Do ongoing relationships buffer the effects of service recovery on customers' trust and loyalty?

Abstract

PurposeThis study aims to fill an important gap in the literature by exploring the moderating role of client‐company relationship type on the impact of service recovery judgments on clients' trust and loyalty intentions.Design/methodology/approachA sample of 216 Brazilian banks clients who made a complaint to their bank within the previous 12 months answered the survey. Data collection took place at a major Brazilian international airport. In terms of relationship type, the authors segmented their sample in two groups: relational and transactional clients. They used multi‐group structural equation modeling to test their hypotheses.FindingsRelational clients showed higher switching costs, trust, and loyalty intentions than transactional clients. The client‐company relationship type also moderated the impact of distributive justice on satisfaction, satisfaction on trust in the management policies and practices (MPP trust), and switching costs on repurchase intentions. MPP trust fully mediated the effects of trust in frontline employees (FLE trust) on loyalty (repurchase and WOM intentions).Practical implicationsThe findings suggest that stronger client‐company relationships may limit the impact of service and recovery failures on customer trust and loyalty. This is a critical piece of information for banks as they could customize their recovery strategies to fit the different types of relationships they have with their clients.Originality/valueBy exploring the impact of the type of relationship on the service recovery process and their consequences, this study answers the following important research question: do ongoing client‐company relationships buffer the impact of service recovery on trust and loyalty intentions?