Social Presence in Service Failure: Why It Might not be a Bad Thing

Abstract

The point of retail service delivery is crucial to a business as previous research shows that negative deviations from consumers’ service expectations often discourage customers to make referrals to others. Effective management of customer referral likelihood at the point of retail service delivery, however, remains an understudied area. In this research, we conduct three studies to demonstrate that social presence (vs. no social presence) during service failure helps alleviate the negative impact of service failure on referral likelihood. Study 1 identifies two parallel processes to explain this effect: an affective process (anger reduction) and a cognitive process (fewer other-directed negative cognitions). Studies 2 and 3 demonstrate the important moderating role of blame attribution and cognitive load on social presence effects and processes. Strategies that help retail managers effectively manage customer referral are recommended based on these findings.