Abstract
Purpose This paper aims to compare the relative importance of tangible compensation across the offline and online service mediums, and assess tangible compensation as a trust recovery tactic. Methodology This study is based on a 3 (compensation level: 20%, 50%, 100%) × 2 (compensation type: refund, coupon) × 2 (service medium: offline, online) scenario-based experimental design. Findings The offline and online customers exhibit different satisfaction for the respective values of both the immediate and delayed compensation types. Moreover, offline customers exhibit more trust in the firm when they receive a refund, whereas their online counterparts demonstrate a higher trust when provided with a coupon. Practical implications For a service failure such as the one presented in the experimental study’s scenario, a lower (higher) value coupon will generate more (less) satisfaction compared to providing the same value as a refund. Firms will be better off by providing partial compensation in the form of a coupon, rather than a refund. Originality Unlike most studies of service recovery, this research takes into account the perceived differences of various tangible compensations to provide a comparison of offline and online customers’ recovery preferences. Furthermore, the previous studies have not focused on trust restoration and assessed causes and effects of trust based on trust at one point in time i.e. trust after recovery. While this study has included restored trust as a variable in the conceptual model.
Highlights
Trust is considered the foundation of relationship marketing but can be negatively impacted by service failures as they reduce a service provider’s perceived reliability (Weun et al, 2004)
4.3 Discussion The significant positive effect of compensation level on satisfaction shows that respondents’ satisfaction varies with the compensation level (Table 1) such that more the compensation level, more will be the satisfaction, lending support to H1. The support for both the immediate and delayed compensations in the service recovery literature led to the effectiveness’ evaluation of either of the compensation types
It was hoped that the relative importance of the different compensations, which were manipulated in the scenario, would be calculated
Summary
Trust is considered the foundation of relationship marketing but can be negatively impacted by service failures as they reduce a service provider’s perceived reliability (Weun et al, 2004). The meta-analyses of Orsingher et al (2010) and Gelbrich and Roschk (2011) specify that trust, in general, and trust recovery, in particular, has not been a focus of service recovery studies. Customers’ evaluation of the service recovery depends on compensation’s value and the type, which is perceived differently because of its immediate or delayed nature (BambauerSachse and Rabeson, 2015). This suggests that the researchers and managers have to expend more effort toward ensuring satisfaction with service recovery efforts
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