Mix&Match: a resource-based complaint recovery framework for tangible compensation

Stanislav Stakhovych, Ali Tamaddoni

Research output: Contribution to journalArticleResearchpeer-review

3 Citations (Scopus)

Abstract

Resource exchange theory suggests service recovery compensation is optimal when it is commensurate with what was lost (e.g., refund for overcharging). However, in practice, companies cannot always follow the theory-driven prescriptions, and the complaint recovery literature remains silent on how to best recover in such suboptimal situations. This study takes a resource-based theory stance to propose Mix&Match, a complaint recovery framework for tangible compensation offers (refunds, redeliveries, or credits) to optimize customer retention and lifetime value in both optimal and suboptimal complaint recovery scenarios. We find that matching tangible compensation with the complaint cause (e.g., redelivery for expired products) is the most effective recovery response for improving customer retention and lifetime value. However, in suboptimal nonmatching scenarios, monetary compensation in the form of store credit proves to be the most effective response.

Original languageEnglish
Pages (from-to)337-352
Number of pages16
JournalJournal of Service Research
Volume23
Issue number3
DOIs
Publication statusPublished - 2020

Keywords

  • service failure
  • customer complaints
  • tangible compensation
  • customer churn
  • RLV
  • customer base analysis

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