service recovery for customers

Does the Co-Creation of Service Recovery Create Value for Customers?

Dr Ioannis Assiouras, Associate, Centre for Business in Society

The services marketing literature (e.g. Balaji et al., 2018) has demonstrated that service delivery, failure, and recovery determine service patronage and profitability. The interactive nature of service encounters occasionally may lead to failures and situations demanding recovery (Sparks, 2001). Despite the importance of service failures and service recovery, to date little research has focused on the service recovery context from the perspective of value co-creation (e.g. Dong et al., 2008) which in the service failure-recovery context could be referred to as value co-recovery.

In practical terms, consumers engage in the co-recovery process with the service provider by explaining what they want from the service provider in the case of a service failure recovery and interact with employees by giving appropriate information and answers to employees’ service-related questions and act courteously with employees as a means of establishing a strong rapport. Customers’ participation in service recovery has been found to influence satisfaction with the service recovery process, perceived value of future co-creation, intentions regarding future participation (Dong et al. 2008), perceived justice (Xu et al. 2014) and relationship-based self-esteem (Guo et al. 2016).

studies-service-recovery In a recent study, Skourtis, Decaudin, Assiouras and Karaosmanoglu (2018) developed a dual process model that posits customers’ extrinsic and intrinsic motivation as the two psychological mediators of the relationship between the ability to co-recover and consumer value co-recovery in-role behaviour. This study asserts that the consumers’ ability to co-recover (operant resources) is one of the antecedents of this motivational process.

However, some of the results of this paper stand in contrast to the positive effects of co-creation demonstrated in previous studies on non-service recovery (e.g. Yi and Gong, 2013). Although, the ability to co-recover increases intrinsic motivation, surprisingly the latter decreases consumer value co-recovery in-role behaviour. A possible explanation for this finding is that negative feelings tend to overwhelm cognition in recovery situations (Smith and Bolton, 2002). Furthermore, another intriguing finding was the negative effect of co-recovery in-role behaviour on hedonic value. That negative effect can be explained by collaborative inertia (see Hibbert and Huxham 2005), which may occur when co-creation is ineffective. If that happens, progress becomes slow and painful, and eventually it may decrease customer hedonic value.

This study highlights some important managerial implications. First, service providers should engage in co-recovery with consumers who have high levels of ability regarding services, processes, and product technology. Otherwise, forcing consumers who do not have the necessary resources will lead to lower value extraction. Moreover, service managers should not attempt to engage with all customers in the co-recovery process. Obligatory engagement in co-recovery may lead to lower levels of value, especially for consumers with high intrinsic motivation.