Measuring moderating effects of service recovery and CRM on consumer trust, repatronization and advocacy with distribution variation of the same across recovery zone-of-tolerance


Service firms are prone to encounter service failures due to certain inherent criticalities of services related to its transaction and quality perception. As a strategic response, service recovery becomes almost imperative in such cases. To increase the probability of registering zero-defective services, service firms have adopted customer relationship management (CRM) which has been presumed to equip them with procustomer business analytics. The objective of this paper is to assess the moderating effects of service recovery and CRM dimensional performance on behavioural intents namely customer trustrepatronization- customer advocacy link with a novel approach of recovery zone of tolerance (RZOT), which has been conceptualized to reveal a varying degree of acceptance of service recovery under the influence of service recovery initiated and CRM dimensional performance. The study has been restricted to the banking sector with cross-sectional primary data. Appropriate methodology was applied and necessary statistical methods were applied to identify the causal relationships between the constructs. The results confirmed the moderating capability of service recovery and CRM dimensional performance on behavioural aspects of customers under study. The RZOT concept also exhibited considerable variance across layers. The default research model holds good and was found to be robust when structural equation modelling techniquewas applied.


Research has described service failure as one of the ‘pushing determinant’ that, if handled improperly, drives a customer’s switching behaviour (Roos, 1999); thus effective service recovery satisfaction has become an emerging area of interest in an effort to minimize failures and retain customers. Service failures are considered to be detrimental to a firm’s sustainability as it may trigger customer defection (Folkes, 1984; Folkes and Kotsos, 1986, Maxham III, 2001) resulting in increase in cost with respect to acquisition of new customers (Hart et al., 1990) and receding profit line (Kelley and Davis, 1994; Smith et al, 1998). Zemke (1999) observed that a dissatisfied customer may influence 10-20 prospects by relating his/her experience in encountering service failure and thus minimizing the prospects’ patronizing decision of the service provider. Therefore, for a service provider, responding to a service failure – termed as ‘service recovery’, must receive top-priority. Researchers found empirical evidence that effective service recovery may generate a higher level of satisfaction (McCollough and Bharadwaj, 1992) popularly phrased as ‘recovery-paradox’ (McCollough et al., 2000; Smith et al., 1998; Tax et al., 1998). For a service firm, customer advocacy is absolutely critical as it plays the role of ‘physical evidence’ in detangibilizing a service and ensuring new customer acquisition. Till date, not much of research evidence is available which can correlate customer advocacy with other marketing initiatives. Service failures and subsequent initiatives to recover from such failures may be affected by the zone-of-tolerance of an individual customer which centres around the concept of a buffer of acceptable service quality with upper and lower limits.

For financial service providers like banks, error-free service delivery is an absolute must as customers are sensitive to transactions. Therefore this study, which attempts to explore the moderating effects of perceived service recovery and zone-of-tolerance of customers on some specific behavioural manifestat i o n s namely customer t r u st , repatronization intention and customer advocacy in the context of the banking sector of India, should prove to be quite significant not only for the researchers but also for the bankers.

The objectives of the study were (a) to assess the relationship between the constructs, (b) to assess whether to identify the moderating effects, if any, of perceived service recovery and customer relationship management on customer trust-repatronizationcustomer advocacy link and (c) to test the robustness of the proposed research model.

The layout of the paper following the introduction has been restricted to ‘reviewof literature and formulation of hypotheses and research model’, ‘methodology with factor constructs and reliability and validity’ dataanalysis and interpretation’ and ‘conclusion with managerial implications and future scope’.

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