Tracking service failures and employee recovery efforts

JOURNAL OF SERVICES MARKETING VOL. 9 NO. 2 1995 pp. 49-61 © MCB UNIVERSITY PRESS. 0887 6045 49

IntroductionService managers and personnel are facing more intensive customer servicepressures than ever before (De Lisser, 1993). Today’s customers are moredemanding (Power, 1991), better informed, and more assertive when serviceproblems arise. This may be due in part to increased customer demand forvalue in the products and services purchased. Customer demands for valueresult in a stronger focus on a combination of quality, fair price, and goodservice in the purchases they make (Power, 1991).

When service failures occur, the service provider’s reaction can potentiallyeither reinforce a strong customer bond, or change a seemingly minordistraction into a major incident. Given that improving a company’scustomer retention rate by 20 percent has the same effect on profits ascutting costs by 10 percent (Power, 1992), it is imperative that managerscarefully consider failure and recovery issues and have an establishedservice recovery plan to overcome failures when they occur.

Tracking and analyzing service failures and service recovery strategies is anextremely useful management tool (Vavra, 1992). By systematicallycategorizing customer complaints, a hierarchy of criteria evolve whichreflect the customer’s perspective of effective performance. While effectiveservice failure analysis provides the type, frequency, and magnitude ofvarious failures, service recovery analysis provides sometimes frightfulinsights into how employees react to service failures and how customers ratethe effectiveness of employees’ recovery efforts. The analysis of servicefailures and service recoveries is beneficial to service organizations as itallows management to identify common failure situations. This informationcan in turn be used to minimize the occurrence of service failures, andimprove service recovery efforts of the organization through employeetraining programs focussing on these issues.

Despite the importance of tracking and analyzing service failures andrecovery strategies from a managerial perspective, only limited empiricalresearch examining failures and recoveries has been conducted. Goodwinand Ross (1992) conducted an experiment investigating consumer responsesto service failures using an equity theory framework. Their findings suggestthat when consumers are offered an apology or are provided with theopportunity to express their concerns to a service representative thatperceptions of satisfaction and fairness are enhanced, particularly whenrecovery outcomes are favorable. Kelley and Davis (1994) conducted aninvestigation of antecedents to customer expectations for service recoveryand found that perceived service quality and customer organizationalcommitment were both significantly related to customer service recoveryexpectations. Finally, Kelley et al. (1993) developed a typology of failuresand recoveries for the retail industry.

Tracking service failures andemployee recovery effortsK. Douglas Hoffman, Scott W. Kelley and Holly M. Rotalsky

Categorizing customercomplaints

Limited empiricalresearch

50 JOURNAL OF SERVICES MARKETING VOL. 9 NO. 2 1995

Research purposeOur study builds on previous research by demonstrating a process forexamining service failures and recovery strategies in service industriesthrough an existing research methodology, and describing a typology ofservice failures and recoveries commonly occurring in the restaurantindustry. Specifically, in this research we:

● identify and classify failures within the restaurant industry;

● assess customer perceptions regarding the magnitude of each failure;

● identify and classify recovery strategies utilized by restaurants to correctfailures;

● assess customer perceptions of the effectiveness of each recoverystrategy; and

● assess subsequent patronage behaviors.

The critical incident technique (CIT) (Flanagan, 1954) is used to investigatethese issues. This research method has been used previously to investigate avariety of related issues including assessing favorable and unfavorableincidents in the service encounter from the customers’ (Bitner et al., 1990;Gremler and Bitner, 1992), and employees’ perspectives (Bitner et al.,1994); determining customer reactions to product failures (Folkes, 1984);developing waiter-waitress training programs (Goodman, 1979); developinga typoIogy of retail failures and recoveries (Kelley et al., 1993); anddetermining sources of communication difficulties in service encounters(Nyquist et al., 1985).

The studyThe CIT methodology involves five steps:

(1) determine the general aims of the activity (discussed above in theresearch purpose section);

(2) formulate plans and specifications for the collection of critical incidents;

(3) collect the data;

(4) analyze the data; and

(5) interpret the data and report the results (Flanagan, 1954).

Steps two through four are discussed below; while step five is discussed inthe Results section.

Data collectionThe second and third steps in the CIT method entail planning and executingthe data collection procedures. The incidents for this study were collected byfive students enrolled in a services marketing class at a university located inthe southeastern United States. After being presented with the principles ofthe CIT, each student was instructed to collect and record critical incidentsand associated data from respondents contacted via convenience samplingmethods using a data collection form developed by the authors. Each studentwas asked to collect approximately 80 critical incidents from consumerswith the stipulations that other students should not be solely relied upon andthat an effort should be made to contact individuals representing a variety ofdemographic groups. This resulted in the collection of 373 critical incidents.

Critical incidenttechnique

JOURNAL OF SERVICES MARKETING VOL. 9 NO. 2 1995 51

Each respondent was asked to report a service failure associated with afavorable service recovery, as well as a service failure associated with a poorservice recovery. In addition, respondents were asked to:

● rate the magnitude of the failure on a ten-point scale with anchors ofminor mistake = 1 and major mistake = 10;

● rate the effectiveness of the recovery strategy on a ten-point scale withanchors of very poor = 1 and very good = 10;

● report changes in shopping behavior attributed to the encounter throughan open-ended question; and

● provide demographic information with regard to gender, education, andage.

Data analysisThe fourth step in the CIT method is data analysis. The analysis of the CITdata involved four steps:

(1) Identify the failure incident. Initially, each critical incident wassystematically categorized through a deductive sorting process into oneof the three major failure groups developed by Bitner et al. (1990).These three groups were developed based on a sample of incidents fromthe hotel, restaurant, and airline industries, and included: employeeresponse to service delivery system failures; employee response toimplicit/explicit customer requests; and unprompted and unsolicitedemployee actions.

(2) Identify failure subgroups within the three major groups. This stepinvolved classifying failures into subgroups within each of the threebroad groups noted above. This inductive process resulted in theidentification of eleven unique failure subgroups (five in Group 1; twoin Group 2; and four in Group 3).

(3) Classify recovery strategies. This step involved classifying therecoveries within each failure subgroup. A total of 87 types ofrecoveries were identified with a great deal of overlap across the 11failure subgroups.

(4) Collapsing service recovery strategies. The final step in thecategorization process involved reducing the 87 service recoverycategories to a more manageable number of recovery strategiesapplicable to a variety of food service operations. This classification andsorting process resulted in eight service recovery strategies.

ReliabilityIn order to assess the reliability of the 11 failure subgroups and eightrecovery strategies established through the sorting processes, an independentjudge (the third author) categorized each of the incidents included in thesample. As a starting point, the incident report forms were presorted into thethree main categories previously identified by Bitner et al. (1990). Theindependent judge was provided with the 11 previously identified failuresubgroups and asked to independently sort each of the failure incidents intoone of the 11 categories. This resulted in agreement rates of 92 percent, 90percent, and 90 percent for the failure subgroups included in the three maincategories. After completing this task, the independent judge then sorted the

Incident report forms


recovery incidents into the eight recovery strategy categories provided bythe researchers. The recovery agreement rate was 93 percent.

ResultsIncidents associated with positive recovery strategies accounted for 49.6percent of the sample, while 50.4 percent of the sampled incidents wereassociated with poor recoveries. The demographic characteristics of therespondents are reported in Table I. Overall the sample appears to representwhat might be viewed as a cross-section of the dining public fairly well withthe possible exception that older diners might be slightly under-represented.

In order to provide an assessment of the generalizability of the findings,appropriate statistical tests (i.e. chi-square and ANOVA) were utilized toexamine the relationships between gender, education, age, and restauranttype; and failure type, recovery strategies, failure ratings, recovery ratings,and subsequent patronage behavior. Results revealed no statisticallysignificant findings with the exception of the chi-square test associated withthe restaurant type and failure type variables – fast food customersexperienced more wrong orders. These tests provide evidence of thegeneralizability of our findings across age, gender, education levels andrestaurant type.

Failure categoriesTable II includes the study findings pertaining to service failures andincludes:

● failure frequencies;

● frequency percentages;

● failure ratings;

● average recovery ratings associated with each failure;

● the average lapsed time since the failure incident occurred; and

● the customer retention percentage associated with each failure type.

Table I. Descriptive statistics for incidents and respondents

Variable Percentage

Restaurant typeFast food restaurants 20.6Non-fast food restaurants 79.4

Respondent genderMale 42.5Female 57.5

Respondent education levelNo college degree 68.2Undergraduate degree 21.7Some or completed graduate school 10.1

Respondent ageLess than 26 years old 67.526 to 35 years old 14.1More than 35 years old 18.4

Generalizability of thefindings


Table II. Restaurant failures

AverageFailure Failure Recovery lapsed Retentioncategory Count Percentage ratingab ratingbc timebd percentagee

Group 1: Employee response to service delivery system failures

Product defects 78 20.9 6.69 6.21 318 80.0(2.33) (3.35) (422) (60/75)

Slow/ 67 17.9 7.05 5.38 313 61.5unavailable service (2.41) (3.52) (552) (40/65)

Facility problems 12 3.2 7.25 3.92 682 41.6(3.41) (3.67) (728) (5/12)

Unclear policy 6 1.6 6.16 6.33 142 83.3(2.31) (3.20) (126) (5/6)

Out of stock 3 0.8 7.33 6.00 590 66.7(2.03) (3.60) (292) (2/3)

Group 1 total 166 44.4 6.87 5.71 341 69.6(2.43) (3.46) (503) (112/161)

Group 2: Employee response to implicit/explicit customer requests

Not cooked to order 56 15.0 6.02 5.80 306 83.6(2.26) (3.51) (280) (46/55)

Seating problems 13 3.4 8.00 5.61 325 66.7(1.58) (2.90) (242) (8/12)

Group 2 total 69 18.4 6.37 5.74 310 80.6(2.30) (3.40) (273) (54/67)

Group 3: Unprompted and unsolicited employee actions

Employee behavior 56 15.2 7.12 3.71 265 65.4(2.15) (3.28) (255) (36/55)

Wrong order 47 12.6 6.25 6.44 240 84.1(2.70) (3.41) (261) (37/44)

Lost order 28 7.5 6.71 5.82 170 89.2(2.27) (2.96) (119) (25/28)

Mischarged 7 1.9 5.86 7.71 58 100.0(1.22) (2.98) (42) (7/7)

Group 3 total 138 37.2 6.69 5.29 228 78.4(2.36) (3.49) (235) (105/134)

Grand total 373 100.0 6.71 5.56 294 75.5(2.38) (3.46) (387) (271/359)

Key:a Failures were rated on a scale of 1 (minor mistake) to 10 (major mistake)b Standard deviations are in parenthesesc Recoveries were rated on a scale of 1 (very poor) to 10 (very good)d Average lapsed time represents the average number of days from the time an incident

occurred to the time it was reportede Retention rate is the ratio of the number of respondents indicating that they still

patronize the restaurant involved in the incident to the number of incidents reported. The number of incidents reported has been adjusted for respondents who have moved or no longer have access to the restaurant involved in the incident


It should be noted that there are some similarities between the failuresubgroups identified in this study and the service encounter subgroupsidentified by Bitner et al. (1990). For example, both classification schemesinclude categories focussing on slow and/or unavailable service, andemployee behaviors. The differences between the subgroups reported belowand Bitner et al.’s (1990) subgroups are due largely to the industry-specificfocus taken in this study. As noted above, Bitner et al. (1990) took a broaderfocus encompassing three different service industries.

Group 1 failures involved employee responses to service delivery systemfailures and accounted for 44.4 percent of total failures. A total of fivedifferent types of Group 1 failures were identified. Within this group,product defects accounted for 20.9 percent of the total failures. Productdefect failures involved incidents with food described as cold, soggy, raw,burnt, or spoiled. This failure category also included incidents in whichinanimate objects were found in the customer’s food such as hair, glass,band-aids, bag ties, and cardboard. This failure type received an averagefailure rating of 6.69 on a scale of 1 (minor mistake) to 10 (major mistake).

Incidents classified as slow/unavailable service made up 17.9 percent of thetotal incidents collected. These incidents involved situations in whichcustomers waited an excessive amount of time for service or were not able tofind assistance when they needed it. This failure type received an averagefailure rating of 7.05.

Facility problems accounted for 3.2 percent of the total failures. Thesefailures dealt with cleanliness issues such as bad smells, dirty silverware,and animate objects found in food or crawling across the table (e.g. bugs).This failure type received an average failure rating of 7.25.

Unclear policies accounted for a relatively small portion of the total failurescollected (1.6 percent). These failures resulted from restaurant policies thatwere not clearly stated by the restaurant or its representatives and as a resultwere perceived by the customer as unfair. Examples of the unclear policyfailure included incidents involving restaurants that would not accept checksor certain credit cards. These failures received an average failure rating of6.16.

The final failure type included in Group 1 involved out of stock conditions.Less than one percent of the total failures collected were included in thiscategory (0.8 percent). As implied by the category, these failures resultedfrom an inadequate supply of menu items. The average failure rating for thisfailure category was 7.33.

Group 2 failures involved employee responses to implicit/explicit customerrequests and accounted for 18.4 percent of total failures. Only two failurestypes were identified within this group. Failures resulting from food notcooked to order accounted for 15 percent of the total failures. These failuresarose in situations in which the customer explicitly asked for the food to beprepared in a specific manner (e.g. medium-rare, no mustard) and thatrequest was not honored on delivery. The average failure rating of incidentsin this category was 6.02.

Product defect failures


Seating problems accounted for 3.4 percent of the total failures. Thesefailures involved seating smokers in nonsmoking sections and vice versa, lostor disregarded reservations, denied requests for special tables, and unrulycustomers. This failure category had an average failure rating of 8.00, whichwas the highest average failure rating of the failures identified in this study.

Group 3 failures included incidents involving unprompted/unsolicitedemployee actions and account for 37.2 percent of the total failures. Withinthis group, 15.2 percent of failures were attributed to inappropriate employeebehavior. These failures received an average failure rating of 7.12, andinvolved incidents of rudeness, inappropriate verbal exchanges, and poorattitudes associated with unpleasant behaviors.

Incidents in which customers reported receiving the wrong order made up12.6 percent of the total failures. These incidents involved the delivery of anincorrect food item to the table, or in the case of fast food, packing anincorrect food item that was discovered when the customer was no longer onthe restaurant premises. This failure type received an average failure rating of6.25.

Lost orders accounted for 7.5 percent of the total failures reported. Thisfailure category included situations where the customer’s order wasmisplaced and never fulfilled. This failure type received an average failurerating of 6.71.

The final failure category involved incidents in which the customer wasmischarged. This failure type included incidents in which customers werecharged for items that were never ordered, charged incorrect prices for itemsthat were ordered, or were given incorrect change. This failure type wasreported relatively infrequently (1.9 percent), and had an average failurerating of 5.86.

Recovery categoriesFollowing the identification of the service failure categories, service recoverystrategies were identified based on a similar sorting and categorizationprocess. Table III includes the following information regarding the sevenservice recovery categories identified using the CIT:

(1) recovery frequencies;

(2) frequency percentages;

(3) average failure ratings associated with each recovery strategy;

(4) average recovery ratings;

(5) the number of incidents in which the recovery strategies were considered“good” and “poor”;

(6) the average lapsed time since the incident occurred; and

(7) customer retention percentages associated with each recovery strategy.

Service recovery strategies included providing customers with free food. Thisrecovery strategy was reported in 23.5 percent of the total incidents collected.This recovery category involved incidents in which customers were providedwith a meal, desserts, or drinks on a complimentary basis. This recovery

Incorrect food item


category received an average recovery rating of 8.05 on a scale of 1 (verypoor) to 10 (very good), which was the highest average recovery rating forthe recovery strategies identified.

Customers reported receiving a discount in 4.3 percent of the total incidentsreported. These customers were provided a discount for food items purchasedat the time of the failure incident. This recovery strategy received an averagerecovery rating of 7.75.

Coupons were offered to customers in response to 1.3 percent of the totalfailure incidents. The couponing recovery strategy resulted in customers beingprovided with discounts for food items purchased at the restaurant on theirnext visit. This recovery strategy received an average recovery rating of 7.

Table III. Restaurant recovery strategies

AverageRecovery Failure Recovery lapsed Retentioncategory Count Percentage ratingab ratingbc Goodd Poord timebe percentagef

Free food 87 23.5 6.54 8.05 72 15 279 89.0(2.69) (2.61) (341) (73/82)

Discount 16 4.3 6.94 7.75 12 4 296 87.5(2.14) (2.23) (242) (14/16)

Coupon 5 1.3 7.20 7.00 4 1 204 40.0(0.84) (1.56) (123) (2/5)

Managerial 10 2.7 7.60 7.00 8 2 228 99.8intervention (1.84) (1.56) (194) (8/9)

Replacement 124 33.4 6.12 6.35 74 50 314 80.2(2.40) (3.17) (381) (97/121)

Correction 21 5.7 5.85 5.14 9 12 201 80.0(1.77) (3.51) (225) (16/20)

Apology 29 7.8 6.44 3.72 5 24 237 71.4(1.92) (2.40) (230) (20/28)

Nothing 79 21.3 7.90 1.71 1 78 340 51.3(2.08) (1.07) (549) (40/78)

Grand total 371 100 6.71 5.56 185 186 294 75.5(2.38) (3.46) (387) (271/359)

Key:a Failures were rated on a scale of 1 (minor mistake) to 10 (major mistake)b Standard deviations are in parenthesesc Recoveries were rated on a scale of 1 (very poor) to 10 (very good)d Good and poor represent the number of incidents reported by respondents on the data

collection form as favorable recoveries and poor recoveries.e Average lapsed time represents the average number of days from the time an incident

occurred to the time it was reportedf Retention rate is the ratio of the number of respondents indicating that they still

patronize the restaurant involved in the incident to the number of incidents reported. The number of incidents reported has been adjusted for respondents who have movedor no longer have access to the restaurant involved in the incident


In 2.7 percent of the total incidents reported, service failures were resolvedthrough managerial intervention. In these incidents, the focal point was theinvolvement of management in the resolution of the service failure. In theincidents classified in this category the ultimate action taken generallyinvolved other recovery strategies such as free food, discounts, and coupons.However, the key characteristic of these incidents was judged to be theintervention of a manager. These recoveries had an average recovery ratingof 7 percent

A replacement recovery strategy was implemented in 33.4 percent of theincidents reported. These recoveries involved the replacement of a defectivefood order with a new order. Unlike the free food recovery strategy, thecustomer still paid for his or her order in the replacement recovery strategy.This recovery strategy received an average recovery rating of 6.35 percent.

The correction of the failure was utilized as a recovery strategy in 5.7percent of the incidents reported. In these incidents, restaurant personnelelected simply to correct the failure. For example, in the case of a defectiveorder, rather than replacing the order with a new one as in the replacementrecovery strategy, restaurant personnel elected to correct the existing order.This recovery strategy received an average recovery rating of 6.35 percent.

In 7.8 percent of the incidents reported, the customer received an apologyfrom restaurant personnel. This recovery strategy was relatively ineffectiveas it received an average recovery rating of only 3.72 percent.

Finally, in 21.3 percent of the incidents reported, restaurant personnel didnothing to correct the service failure experienced by the customer. In theseincidents the resulting average recovery rating was 1.71 percent.

Service failures and corresponding recoveriesTable IV provides the frequency of occurrence for each service failure typeand corresponding service recovery. While many of the cells in this table areeither empty or relatively small, this table does provide further insights intoservice failures and recoveries in the restaurant industry.

Product defect failures were corrected through the replacement and free foodrecovery strategies in the majority of the incidents reported. When a failurearose due to slow/unavailable service customers were generally providedwith free food or received an apology; however, in a large number of casesnothing was done to remedy the failure. Failures associated with food orders(not cooked to order, wrong order, and lost order) were usually remediedthrough either the free food or replacement recovery strategies, as would beexpected. Finally, a relatively large number of failures arising due toemployee behavior resulted in nothing being done in an effort to recoverfrom the failure.

Average lapsed timePast research has indicated that negative information has a greater impact oncognitive structure and attitude than positive information (Lutz, 1975).Consequently, within the context of this study, it was expected that moreserious service failures would tend to be more memorable over time. ThePearson correlation coefficient for the relationship between lapsed time andfailure rating (r = 0.13, p < 0.05) provided substantiating evidence pertaining

Other recovery strategies

Replacement and freefood recovery strategies


to this issue. Similarly, it was also expected that poorer recoveries wouldalso be more memorable. However, this relationship was not statisticallysignificant (r = –0.011, p = 0.837).

Customer retentionThe customer retention rates in this study revealed that in general it ispossible to recover from almost any failure, regardless of its type ormagnitude. Overall, customer retention for the incidents considered was over75 percent. Even customers experiencing less than acceptable recoveries(apology and nothing) were still retained in over 55 percent (60/106) of theincidents reported. However, the correlation between failure rating andrecovery rating (r = –0.376, p < 0.01) does indicate that in the case of moreserious failures, it is generally more difficult to execute an effective recovery.

DiscussionSeveral of the findings of this study merit further discussion. When thecritical incidents were gathered from respondents during the data collectionfor this study, ratings of the severity for each of the failure incidents wereascertained. Average failure ratings exceeded the midpoint of the 10 pointfailure rating scale for all 11 of the failure categories. This suggests that eachof the failure types identified in this study constituted what might be referred

Table IV. Restaurant failures and corresponding recovery strategies

Failure category 1 2 3 4 5 6 7 8

Group 1: Employee response to service delivery system failuresProduct defects 15 1 1 48 2 1 10

Slow/unavailable service 25 7 1 4 14 16

Facility problems 2 6 3

Unclear policy 2 2 2

Out of stock 2 1

Group 2: Employee response to implicit/explicit customer requestsNot cooked to order 5 35 13 3

Seating problems 3 1 3 2 4

Group 3: Unprompted and unsolicited employee actionsEmployee behavior 6 3 2 1 5 7 32

Wrong order 13 1 25 7

Lost order 13 3 1 5 5 1

Mischarged 1 6

Column total 87 16 5 10 124 21 29 79

Notes:Numbers within columns represent the frequency with which a specific failure type wasresolved with the pertinent recovery strategy

Recovery strategies are presented numerically at the head of each column


to as “major” failures. This is not particularly surprising given the nature ofthe research methods used, as by definition the CIT involves the collectionof “critical incidents” from respondents. Clearly, “minor” failures do occurand may also adversely impact on service organizations and their customers.

The findings of this study suggest that it is particularly difficult to recoverfrom two of the failure types identified. Specifically, facility problems andemployee behavior had the lowest mean recovery ratings of the failuresidentified. On a ten-point scale, failures associated with facility problemsand employee behavior had mean recovery ratings of only 3.92 percent and3.71 percent, respectively. These findings amplify the importance ofphysical facilities during the process of service delivery, as recovery fromfacility problems are particularly difficult. In addition, these findings provideevidence of the importance of employee training, as these failures weredifficult to effectively recover from as well. The mean recovery ratings of allother failure types exceeded the midpoint of the 10 point scale, suggestingthat restaurants in general have discovered ways to effectively recover fromthe nine remaining failures identified.

The recovery findings also provide information concerning the desirabilityof specific recovery strategies. For example, recoveries involving some formof compensation were rated most favorably. In the context of the recoverytypology developed in this study, compensation took the form of free food,discounts, and coupons. On a ten-point scale, these three recovery strategieshad mean recovery ratings of 8.05, 7.75, and 7.00, respectively.

Several less effective recovery strategies were also identified. Based onrecovery ratings, a simple correction of a failure, an apology, and doingnothing were considered less effective recovery strategies by customers, asthese recovery strategies had ratings of 5.14, 3.72, and 1.71, respectively.

Managerial implicationsThis research provides service managers with a means for tracking andanalyzing service failures and recoveries. Managers might use thisinformation when designing service delivery systems and procedures. Forexample, as noted above, the findings of this study amplify the importanceof service facilities and employee behaviors. In addition, the findings of thisstudy indicate that failures arising due to out of stock conditions are alsoperceived as serious failures (average failure rating – 7.33) and are difficultto recover from (average recovery rating – 6.00). This finding seems tosupport conventional wisdom which suggests that service organizationsshould only promise what they can deliver.

The seating problem failure was another failure type that was perceived asbeing severe (average failure rating = 8.00). This failure was also difficult toeffectively recover from (average recovery rating = 5.61). This findingshould be of particular interest to managers because in some instances theseating problem failure was due to circumstances beyond the direct controlof the service organization. That is, this failure often arose in situationswhere customers were smoking in a nonsmoking section, or other customerswere particularly unruly.

Many restaurants solicit comments from customers regarding their serviceexperiences through comment cards. The data provided on these comment

Lowest mean recoveryratings

Seating problem failure


cards could be treated as critical incident data in many cases. Whilerestaurant managers may not have the time or inclination to analyzecomment card data as rigorously as an academician might, it may be helpfulto a restaurant manager to use this data to develop categories of serviceproblems and recoveries.

Service managers that use the CIT method to track and analyze the servicefailures and recovery efforts of their organizations will find that the resultsof these efforts will provide a list of service failures experienced by theircustomers and the customers’ perceptions of these failures; as well asmethods for effectively (and ineffectively) recovering from service failureswhen they occur. This information should be helpful in establishing policiesregarding service delivery and service recovery. Based on the findings ofthis study, it appears that when a failure does arise, in order to recovereffectively, service organizations should be prepared to offer some form ofcompensation (either free food, a discount, or a coupon in the restaurantindustry examined here). Further customers perceive compensation-basedrecoveries more favorably, the more immediately they receive the valuefrom the compensation. For example in the context of the restaurantindustry, free food and discounts whose value is experienced immediatelywere perceived more favorably than coupons which are not redeemable untilsubsequent visits. This information should be useful to service managersintending to develop and implement service recovery programs.

Finally, from a managerial perspective, the large number of service failuresresulting in service personnel providing or doing nothing in response isparticularly surprising. In over one-fifth of the incidents collected, customersreported that service personnel made no effort to execute a service recoveryin response to the failure. This would seem to suggest that merely makingservice personnel aware of the importance of service recovery, andencouraging them to acknowledge failures when they become aware ofthem, will enhance the service recovery efforts of many serviceorganizations.

Future service failure and recovery researchThis study considered service failures and recoveries in one service industry.In addition to investigating types of failures and recoveries in other serviceindustries, future research might consider the relative importance of differenttypes of failures, as well as customer preferences for recovery strategies asthey pertain to specific failure types.

Researchers might also consider possible antecedents and consequences ofservice failure/recovery incidents. For example, researchers might considerthe impact of organizational antecedents such as organizational structure,leadership, and empowerment on service failures and subsequent recoveryefforts. In addition, employee-related antecedents such as job satisfaction,organizational commitment, and motivation may be of interest as well.Finally, the impact of customer-related antecedents such as customerexpectations, a priori loyalty, and complaining behavior might also beconsidered as they pertain to customer perceptions of service failures andrecoveries.

Other researchers have anecdotally documented several outcomes of servicefailure and recovery incidents (e.g. Hart et al., 1990); however, relationships

List of service failures

Possible antecedents andconsequences


between service failure and recovery efforts have yet to be empiricallytested. Consequently, researchers might empirically investigate the impact ofcustomer perceptions of service failures and recoveries on variables such ascustomer satisfaction, perceived service quality, perceived recovery value,subsequent customer loyalty, and profitability.

In conclusion, this research provides a demonstration of a method forassessing service failures and recovery efforts – issues critical to the successof service organizations (Hart et al., 1990). In addition to demonstrating anapplication of the CIT in the context of service failures and recoveries, theresults of this study provide managers with information useful for thepurposes of service delivery, policy formation, and employee training.

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K. Douglas Hoffman is Associate Professor of Marketing at The University of NorthCarolina, Wilmington, North Carolina, USA, Scott W. Kelley is Associate Professorof Marketing at University of Kentucky, Lexington, Kentucky, USA and Holly M.Rotalsky is Team Sales Manager at Boseman’s Sporting Goods, Wilmington, NorthCarolina, USA.

Documents

Tracking service failures and employee recovery efforts