Title

How Compensating Customers After a Service Failure Affects Repurchase Intentions: The Moderating Effect of Responsibility, Stability, and Severity of the Failure

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Abstract

This research investigates conditions in which compensating customers after a service failure is effective in positively impacting their repurchase intentions. Using an experimental procedure, the impact of varying levels of compensation in different stability, locus of responsibility, and failure of severity conditions is evaluated. The findings from two studies intentions in all conditions except when the company is responsible for the failure and it occurs repurchase intentions when the failure occurs infrequently. However, compensation minimizes consumers’ negative evaluations, if the company is responsible for the failure and the failure occurs frequently. Thus, failure severity and attributions moderate the effectiveness of the service compensation in enhancing repurchase intentions.

Disciplines

Business | Business Administration, Management, and Operations | Business Law, Public Responsibility, and Ethics | Marketing

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