Can Loyal Customers Tolerate Service Failure? The Moderating Roles of Service Failure Severity and Transaction Frequency in a B2B Context

Wen-Shinn Low, Jeng-Da Lee, Wan-Chun Lian

Department of Business Administration, Chien Hsin University of Science and Technology, Zhongli City, Taiwan.
Graduate School of Management, Chung Yuan Christian University, Zhongli City, Taiwan.

DOI: 10.4236/jssm.2013.65A002                

Abstract

Fans can tolerate their idol arriving one hour late at a concert, but could perhaps not accept news of an idol’s immoral conduct. Therefore, there likely are some moderators between the loyalty of fans and their zone of tolerance to service failure. This study examines the moderating effects of service failure severity and transaction frequency on the relationship between customer loyalty and the zone of tolerance to service failure within the hair salon industry in Taiwan. By the analysis of survey data from 113 customers, the results of the study show that monthly transaction frequency significantly moderates the relationship between customer loyalty and tolerance to service failure. Service failure severity (product delivery mistakes and poor service attitude) also significantly affects this relationship. Therefore, firms should increase transaction frequency and reduce service failure in order to enlarge the tolerance zone, especially after service failure has occurred. This study concludes with related recommendations for practitioners and academics.

Keywords

Customer Loyalty; Zone of Tolerance; Service Failure; Transaction Frequency

Conflicts of Interest

The authors declare no conflicts of interest.

References

[1]	R. L. Oliver, “Whence Consumer Loyalty,” Journal of Marketing, Vol. 63, No. 1, 1999, pp. 33-44. http://dx.doi.org/10.2307/1252099
[2]	J. Griffen, “Customer Loyalty: How to Earn It, How to Keep,” Lexington Books, New York, 1995.
[3]	P. Kotler, “Marketing Management,” 10th Edition, Prentice Hall, Upper Saddle River, 1999.
[4]	J. H. Huang, C. T. Huang and S. Wu, “National Character and Response to Unsatisfactory Hotel Service,” International Journal of Hospitality Management, Vol. 15, No. 3, 1996, pp. 229-243. http://dx.doi.org/10.1016/S0278-4319(96)00009-6
[5]	R. Rust, V. A. Zeithaml and K. N. Lemon, “Driving Consumer Equity: How Customer Lifetime Value Is Reshaping Corporate Strategy,” The Free Press, New York, 2000.
[6]	B. Weiner, “Attribution Thoughts about Consumer Behavior,” Journal of Consumer Research, Vol. 27, No. 3, 2000, pp. 382-387. http://dx.doi.org/10.1086/317592
[7]	R. B. Woodruff, “Customer Value: The Next Source for Competitive Advantage,” Journal of the Academy of Marketing Science, Vol. 25, No.12, 1997, pp. 139-153. http://dx.doi.org/10.1007/BF02894350
[8]	O. Helgesen, “Are Loyal Customers Profitable? Customer Satisfaction, Customer (action) Loyalty and Customer Profitability at The Individual Level,” Journal of Marketing Management, Vol. 22, No. 3, 2006, pp. 245-266. http://dx.doi.org/10.1362/026725706776861226
[9]	F. F. Reichheld and P. Schefter, “E-Loyalty: Your Secret Weapon on the Web,” Harvard Business Review, Vol. 78, No. 4, 2000, pp. 105-133.
[10]	V. A. Zeithaml and M. J. Bitner, “Services Marketing: Integrating Customer Focus across the Firm,” 2nd Edition, McGraw-Hill, New York, 2000.
[11]	T. A. Brunner, M. Stocklin and K. Opwis, “Satisfaction, Image and Loyalty: New versus Experienced Customers,” European Journal of Marketing, Vol. 42, No. 9, 2009, pp. 1095-1105.
[12]	E. Langeard, J. E. G. Bateson, C. H. Lovelock and P. Eiglier, “Service Marketing: New Insights from Consumers and Managers,” Marketing Science Institute, Cambridge, 1981.
[13]	C. Gronroos, “Service Management and Marketing: A Customer Relationship Approach,” 2nd Edition, John Wiley and Sons, West Sussex, 2001.
[14]	L. L. Berry, V. A. Zeithaml and A. Parasuraman, “Quality Counts in Service, Too,” Business Horizons, Vol. 28, No. 3, 1985, pp. 41-52. http://dx.doi.org/10.1016/0007-6813(85)90008-4
[15]	I. Roos, “Switching Processes in Customer Relationship,” Journal of Service Research, Vol. 2, No. 1, 1999, pp. 68-85. http://dx.doi.org/10.1177/109467059921006
[16]	R. Johnston, “The Zone of Tolerance: Exploring the Relationship between Service Transaction and Satisfaction with Overall Service,” International Journal of Service Industry Management, Vol. 6, No. 2, 1995, pp. 46-61. http://dx.doi.org/10.1108/09564239510084941
[17]	V. A. Zeithaml, M. J. Bitner and D. D. Gremler, “Service Marketing: Integrating Customer Focus across the Firm,” (International ed.), McGraw-Hill, Singapore City, 2006.
[18]	S. Weun, S. E. Beatty and M. A. Jones, “The Impact of Service Failure Severity on Service Recovery Evaluations and Post-Recovery Relationships,” Journal of Services Marketing, Vol. 18, No. 2, 2004, pp. 133-146. http://dx.doi.org/10.1108/08876040410528737
[19]	K. D. Hoffman, S. W. Kelley and H. M. Rotalsky, “Tracking Service Failure and Employee Recovery Efforts,” Journal of Service Marketing, Vol. 9, No. 2, 1995, pp. 49-61. http://dx.doi.org/10.1108/08876049510086017
[20]	K. R. Hammond, T. R. Stewart, B. Brehmer and D. O. Steinmann, “Social Judgment Theory,” In: M. F. Kaplan and S. Schwartz, Eds., Human Judgment Decision Process, Academic Press, New York, 1975. http://dx.doi.org/10.1016/B978-0-12-397250-7.50016-7
[21]	M. J. Binter, W. T. Faranda, A. R. Hubbert and V. A. Zeithaml, “Customer Contributions and Roles in Service Delivery,” International Journal of Service Industry Management, Vol. 8, No. 3, 1997, pp. 193-205. http://dx.doi.org/10.1108/09564239710185398
[22]	L. G. Schiffman and L. L. Kanuk, “Consumer Behavior,” 7th Edition, Prentice Hall, Upper Saddle River, 2000.
[23]	R. M. Morgan and S. D. Hunt, “The Commitment-Trust Theory of Relationship Marketing,” Journal of Marketing, Vol. 58, No. 3, 1994, pp. 20-38. http://dx.doi.org/10.2307/1252308
[24]	M. Becerra and A. K. Mehta, “Perceived Trustworthiness within the Organization: The Moderating Impact of Communication Frequency on Trustor and Trustee Effects,” Organization Science, Vol. 14, No. 1, 2003, pp. 32-44. http://dx.doi.org/10.1287/orsc.14.1.32.12815
[25]	A. Prus and B. D. Brandt, “Understanding Your Customers,” Marketing Tolls, Vol. 2, No. 5, 1995, pp. 10-14.
[26]	S. W. Kelley, K. D. Hoffman and M. A. Davis, “A Typology of Retail Failures and Recoveries,” Journal of Retailing, Vol. 59, No. 4, 1993, pp. 429-452. http://dx.doi.org/10.1016/0022-4359(93)90016-C
[27]	M. J. Bitner, B. Booms and M. Tetreault, “The Service Encounter: Diagnosing Favorable and Unfavorable Incidents,” Journal of Marketing, Vol. 54, No. 1, 1990, pp. 71-84. http://dx.doi.org/10.2307/1252174
[28]	J. C. Nunnally, “Psychometric Theory” 2nd Edition, Mc Graw-Hill, New York, 1978.
[29]	L. R. Kahle, “Social Values and Social Change: Adaptation of Life in America,” Praeger, New York, 1983.
[30]	S. Tai, “Relationship between the Personal Values and Shopping Orientation of Chinese Consumers,” Asia Pacific Journal of Marketing and Logistics, Vol. 20, No. 4, 2008, pp. 381-396. http://dx.doi.org/10.1108/13555850810909713
[31]	N. A. Zainol, A. Lockwood and E. Kutsch, “Relating the Zone of Tolerance to Service Failure in the Hospitality Industry,” Journal of Travel & Tourism Marketing, Vol. 27, No. 4, 2010, pp. 324-333. http://dx.doi.org/10.1080/10548401003744792
[32]	S. W. K. Kelly and M. A. Davis, “Antecedents to Customer Expectations for Service Recovery,” Journal of the Academy of Marketing Science, Vol. 22, No. 1, 1994, pp. 52-61. http://dx.doi.org/10.1177/0092070394221005
[33]	L. L. Berry, “relationship Marketing of Service-Growing Interest Emerging Perspectives,” Journal of the Academy of Marketing Science, Vol. 23. No. 4, 1995, pp. 236-245. http://dx.doi.org/10.1177/009207039502300402
[34]	P. S. Goodman, M. Fichman, F. J. Lerch and P. R. Snyder, “Customer-Firm Relationships, Involvement, and Customer Satisfaction,” Academy of Management Journal, Vol. 38, No. 5, 1995, pp. 1310-1324. http://dx.doi.org/10.2307/256859
[35]	S. S. Tax, S. W. Brown and M. Chandrashekaran, “Customer Evaluations of Service Complaint Experiences; Implications for Relationship Marketing,” Journal of Marketing, Vol. 62, No. 2, 1995, pp. 60-76. http://dx.doi.org/10.2307/1252161