Consequences of perceived acceptability of a bank's service failures
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Stefan Michel is an assistant professor of marketing at Thunderbird, The American Graduate School of International Management, in Phoenix, Arizona. His research focuses on services marketing, customer satisfaction and CRM. From 1998 to 2003, he was a professor at Lucerne Business School where he conducted a large-scale study for a major Swiss bank. His professional experiences are in banking, in the hospitality industry and in consulting. He was a visiting researcher at the Center for Services Leadership at Arizona State University and at the University of Edinburgh in 1997.
Abstract This paper presents a study of service failures of a bank and their impact on customer satisfaction and recommendation intention. In contrast to most other studies on this topic, this study uses a large, real-customer sample where the respondents describe a real failure incident, regardless of whether they complained about it. The paper aims to make three contributions: first, based on a literature review, it introduces the construct of ‘acceptability’ of service failures and relates it to the concept of a ‘tolerance zone’ for dissatisfaction. Secondly, it tests its impact on satisfaction and recommendation intention, which is both statistically significant and managerially relevant. Thirdly, the ‘service failure pyramid’ as a managerial tool is proposed and linked to the idea of perceiving every service encounter as a ‘moment of truth’. As a consequence, the use of a ‘perceived acceptability’ measure in customer surveys is suggested. Keywords Service recovery, service failure, acceptability, customer satisfaction, banking, zone of tolerance
LITERATURE REVIEW
Stefan Michel Thunderbird, The American Graduate School of International Management, Global Business Department, 15249 N. 59th Avenue, Glendale, AZ 85306, USA. Tel: +1 602 978 7296: e-mail: [email protected]
It is widely accepted that superior service performance leads to higher customer satisfaction and positive word-of-mouth. Conversely, there is ample evidence that service failures have a negative impact on satisfaction and word-of-mouth. Despite the large and still growing literature on complaint handling, service recovery and customer satisfaction, knowledge about how customers of financial services perceive a service failure is very limited. Service failure and recovery Financial services are often provided at a service counter in direct contact between
# Henry Stewart Publications 1479–1846 (2004)
Vol. 8, 4 367–377
the bank’s employees with the customer, or by telephone, or by having the customers interact with the bank’s ATM. Simultaneity in delivering and receiving a service is, therefore, a common characteristic in the financial services market. While banks commonly try to achieve a high service quality by providing error-free services, the bank–customer interaction is influenced by many uncontrollable factors. As a consequence, service failures appear to be inevitable.1 A service failure is said to occur when the service encounter falls short of the customer’s expectat
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