Strategy Formulation for Service Failure Recovery, Using Mixed Research Method

The purpose of this study is to explain the strategies affecting the failure recovery in significant services which researches had previously disregarded. Since more than half of the total global wealth comes from the service sector, this study gains importance. Service failures and failed recoveries are among the leading causes of customer switching behavior from service organizations. The existing related literature focuses only on service market in developed countries and only on a few service types. Three major selected services were examined based on the critical incident method. Also, a mixed  research methodology was applied, which consists of scenario-based experimentation, and Grounded Theory to evaluate different recovery strategies and customer behaviors. Results show that when failure exists in services having strong connection with man’s health and survival, strategies relevant to empathy and communication with customers are effective, and when the service failure is connected with the individual’s properties (as in the internet and car fixing services), tangible compensation can be promising. Consequently, service failure recovery measures have positive and direct effect on customer satisfaction, confidence, positive oral promotion, and intention to  repurchase.