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Managing Online Service Recovery: Procedures, Justice, and Customer Satisfaction

Info: 1484 words (6 pages) Essay
Published: 4th Nov 2020 in Leisure Management

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The use of modern technology has changed customer - firm interactions and service deliveries. Nowadays, services can be provided through the internet without the physical presence of employees and customers which has increased customer engagement for online services such as booking hotel rooms, transfer money, buy flight tickets, and online shopping. However, during the delivery process, mistakes can be made either online or offline, which can impose a negative impact on firms and damage their brand’s reputation. Compared to offline shopping, switching is much easier on the internet because customers can browse alternative providers with just a click from the mouse. Therefore, the firm’s success must know how to manage online service failure effectively. Most studies focusing on service failure emphasize the importance of fair or just service recovery to restore customer satisfaction. The present study investigates customer perceptions of justice, satisfaction, and subsequent behavioral intentions after online service failure and recovery encounters. This study has two main research objectives, first is to examine the use of online information and mode of contact in service recovery strategies and how it changed customer’s perceptions of justice, satisfaction towards the service provider, intentions to switch, and possibly generate positive word of mouth (PWOM). Then the authors want to detect different customer responses between subscription and non-subscription services when dealing with online service recovery (Singh & Crisafulli, 2016).

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When service failure occurs, firms than to offer compensation (distributive justice), rectifying the service failure (procedural justice), and through customer-employee interactions (interactional justice), and most compensation are delivered offline. The author argues that procedural justice is used in both online and offline service recovery encounters and interactional justice is crucial to restore customer satisfaction as customers are most satisfied when receiving personalized, tailored emails. When customers are satisfied, it may change their behavioral intentions such as staying with the service provider and generate PWOM. Further, the authors argue that customer response to online service recovery may vary between service contexts. Subscription services customers may have high expectations for service encounters and service recovery. On the other hand, customers who have a history of positive past experiences with the firm such as subscription services tend to be easier to satisfy during the service recovery process. Also, because of the high switching costs, of subscription service customers are less likely to switch service providers. Lastly, satisfied customers may generate PWOM, especially for subscription services. Based on such arguments, the authors proposed eight hypotheses and tested them by employing a scenario-based survey.

In total, 137 valid responses were obtained. Results show that perceived justice and international justice can restore customer satisfaction after a service failure, and international justice is a stronger determinate for customer satisfaction than perceived justice. Customers are less likely to switch service provider and if they perceived satisfying online service recovery, they are willing to generate PWOM. The study also proved that it is harder to satisfy subscription service customers, and either subscription or non-subscription customers would generate PWOM if they had a positive online recovery experience, not by the service context.

Service failure often exists in the hospitality industry either online or offline. This article primarily focused on three-justice that are typically offered during the service recovery process which is by offering compensation (distributive justice), rectifying service failure (procedural justice), and customer-employee interactions, which in this case as technology-mediated interactions (interactional justice). These methods are constantly used in the tourism industry for online and offline service failure recovery process, especially during the pre-trip stage where travelers tend to book hotels, air tickets, and activities online. Moreover, this article investigated the differences between subscription service and non-subscription service customer’s behavior when facing online service failure. The authors argue that customers of subscription services can be categorized as loyal customers and apply to the hospitality industry. Typically, loyal customers are harder to satisfy when encountering service failure, but once they are satisfied, they are more likely to generate PWOM (Assaf et al., 2015).

Service performance is a major component in hotel evaluation, and service failure for either online or offline does occur in the hospitality industry. It is especially challenging because unsatisfied customers would post their experience on social media, review sites, and webpage comments. Therefore, hotels are using multiple methods for service recovery. Smith, Bolton, and Wagner (1999) found that moderate compensation is more effective for less severe service recoveries in the hotel context, but it is not a significant influence on customer satisfaction (Smith & Bolton, 2002). However, hotels use different strategies for online service recovery. For example, Kim, Lim, and Brymer (2015) found that customers value response to negative hotel comments on social media, and if hotels properly manage online comments, it will increase hotel performance. Further, Min, Lim, and Magnini (2015) identified two effective types of response to negative reviews, using empathy statements, paraphrase the complaint, yet the authors found that when it's online, the timing of response has the lest influence on customer satisfaction. As there are countless reviews generated in one day, Berezina et al. (2016) suggested hotels to use text mining to search for online hotel reviews to respond and restore customer satisfaction.

Overall, I think that service recovery is crucial for service providers, especially with information fast spread on the Internet and the importance of service in the hospitality industry. I think the three-justice that the authors mentioned are applicable for hotels either online or offline. The articles only examined procedural justice and interactional justice during the online service recovery process, which I think distributive justice such as offering compensation could also be used as online service recovery. Aside from these three strategies, hotels should also consider text-mining to find and respond to reviews.

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In conclusion, this study investigated customer perceptions of justice through online information and technology-mediated interactions function during the online service recovery process. The consequent impact on how customer responses to online service recovery, post-recovery satisfaction, and behavioral intentions slightly varies between subscription and non-subscription services customers. Findings from this article can assist service providers and managers to understand how to recover from online service failures and how to design effective service recovery strategies.

References

  • Assaf, A. G., Josiassen, A., Cvelbar, L. K., & Woo, L. (2015). The effects of customer voice on hotel performance. International Journal of Hospitality Management44, 77-83.
  • Berezina, K., Bilgihan, A., Cobanoglu, C., & Okumus, F. (2016). Understanding satisfied and dissatisfied hotel customers: text mining of online hotel reviews. Journal of Hospitality Marketing & Management25(1), 1-24.
  • Kim, W. G., Lim, H., & Brymer, R. A. (2015). The effectiveness of managing social media on hotel performance. International Journal of Hospitality Management44, 165-171.
  • Min, H., Lim, Y., & Magnini, V. P. (2015). Factors affecting customer satisfaction in responses to negative online hotel reviews: The impact of empathy, paraphrasing, and speed. Cornell Hospitality Quarterly56(2), 223-231.
  • Singh, J., & Crisafulli, B. (2016). Managing online service recovery: procedures, justice and customer satisfaction. Journal of Service Theory and Practice.
  • Smith, A. K., & Bolton, R. N. (2002). The effect of customers' emotional responses to service failures on their recovery effort evaluations and satisfaction judgments. Journal of the academy of marketing science30(1), 5-23.
  • Smith, A. K., Bolton, R. N., & Wagner, J. (1999). A model of customer satisfaction with service encounters involving failure and recovery. Journal of marketing research36(3), 356-372.

 

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