The Impact of Service Recovery on Customer Loyalty
Chapter One
Objective of the study
The objectives of the study are;
- To ascertain the impact of service recovery on customer satisfaction
- To ascertain the impact of service recovery on customer loyalty
CHAPTER TWO
LITERATURE REVIEW
Service Recovery
Service recovery can be defined as a process of restoring consumer confidence due to service failure. Service recovery is intended as a process to make up for customer disappointment in being satisfied after a failure (Borah, Prakhya & Sharma, 2020; Cheng et al., 2019; McQuilken et al., 2020). Service recovery is a specific action taken to ensure that customers get the appropriate level of service after problems occur in the normal service (Babin et al., 2021; Harrison-Walker, 2019; Kandulapati & Bellamkonda, 2014). Service recovery can also be interpreted as an action taken by a service provider company against customer complaints regarding service failure that is perceived by the customer (Van Vaerenbergh et al., 2019; Albrecht et al., 2019). Service recovery can be realized in three ways, namely distributive justice, procedural justice and interactional justice (La & Choi, 2019; Wu et al., 2020; Babin et al., Borges, 2021). Distributive justice is the value of justice which refers to the calculation of the allocation of costs incurred by customers and benefits received by customers; procedural justice is the value of justice inherent in the reliability of the complaint submission process; and interactional justice, namely the value of justice felt by customers because of the interaction process between customers and employees during the complaint handling procedure (Babin et al., 2021; La & Choi, 2019; Bacile et al., 2018). In addition, service recovery can also be measured using the dimensions of online service recovery, namely; responsiveness is the ability of service providers to respond to customer complaints quickly; compensation is the ability of the service provider to provide compensation for service failure, and contact is the ability of the service provider to interact with customers for service failures that occur (Kandulapati & Bellamkonda, 2014).
Customer Loyalty
According to Jacoby and Chestnut (1978), there are three concepts about customer loyalty First, Loyalty is an attitude or a positive emotion of a customer that lead to a relationship between a customer and a seller, second Loyalty is primarily expressed as ‘repurchase behaviour’ and third Loyalty is a moderate repurchase behaviour due to the situations, circumstances or the individual characteristics. Reichheld et al; (2000) has mentioned that the customers may show their loyalty in different ways, they may continue purchase from a seller without any emotional connection, they may increase the amount and frequency of their buying behaviour or both, or they may become the supporters and defenders of the organization for other customers and influence their purchasing decision. Observations show that in the customer loyalty, the past theories have been focusing on the repurchase behaviour basically, without considering the attitude or the mind of the customer, for example Tucker (1964. p.32) defines loyalty as the behaviour of the customer is full statement of brand loyalty regardless of what the customer think and what goes in his/her central nervous system. Later on authors mentioned both of the components in the definition of loyalty. Jacoby (1971. p.25) states that brand loyalty is not merely buying of a brand; it should have both of the components, the behaviour component, which is measured by repurchase, and the attitudinal component, which is measured by single scale or multi scale items. Gremler and Brown (1999, p.286) have mentioned that the Positive attitude of a customer can be measured by the word of mouth, acting as a mentor and other adding value activities that may be unintentional, for example picking rubbish from the road . It is not easy to measure the unintentional activities of a loyal customer. According to Dick and Basu (1994) loyalty must have both of the components, relative attitude and patronage behaviour. Relative attitude is defined as the emotions of a customer towards a particular brand relative to other brands or stores. Patronage behaviour is the frequency of purchase and monetary value of purchase. They have discovered four types of loyalty; first one is called no loyalty, where a customer has low relative attitude and low repurchase intention. In this case managers need to build spurious loyalty. Spurious loyalty is second category of loyalty, where a customer has high repurchase behaviour and lower relative attitude, sellers cannot rely on these customers because they are open to better offer and can switch. Third category is latent loyalty, where a customer has high relative attitude and low repurchases behaviour. In this case a customer may like a store, for example but its location is inconvenient, or customer likes to buy a brand but it is not easily available. Managers need to remove the obstacles for example extending the branch network in this case. The Final form is sustainable loyalty, where a customer repurchases (patronage) because the customer has strong preference (relative attitude). Bothe the relative attitude and repurchase behaviour is high. The mangers must continually reinforce in this case.
Jennifer Rowley (2005, p.575) has proposed a model in her article, which divides the loyal customers into other four categories, The Captive, they continue to purchase from only one seller as they lack alternatives, or switching cost is high. They neither have a positive attitude nor a positive intention towards a brand, however when they buy the brand they are satisfy with the brand and have positive experience. They may not get chance to test other products so they do not switch from exiting brand, example of such loyalty can be buying a car, and stick with it. Second types of loyal customers are Convenience seeker, who may not have the positive attitude and may have a low involvement to the brand but they still repurchase from the existing store because of the geographical location or opening hours or low cost.
CHAPTER THREE
RESEARCH METHODOLOGY
INTRODUCTION
In this chapter, we described the research procedure for this study. A research methodology is a research process adopted or employed to systematically and scientifically present the results of a study to the research audience viz. a vis, the study beneficiaries.
RESEARCH DESIGN
Research designs are perceived to be an overall strategy adopted by the researcher whereby different components of the study are integrated in a logical manner to effectively address a research problem. In this study, the researcher employed the survey research design. This is due to the nature of the study whereby the opinion and views of people are sampled. According to Singleton & Straits, (2009), Survey research can use quantitative research strategies (e.g., using questionnaires with numerically rated items), qualitative research strategies (e.g., using open-ended questions), or both strategies (i.e., mixed methods). As it is often used to describe and explore human behaviour, surveys are therefore frequently used in social and psychological research.
POPULATION OF THE STUDY
According to Udoyen (2019), a study population is a group of elements or individuals as the case may be, who share similar characteristics. These similar features can include location, gender, age, sex or specific interest. The emphasis on study population is that it constitutes of individuals or elements that are homogeneous in description.
This study was carried to examine the impact of service on customer loyalty. First bank Uyo form the population of the study.
CHAPTER FOUR
DATA PRESENTATION AND ANALYSIS
INTRODUCTION
This chapter presents the analysis of data derived through the questionnaire and key informant interview administered on the respondents in the study area. The analysis and interpretation were derived from the findings of the study. The data analysis depicts the simple frequency and percentage of the respondents as well as interpretation of the information gathered. A total of eighty (80) questionnaires were administered to respondents of which only seventy-seven (77) were returned and validated. This was due to irregular, incomplete and inappropriate responses to some questionnaire. For this study a total of 77 was validated for the analysis.
CHAPTER FIVE
SUMMARY, CONCLUSION AND RECOMMENDATION
Introduction
It is important to ascertain that the objective of this study was to ascertain the impact of service recovery on customer loyalty. In the preceding chapter, the relevant data collected for this study were presented, critically analyzed and appropriate interpretation given. In this chapter, certain recommendations made which in the opinion of the researcher will be of benefits in addressing the challenges of service recovery on customer loyalty.
Summary
This study was on the impact of service recovery on customer loyalty. Three objectives were raised which included: To ascertain the impact of service recovery on customer satisfaction and to ascertain the impact of service recovery on customer loyalty. The study adopted a survey research design and conveniently enrolled 80 participants in the study. A total of 77 responses were received and validated from the enrolled participants where all respondents were drawn from first bank, Uyo. Hypothesis was tested using Chi-Square statistical tool (SPSS).
Conclusion
This study aims to examine the impact of service recovery on customer loyalty. The results of the study found that service recovery has a positive and significant effect on customer satisfaction and corporate image. The results of this study also found that customer satisfaction and corporate image have a reciprocal relationship between the two. Customer satisfaction and corporate image occurs as a result of the recovery which is performed due to service failure has an impact on increasing the customer loyalty of the logistics company.
Recommendation
The study therefore recommended that banks should initiate effective and flexible service recovery strategies that will give timely response to customers‟ complaints. Banks should prepare their employees with service recovery strategies that include an immediate and appropriate service failure response. The best service recovery strategies can fix mistakes, repair relationships, and build trust. This can be done by avoiding negative attitude towards the customers and ensuring quick response and remedy to the service failure. Furthermore, banks should direct their frontline employees to be attentive and courteous when dealing with customers especially those that have complaints about services received and explain the importance of apologies and explanations to them. Training and empowerment, supported with recognition and reward programs, are likely to increase frontline employees‟ service recovery performance.
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