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Cost-Effective Service Recovery: Knowing Which Customers to Keep

International Journal of Applied Marketing (ISSN: 1742-2612) Volume 1 Issue 3

Kristen Bell DeTienne
Kristie K. Seawright
Aaron R. Brough

Marriott School of Management
Brigham Young University

Abstract

Service failures are inevitable. However, research shows that in many cases it is considerably more profitable for a company to keep customers who have experienced failures than to try to find new customers. This article explores important decisions companies must make when designing their service recovery systems. After discussing the benefits of service recovery, the paper reviews the findings of recent research about the elements of high-quality service recovery. Next, we show how a customer’s expectations and profitability must be considered when designing the recovery system. Based upon a classification system that integrates customer profitability and expectations, this article presents a theory that challenges the notion that all customers should be recovered. The paper presents practical advice for managers who seek to enhance service effectiveness through cost-effective service recovery.

Keywords: Service recovery, customer expectations, service failure

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