Service Recovery: how companies handle customer complaints

Abstract: Everyday people purchase goods, and unfortunately it is inevitable that
sometimes goods do not live up to costumers’ expectations. On the other
hand, many researches agree that recovery after a service failure can make
customers more satisfied and loyal than if the service failure had not
occurred at all. Customer complaints occur all the time even though many
companies wish they could lower the number of complaints. The purpose of
this thesis, therefore, was to provide a better understanding on how to turn
a dissatisfied customer into a satisfied one. In order to reach this
purpose, research questions that focus on how the handing of a service
recovery can be described, as well as the benefits of doing so have been
stated. These research questions provided a path to reviewing the relevant
literature which results in a conceptual framework. This framework was then
used to guide the data collection. Data was collected via a qualitative,
case study approach using interviews of six recent customers of consumer
electronics, enabling us to collect data on a service recovery from a
customer’s perspective. The study found that the service failure itself is
not what companies should focus on. Instead, it is the effort a company is
willing to make to recover from a service failure that matters for most
customers. Our findings show a connection between how the employee handles
the service recovery and customer satisfaction. We also found benefits
connected to handling customer complaints, such as word-of-mouth and
customer retention. These benefits can be achieved by companies that welcome
customer complaints and respond to their customers’ needs instead of trying
to minimize the number of complaints.