Service recovery via social media

Abstract

Problem Service failure recovery has been researched for several years, with research on social media starting to surface. However, surprisingly little attention has been paid to a significantly larger group than customers: the observers of complaints on social media. Further, social media provides companies with new service recovery options and companies can now choose to reply in a vague and unhelpful manner or choose not to reply at all. Therefore, this thesis investigates the impact unhelpful service recovery versus no reply has on observers perceived fairness and purchase intentions. We also consider complaint severity and failure locus as moderators to the relationship. Purpose The purpose of this thesis is to study the effect unhelpful service recovery versus no reply has on observers purchase intentions, while moderated by failure severity and locus, and mediated by perceived fairness. Research Design This thesis uses a scenario-based experiment with a betweensubjects design to answer the problem statement. The study takes a 2 (mere apology, no reply) X 2 (severity: high, low) X 2 (locus: company, external) design. Findings Not replying is proven to be better in terms of observers’ perceived fairness and observers purchase intentions in all considered scenarios. Failure severity and locus is also found to have a direct effect on observers perceived fairness and an indirect effect on observers purchase intentions via perceived fairness. Keywords Service recovery, social media, observers, unhelpful service recovery, failure severity, failure locus, perceived fairness