This research investigates how target and observing customers react to service failure and recovery. Previous research has focused on the effect of service recovery on target customers. It has been assumed that the reactions of those customers observing the recovery efforts would mirror those of target customers, or perhaps be even more favorable, given that they are not directly affected by the service failure. This research challenges this pre-conception. Through three experiments, this paper shows that often greater recovery efforts are required to improve the evaluation of observing customers than that of target customers. This research explores the reasons behind this counterintuitive finding and concludes with a discussion of its theoretical and managerial implications.
- service failure
- service recovery