From service failure to brand loyalty: evidence of service recovery paradox

Abstract The transition from service failure to brand loyalty represents both a critical challenge and opportunity. Underpinned by the multi-theoretical foundation of equity theory, social exchange theory, expectancy disconfirmation theory, affect control theory, and commitment-trust theory, this study examines the mechanisms through which service recovery efforts by a brand can transform dissatisfied customers into engaged and loyal patrons, exemplifying a service recovery paradox. Employing structural equation modeling to analyze data from 638 survey responses, our findings illuminate the pivotal roles of distributive and procedural justice in crafting satisfactory service recovery experiences, overshadowing the negligible impact of interactional justice. Significantly, we uncover that fostering brand attachment amplifies the relationship between satisfaction derived from service recovery and subsequent brand engagement, wherein this engagement plays a vital role in the development of brand loyalty. These insights collectively chart a clear and strategic course for brand managers to convert service failures into triumphant resolutions, enhancing brand engagement and loyalty amidst potential hiccups in service delivery. The implications of this study also extend beyond academic discourse by offering practical strategies for brands seeking to navigate service recovery with finesse.