Is differential treatment in response to service failures effective? The roles of comparison, loyalty, and scarcity messages

Abstract

Previous studies have shown how a strong relationship between a customer and a firm can exacerbate dissatisfaction after a service failure. However, the effectiveness of providing preferential benefits to loyal customers during a service recovery has been less explored. The purpose of this paper was to examine the impact of differential treatment on post-recovery responses by customers’ loyalty status as well as the moderating role of scarcity cues. By using a between subjects factorial design, the results revealed that less loyal customers’ post-recovery evaluations could be less positive when they were given less compensation than loyal customers. Moreover, scarcity cues were not sufficient to alleviate less loyal customers’ negative feelings in this circumstance. Hospitality practitioners may want to treat customers equally during service failures and use scarcity cues to mitigate loyal customers’ feelings. Future studies may find it fruitful to research individual differences in such effects. • The impact of differential treatment on post-recovery responses was examined. • Customers’ loyalty status and the use of scarcity cues were used as moderators. • Less loyal customers tended to evaluate the service less positively when they were compensated less than loyal customers. • Scarcity cues were not sufficient to alleviate less loyal customers’ negative feelings under differential treatment. • Treating customers equally after service failures and using scarcity cues to loyal customers are recommended.