For nearly three (3) decades there has been a notion, the service recovery paradox (SRP), that companies recovering from a poor experience earn stronger customer loyalty than companies who deliver an excellent experience in the first place.  But is the assumption true?

Under what conditions is the SRP most likely to occur?  According to a study by Mangini the “service recovery paradox is most likely to occur when the failure is not considered by the customer to be severe, the customer has had no prior failure with the firm, the cause of the failure was viewed as unstable by the customer, and the customer perceived that the company had little control over the cause of the failure.”  These ideas seem plausible.

But what does the data say about what successful SRPs actually accomplish?  Helpfully, Matos, Henrique, and Rossi suggest that successful recovery work:

  • Does increase satisfaction BUT
  • Doesn’t impact repurchase intentions AND
  • Doesn’t increase word of mouth (WOM) recommendations AND
  • Doesn’t improve corporate image (brand)

Putting these two studies together reaffirms my conviction that companies must strive for consistent positive customer experiences to earn customer trust and loyalty.  Both intermittent and repetitive poor experiences, even when recovery efforts are deemed successful, erode trust and diminish the likelihood of loyalty.

The pivot point is that while investing in recovery efforts may ameliorate a poor experience those efforts may not be enough to keep a customer.  A better plan is to invest in delivering an exceptional experience each time.  After all, satisfied customers are not necessarily loyal.

(One area which seems to remain untouched in the literature relates to competition.  If a company’s competitors deliver poor experiences, how might this impact intent to defect and loyalty?  Essentially, how do we compare the effects of the “devil you know versus the devil you don’t.”  What do you think?)

Is the Service Recovery Paradox Real?
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