RESEARCH INSIGHT | Recovering Reputation after a Service Failure
The Research
Many firms have had to own up to service failures lately. How will these failures affect perceived service quality in the long run? Because service performance losses loom larger and longer in customers’ minds than gains, the recovery must do more than just overcome the failure to keep long-term perceived service quality at a constant level; a service failure raises the bar for future performance.
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What You Need to Know
- Exceeding prior service levels is especially important when improvements are followed by a mass service failure. If service quality is trending downward already, more service deterioration does not further depress perceptions.
- Relatively stable patterns are better for long-term perceived service quality than strong up–down or down–up scenarios. Emphasizing the steadiness of the service quality (or deemphasizing the instability) may help.
Abstract
Service providers sometimes face mass service failures. These problems occur across service industries, ranging from severe Internet outages to major delays for airlines or trains. The literature has not yet addressed the following key question: How do service crises affect perceived service quality (PSQ) over time? To answer this question, the authors introduce a Double-Asymmetric Structural Vector Autoregressive model. It captures not only the short- and long-term effects of objective service performance on PSQ but also the differential effects of service crises versus service restoration. The authors analyze a unique data set from a major European railway company, spanning seven years of monthly observations. During this period, severe winter weather caused dramatic service crises. The authors find that performance losses loom larger than gains in the short run and also have permanent negative effects on PSQ in the long run. Consequently, a crisis followed by a restoration will result in a net negative long-term effect on PSQ. The impact of a crisis also depends on the prior trend in objective service performance.
Maarten J. Gijsenberg, Harald J. Van Heerde, Peter C. Verhoef (2015), “Losses Loom Longer than Gains: Modeling the Impact of Service Crises on Perceived Service Quality over Time,” Journal of Marketing Research, 52(5), 642-656.