Sammendrag
As one of the retailer’s most potent recovery tactics to ofset disgruntled customers, frms
invest heavily in compensation to increase customer satisfaction and improve loyalty. However, the efectiveness of this tactic remains unclear. This study examines whether frm-ofered
compensation afects customers’ emotional responses and bad-mouthing behavior (i.e., telling others about a particular problem). Importantly, the study investigates whether the level
of collaboration during the recovery encounter moderates the link between compensation and
customers’ emotional responses, and whether collaborative eforts infuence the efectiveness
of compensation. The fndings indicate that collaboration during the recovery encounter is necessary if compensation is to mitigate negative emotional responses, with downstream efects
on bad-mouthing behavior. In confrming the importance of collaboration during recovery
encounters, the fndings have critical managerial and fnancial implications.
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