Finding the Sweet Spots: Optimizing Compensation in Proactive Service Recovery: Optimal Compensation in Service Recovery

Authors

  • Nayyer Naseem Johnson C. Smith University, USA
  • Sujay Dutta Wayne State University, USA
  • Attila Yaprak Wayne State University, USA

Keywords:

Service Recovery, Failure Severity, Optimal Compensation, customer satisfaction

Abstract

Extant service recovery research shows that compensation positively affects post-recovery consumer outcomes. However, optimal compensation strategies remain unclear. Our research examined the impact of compensation on the relationship between proactive or reactive vendor initiation and associated consumer outcomes in service-failure-recovery situations, grounded in the justice theory. Using vignettes, we conducted between-subjects studies and found that proactive initiation boosts consumer satisfaction and decreases negative word-of-mouth and anger. These effects were moderated by the level of compensation within specific failure severity boundaries. Our research contributes to the service recovery literature and offers vendors objective guidelines to make cost-effective compensation decisions.

Author Biography

  • Attila Yaprak, Wayne State University, USA

    Attila Yaprak, Ph.D., is a Professor of Marketing and International Business at Mike Ilitch School of Business, Wayne State University, Detroit, MI, USA. He has research expertise in international marketing, marketing strategy, marketing research, international business, and cross-cultural issues. Attila has published articles in the Journal of International Business, Journal of Academy of Marketing Science, Journal of Business Research, International Marketing Review, Journal of World Business, Journal of Global Marketing, among others.

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2024-05-08

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Vol. 37 No. 1 (2024): The Journal of Consumer Satisfaction, Dissatisfaction and Complaining Behavior

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