Introduction. Keywords Consumer behaviour, Service failures, Gender, Compensation. Paper type Research paper

Transcription

1 An examination in the context of service recovery School of Hospitality Management, Pennsylvania State University, University Park, Pennsylvania, USA Abstract Purpose This paper aims to examine the benefits of letting customers choose among compensation methods following a service failure. The author is also interested in the role of gender in influencing satisfaction with the compensation method and post-recovery emotions. Design/methodology/approach A between-subjects quasi-experiment was conducted in addition to a series of pretests. Findings Findings from this study indicate that women are more satisfied with the compensation when given the opportunity to choose from alternatives than are men. Moreover, women seem to value the act of choosing more than their male counterparts. The findings further suggest that service operators and retailers might benefit from offering the customer a choice between hedonic and utilitarian compensation options as part of the service recovery process. Letting the customer choose his/her preferred recovery option enhances satisfaction with the chosen compensation method, thus somewhat mitigating the ill-effects of service failures. Originality/value This research contributes to understanding of service recovery efforts both from a theoretical and practical standpoint. Keywords Consumer behaviour, Service failures, Gender, Compensation Paper type Research paper An executive summary for managers and executive readers can be found at the end of this article. Introduction Resolving customer complaints and recovering from service failures are critical in retaining a loyal customer base (e.g. Blodgett et al., 1997; Miller et al., 2000; De Jong and de Ruyter, 2004), but doing it effectively remains a challenge. Hart et al. (1990), for example, show that more than half of the customers they studied were dissatisfied with the complaint-handling process. Yet, a successful recovery can help in overcoming customer disappointment and anger, and even salvage a relationship (e.g. Tax and Brown, 2000, Chebat and Slusarczyk, 2005). To that end, Davidow (2003) identified six critical dimensions of organizational responses to service failures (timeliness, facilitation, redress, apology, credibility and attentiveness). This study focuses on the redress or compensation dimension. Specifically, we are interested in understanding how offering the consumer choices among several compensation methods influences his/ her post-recovery perceptions. Although there is ample evidence to show that compensation has a positive effect on post-complaint behaviors (e.g. Spreng et al., 1995; Hoffman et al., 1995), relatively little is known about customer preferences over various compensation methods. As Davidow (2003) states, future research on redress practices is necessary to build theory on service recovery and to offer sound advice to practitioners. Literature in service recovery The current issue and full text archive of this journal is available at shows that both what is done (tangible compensation) and how it is done (process) are critical attributes for a successful service recovery (e.g. Smith et al., 1999; Tax et al., 1998). This study addresses both dimensions by investigating the type of compensation (hedonic vs utilitarian) and the process (offering the customer a choice over several compensation methods). We also examine the moderating role of gender in influencing consumers satisfaction with service recovery options. Service firms tend to focus on the monetary aspect of compensation, while customer preferences might lie elsewhere (Davidow, 2003). If customizing the service recovery process helps to mitigate the ill-effects of occasional mishaps, then service organizations might want to consider a range of options in their service recovery strategies. Incorporating choice into the recovery process can be easily accomplished with minimal costs. For example, a hotel manager can offer the customer the choice between a coupon for a free drink (hedonic option) and free internet (utilitarian option). We argue that offering both types of compensation methods is beneficial because such actions give the consumer an opportunity to either indulge in hedonic choices with minimal guilt feelings or to pick an easily justifiable utilitarian option (Kivetz and Simonson, 2002b). We further suggest that gender might influence consumer preferences for compensation methods. Specifically, we propose that women value the act of choosing more than men, and therefore, they are more likely to be satisfied with their preferred compensation method. While gender is an important segmentation variable, research on gender differences regarding consumer choices (Moss and Colman, 2001) and service recovery (McColl-Kennedy et al., 2003) is scarce. In addition to gender, we seek to examine the impact 24/7 (2010) q Emerald Group Publishing Limited [ISSN ] [DOI / ] Received: June 2008 Revised: December 2008 Accepted: February

2 of failure magnitude on consumers recovery option choices. Prior work indicates that perceived severity of failure influences customer reactions to service recovery efforts (Weun et al., 2004; Smith et al., 1999; McCollough et al., 2000; Craighead et al., 2004). Since prior research shows that it is increasingly more difficult to recover from serious rather than minor failures, we propose that the positive impact of choice is negligible with serious failures. The following section will first introduce the importance of choice on satisfaction with the compensation method followed by a brief description of gender effects and utilitarian and hedonic choices. We will then highlight the role of failure magnitude in influencing consumer choices in a service recovery context. Conceptual framework Robust findings in psychology suggest that even trivial choices lead to more enjoyment and higher performance than no choice (Langer, 1975; Zuckerman et al., 1978; Burger, 1989; Botti and Iyengar, 2004; Botti and McGill, 2006). Recent research by Botti and Iyengar (2004) suggests that choosing among positive options results in positive affect. Choosers are highly involved in the decision-making process, and thinking about positive choices induces positive affect (Beattie et al., 1994; Burger, 1989; Weiner, 1985). Nonchoosers, on the other hand, fail to benefit from these positive emotions due to their low involvement in the decision making process. In addition, choosing an alternative leads to a better match between the consumer s idiosyncratic preferences and outcomes (Payne et al., 1993), thus enhancing satisfaction. Personal responsibility for one s choice is also likely to boost anticipated satisfaction since it allows for self-crediting (Botti and McGill, 2006). However, we argue that gender will moderate the positive impact of choice on satisfaction with compensation methods. There is considerable evidence to suggest that gender influences consumers decision-making processes (e.g. Eagly, 1987; Hasseldine and Hite, 2003), but that these effects are highly context-specific (Powell and Ansic, 1997). For example, women tend to evaluate gifts more favorably than men (Areni et al., 1998; Wallendorf and Arnould, 1988). In the context of service recovery, prior research demonstrates that women prefer to have their voice heard in the decision making processes (McColl-Kennedy et al., 2003; McColl- Kennedy and Sparks, 2003). In a similar vein, women seem to be more process-oriented than men who typically focus on the outcome (e.g. Iacobucci and Ostrom, 1993; Deaux and Major, 1982). Mattila et al. (2003), for example, show that women focus more on affective displays (i.e. the process) while men tend to be more interested in the outcome of the service delivery process. Consequently, being part of the process determining the compensation method should be more valuable to women, thus leading to higher levels of anticipated satisfaction compared to men. Hence, we put forth the following process-related hypothesis: H1. Females who are offered a choice between several compensation methods will exhibit higher levels of anticipated satisfaction with their chosen option than men. We further extend prior literature on service recovery outcomes by introducing a novel categorization scheme for compensation practices. Specifically, we are interested in the utilitarian vs hedonic nature of the compensation. These dimensions are relevant to service recovery since failure encounters are a mix of utilitarian and symbolic components (Smith et al., 1999). Research on loyalty reward programs by Kivetz and Simonson (2002a) highlights the need to differentiate between necessity and luxury options. Utilitarian goods or necessities are items that cannot be done without whereas hedonic goods, or luxury items, reflect the desire for pampering (Kivetz and Simonson, 2002a). Chitturi et al. (2008) also associate luxuries with hedonic benefits and necessities with utilitarian benefits. Consistent with prior research (e.g. Okada, 2005; Voss et al., 2003), we realize that hedonism and utilitarianism are not necessarily polar opposites of a unidimensional scale. Accordingly, we characterize service recovery options as being primarily or relatively more hedonic (utilitarian). Hedonic recovery options provide experiential enjoyment, thus appealing to emotions whereas utilitarian recovery options reflect functional or practical benefits. We suggest that offering a choice between hedonic and utilitarian compensation options allows service providers to cater the recovery effort to customers idiosyncratic preferences. In general, people find hedonic goods difficult to justify and often associate them with feelings of guilt (Prelec and Loewenstein, 1998; Thaler, 1985). Kivetz and Simonson (2002a, b) further demonstrate that consumers are aware of their tendency to rationalize purchases, and thus favor utilitarian goods. In this paper, we argue that offering both types of compensation makes sense in the context of service recovery as providing choice allows the consumer to match the compensation to his/her needs. For example, some consumers might find hedonic options attractive because they offer an opportunity to choose indulgencies without the high psychological costs typically associated with such consumption experiences. Conversely, others might prefer the more default mode of utilitarian choices. Consequently, we expect no difference in people s anticipated satisfaction ratings across the two types of compensation methods, provided that the person made a choice: H2. In the choice condition, there will be no difference in anticipated satisfaction between hedonic and utilitarian compensation methods. Literature on service recovery indicates that perceived severity of failure influences customer reactions to service recovery efforts (Weun et al., 2004; Smith et al., 1999; McCollough et al., 2000). Similar to product involvement, we argue that severity of the service failure influences people s choice processes. Previous research in service recovery indicates that customers are emotionally involved in the service recovery process (Smith et al., 1999). According to social exchange and equity theories, resources exchanged should be balanced (Adams, 1965; Deutsch, 1975). When a serious failure occurs, the perceived loss is greater than when the failure is less serious (Smith et al., 1999). Hence, it is not surprising that customers tend to respond more positively to recovery efforts following a less severe failure than following one with a higher magnitude (Smith et al., 1999; Weun et al., 2004; Hoffman et al., 1995). Following this line of arguments, we propose that perceived importance of the failure will moderate the positivity effect of choice. Specifically, we predict that the ability to choose among recovery options will be less important when the service failure is more serious. 500

3 Consequently, satisfaction with the preferred compensation option should be lower in the high rather than in the low importance failure condition: H3. Consumers will exhibit a lower level of satisfaction with their chosen compensation method when the perceived importance of failure is high as opposed to low. Finally, we argue that gender will influence consumers postrecovery emotions. Previous research has shown that men and women have different emotional responses to situations (Eagly, 1987; Alexander and Wood, 2000), including those prompting post-complaint behaviors (Kalamas et al. 2008). In this paper, we propose that positive affect generated by the pleasure of choosing is neutralized among men who tend to engage in reason-based thought processing (Botti and Iyengar, 2004; Wilson et al., 1993; Wilson and Schooler, 1991). Conversely, women are likely to engage in positive thoughts about each option, thus resulting in positive affect. In our context of service failures, the positive impact of choosing should reduce the level of negative emotions among female customers. Prior research has demonstrated the importance of emotions in customer evaluations of service encounters, including failed encounters (e.g. Mattila and Enz, 2002; Smith and Bolton, 2002; McColl-Kennedy and Sparks, 2003). A richer understanding of the role of emotions in influencing customer perceptions of service recovery efforts is important because consumers emotional responses to dissatisfying service experiences are linked to critical outcome variables such as loyalty behaviors (e.g. Chebat and Slusarczyk, 2005; Bougie et al., 2003). Taken together, we propose the following: H4. Women who are offered a choice between several compensation methods will exhibit lower levels of postrecovery negative emotions than women who are not offered a choice. Method Do women like options more than men? Stimuli development and pilot studies A casual dining experience served as the context of this study. This setting was chosen for several reasons. First, prior studies based on the critical incident method indicate that service failures are frequent in the restaurant industry (Hoffman et al., 1995). Second, eating out is a service used by a majority of the US population. Research in psychology suggests that mental simulation is an internally valid methodology when the context involves realistic situations that are frequently experienced in real-life (Schmitt et al., 1992; Thaler, 1985; Maute and Dubé, 1999). Third, the variables of interest to this study could be easily manipulated in this setting. Following prior research, failure importance was manipulated via out-of-stock entrées and slow service (Smith et al., 1999; Mattila and Patterson, 2004). In the high importance condition, the hypothetical restaurant was out of the customer s first two choices of entrees and the customer had to wait for 30 minutes to receive their food. In the low importance condition, they were able to get their second choice of entrées and the waiting time was reduced to 15 minutes. The choice manipulation, adapted from Botti and Iyengar s, 2004 study, involved personal choice over compensation methods vs. compensation chosen by somebody else. Participants in the choice condition were asked to indicate their preferred recovery option whereas their counterparts in the imposed-choice condition were told that the friend that they were dining with insisted on choosing the compensation. Having a friend make the decision minimizes the need for justification, and therefore, such a manipulation is commonly used when studying hedonic versus utilitarian choices (see Okada, 2005). Pilot tests The purpose of Pilot test 1 was to ensure that hedonic and utilitarian compensation methods were acceptable to consumers. The compensation outcomes were adapted from Kivetz and Simonson (2002a), who had subjects rate loyalty rewards as hedonic or utilitarian options. A total of 45 undergraduate students were randomly assigned to either a hedonic option (a coupon for massage package, a coupon for movie tickets, or a coupon for gourmet foods) or to a utilitarian choice set (a coupon for groceries, gas, or drycleaning) following a low importance failure. The gender split was 43 percent male and 57 percent female. The differences in satisfaction ratings across the option sets (utilitarian vs hedonic) were insignificant and ranged from 4.67 to Moreover, the ratings for scenario realism were relatively high with a mean rating of 5.0. Dry-cleaning was dropped as an option since only a few respondents selected this recovery method. In Pilot test 2, 27 undergraduate students (56 percent female; 44 percent male) were assigned to either high or low severity failure, but unlike in Pilot 1 where the choice sets were fixed, they were free to choose among options reflecting both hedonic and utilitarian choices (a $5 coupon for any of the following: massage package, gourmet foods, movie tickets, groceries, or gas). As with Pre-test 1, subjects satisfaction with their choices did not vary across the recovery options, (p ¼ 0:73). In other words, our choice of recovery options is not a likely driver of people s preferences. Since it could be argued that consumers might prefer recovery options that are closely related to the consumption context, a pre-test was conducted to contrast the effectiveness of a coupon for a free dessert and a coupon for gas in the context of restaurant failures. Pre-test To ensure that consumers are open-minded about service recovery options (i.e. willing to consider recovery options not directly tied to the service failure), a pre-test with 76 participants was conducted. The gender split in the pre-test was 52 percent female, 48 percent male. Choice, manipulated at two levels (choice vs friend chooses), was crossed with two recovery options (a coupon for dessert worth $5 on a next visit or a $5 coupon for gas). A dessert reflects sensory pleasure and as such it is considered as a hedonic option (Dube and LeBel, 2003). The magnitude of failure was kept constant (low severity failure). Participants were intercepted either at a local mall or on a large university campus. The average age of the participants was 25 years. The results from an ANOVA indicate a significant choice main effect (F ¼ 12:54, p, 0:05) while the main effect for recovery option was insignificant. Subjects in the choice condition exhibited higher levels of anticipated satisfaction with the compensation method than their counterparts in the 501

4 imposed-choice condition, M ¼ 4:90 and M ¼ 3:81 respectively. Moreover, satisfaction was slightly higher with the gas coupon option than with dessert as compensation for the service failure, M ¼ 4:45 and M ¼ 4:31, respectively. These results provide initial evidence for the power of choice in influencing recovery satisfaction and more importantly, they demonstrate that consumers might be willing to accept recovery options that are not linked to the service failure itself. The realism of the failure scenario was relatively high with a mean of Similarly, realism for the recovery effort was deemed realistic with a mean rating of 4.61 (no significant differences across experimental conditions). Main study research design, sample and procedures The research design was a 2 (choice vs imposed-choice) 2 (male vs female) 2 (low vs high importance failure) quasi experiment. A total of 195 respondents recruited from an arts festival in the northeastern USA were randomly assigned to one of the eight experimental conditions. Participants were randomly approached while they were exploring the arts festival. Three research assistants collected data over a fourday period. Of the participants 58 percent were female and the average age was 41 years. Having read the failure scenario (high or low importance failure), participants answered questions pertaining to their satisfaction with the initial experience and their perceptions of the importance of the service failure. The next section of the survey introduced the fact that the customer in the scenario had complained about poor service and that the waiter apologized and offered some recovery options. The recovery options involved two choices: 1 a hedonic compensation (a $5.00 coupon for gourmet foods or movie tickets); or 2 a choice reflecting utilitarian compensation (a $ 5.00 coupon for gas or groceries). We used a yoked design where each subject in the no choice condition was assigned to the identical recovery that a participant in the choice condition had chosen (Botti and Iyengar, 2004; Cordova and Lepper, 1996; Zuckerman et al., 1978). Following their exposure to recovery options, participants were exposed to our dependent measures of satisfaction with the compensation method, preference for choosing and post-recovery negative emotions. The last section of the questionnaire included manipulation checks and demographic information. Please refer to the Appendix for a sample scenario. Measures Anticipated satisfaction with the compensation method was measured via a two-item scale adapted from Botti and Iyengar, The first item reflected satisfaction with the compensation method, while the second item tapped into the subject s confidence that the focal compensation method was more liked than any other alternatives. The two items were correlated (r ¼ 0:58), thus allowing us to create a composite index for satisfaction with the compensation method. To gauge the participants preference for choosing, subjects in the choice condition were asked How happy do you think that you would have felt about being the one to choose among various compensation options?. Negative emotions were measured via a two-item scale reflecting dissatisfaction and disappointment, 1 ¼ wouldn t feel like at this at all, 7 ¼ would feel like this very strongly. These two emotions were chosen since they tend to be highly applicable to service failure situations (e.g. Bougie et al., 2003). The two items were highly correlated (r ¼ 0:78), and hence, we created a summated scale for post-recovery negative emotions. Importance of the service failure (1 ¼ unimportant, 7 ¼ important) and satisfaction prior to recovery (1 ¼ very dissatisfied, 7 ¼ very satisfied) served as manipulation checks for the initial failure scenario. To check the effectiveness of the choice manipulation, subjects were asked to rate perceived freedom with the following item To what extent would you feel that you personally had freedom over the recovery options? (1 ¼ not at all, 7 ¼ very much). Since age and income level might influence consumer satisfaction (Zeithaml, 1985; Homburg and Giering, 2001), these two variables were added as control variables in the ANOVA analyses. Scenario realism was captured via a seven-item scale (1 ¼ highly unrealistic; 7 ¼ highly realistic). Results Manipulation checks As expected, the importance ratings for service failure were significantly higher in the high importance failure condition than in its low importance counterpart, M ¼ 5:29 and M ¼ 3:78, t ¼ 7:02, p, 0:001. Moreover, satisfaction with the pre-recovery dining experience was significantly lower in the high failure importance condition, M ¼ 2:63 and M ¼ 3:79, respectively, t ¼ 8:34, p, 0:001. Subjects in the choice condition perceived themselves as having greater freedom than nonchoosers, M ¼ 4:16 and M ¼ 3:32, t ¼ 3:65, p, 0:001. Scenario realism ranged from 4.17 to 4.74, thus suggesting that respondents found our failure and compensation scenarios believable. Taken together, these results indicate that our scenario manipulations were effective. Anticipated satisfaction with chosen compensation method The results from an ANCOVA indicate a significant two-way interaction between choice and gender and a significant magnitude of failure main effect, F ¼ 4:23 and F ¼ 13:84, respectively, p, 0:05 for both. No other effects, including the two covariates, were significant. Cell means for anticipated satisfaction with the chosen compensation method are reported in Table I and the choice by gender interaction effect is visualized in Figure 1. As indicated by the cell means, women showed higher amounts of anticipated satisfaction than men when they were allowed to choose their preferred compensation method (M ¼ 5:1 and M ¼ 4:0 respectively; t ¼ 4:06, p, 0:001). As expected, the difference in mean satisfaction ratings between the two genders is minimal in the imposed choice condition. These results provide support for H1. Moreover, the results from a two-way ANCOVA indicate that female respondents in the choice condition were happier about the ability to choose than their male counterparts, (combined M ¼ 5:03 and combined M ¼ 4:26, t ¼ 2:66, p, 0:05). The magnitude of the failure had no effect. To test H3, only the choice condition is relevant. As expected in H3, anticipated satisfaction with the chosen compensation method was lower when the perceived importance was high (combined M ¼ 4:36) rather than low (combined M ¼ 5:00, t ¼ 2:62, p, 0:05). 502

5 Table I Mean anticipated satisfaction with compensation method by experimental condition Choice Failure Gender Mean SD None Low Male Female Total High Male Female Total Total Male Female Total Choice Low Male Female Total High Male Female Total Total Male Female Total Total Low Male Female Total High Male Female Total Total Male Female Total Notes: Dependent variable: anticipated satisfaction; italicized values refer to significant comparisons at p, 0:05 level Figure 1 Anticipated satisfaction with recovery option compensation option (F ¼ 3:73, p ¼ 0:06). Conversely, anticipated satisfaction ratings in the choice condition did not differ across hedonic and utilitarian options (F ¼ 0:03, p ¼ 0:87). Among the male participants, the mean anticipated satisfaction ratings were 4.04 for hedonic options and 4.02 for utilitarian options while the corresponding numbers were 4.97 and 5.13 for female participants. These results are consistent with H2. Negative emotions To gain insight into impact of choice and gender on feelings reflecting the experience, we ran a three-way ANCOVA on the two-item negative emotions scale (Figure 2). The mean values are shown in Table II. Again, the choice by gender interaction is significant, F ¼ 4:67, p, 0:05. As predicted in H2, the level of negative emotions among female participants went down from 4.53 in the imposed-choice condition to 4.11 in the choice condition. The difference between the two genders in the imposedchoice condition is statistically significant, t ¼ 2:07, p, 0:05. Male respondents showed the opposite effect in that the level of negative emotions increased with recovery choice options, M ¼ 3:80 and M ¼ 4:58 for no choice and choice, respectively. These results are consistent with H4. Discussion Service recovery has become an essential strategy for customer relationship management (Tax et al., 1998), yet little theoretical research has addressed the impact of organizational responses to customer complaints (Davidow, 2003). To bridge that gap, the present study examined how offering the customer choices between compensation methods influences their post-recovery perceptions. We offer new insight into two important aspects of the service recovery process: outcome and process (e.g. Smith et al., 1999). The fact that compensation enhances post-recovery satisfaction is well-established in the services literature (e.g. Spreng et al., 1995; McCollough et al., 2000; Hoffman et al., 1995), but the power of offering choice among compensation methods in enhancing post-recovery satisfaction recovery has been ignored. If choice can have a positive impact on satisfaction with redress, then adding choice as a part of the service recovery process can be an easy and cost-effective way to improve the firm s complaint handling practices. Moreover, Figure 2 Gender by choice interaction on negative emotions Hedonic versus utilitarian choices Respondents in the choice condition were fairly equally split between hedonic and utilitarian compensation methods (43 percent and 57 percent for hedonic and utilitarian options, respectively, Chi-square of 1.85, p. 0:1). The results from an ANOVA indicate a significant main effect for gender (F ¼ 13:12, p, 0:05) and a marginal main effect for failure magnitude on anticipated satisfaction with the chosen 503

6 Table II Mean negative emotions by experimental condition Descriptive statistics Choice Failure Gender Mean SD None Low Male Female Total High Male Female Total Total Male Female Total Choice Low male female Total High Male Female Total Total Male Female Total Total Low Male Female Total High Male Female Total Total Male Female Total Notes: Dependent variable: negative emotions; italicized values refer to significant comparisons at p, 0:05 level previous research on service recovery attributes has failed to differentiate between hedonic and utilitarian compensation methods. This is an important distinction because prior research in loyalty reward programs suggests that people react differently to hedonic and utilitarian options (e.g. Kivetz and Simonson, 2002a). In addition, we address the moderating role of gender in influencing customer preferences for service recovery outcomes. Previous research has established that choice has a positive impact on even trivial decisions (Langer, 1975; Zuckerman et al., 1978: Botti and Iyengar, 2004; Botti and McGill, 2006). In this study, we found that gender moderates the impact of choice on anticipated satisfaction with the compensation method. Specifically, choice resulted in higher satisfaction with the compensation method among women than among men. Women also seemed to value the act of choosing among recovery options more than men. Compared to their male counterparts, female participants were happier with the fact they were able to choose among compensation methods. These findings are congruent with the notion that women tend to want to participate in decision-making processes (Eagly and Johnson, 1990; Oakley, 2000; McColl- Kennedy et al., 2003). Moreover, prior research shows that women tend to pay greater attention to the service delivery process as opposed to men who are more outcome-focused (Iacobucci and Ostrom, 1993; Mattila et al., 2003). Hence, it is not surprising that women would be more satisfied with the fact that they were able to influence the final compensation outcome. Our results also support the idea that the act of choosing might reduce negative emotions associated with service failures among female consumers. In this n study, offering a choice of compensation methods reduced negative emotions (dissatisfaction and disappointment) among female participants while producing the opposite effect with men. It thus seems that men might not appreciate a choice of compensation methods, at least with relatively minor compensation methods such as those tested in the present study. This suggestion is consistent with prior research indicating that men and women view consumption objects differently (Fontenelle and Zinkhan, 1993) and that women tend to attach greater importance to evaluative criteria across product and services (Williams, 2002). We further extend the literature in service recovery by contrasting two new types of compensation methods: hedonic and utilitarian. Prior research in the domain of loyalty reward programs shows that hedonic choices easily provoke feelings of guilt and as such are difficult to justify (Prelec and Loewenstein, 1998; Thaler, 1985). The findings of this study suggest that it might be beneficial for service organizations to provide a mix of hedonic and utilitarian compensation methods. Satisfaction ratings with the chosen compensation did not differ across the two types of options and subjects were fairly equally split among hedonic and utilitarian choices. Some consumers might thus appreciate the opportunity to indulge in hedonic choices while others prefer choices that are easy to rationalize (Kivetz and Simonson, 2002b). Finally, our study findings add to the mounting literature suggesting that it is more difficult to recover from serious than less severe failures (Smith et al., 1999; Weun et al., 2004). In this study, satisfaction with consumers preferred recovery option was lower when the importance of the failure was high. Consequently, offering choices might not add as much value to post-recovery satisfaction with serious failures. As prior literature in service recovery suggests, a fair fix implies that compensation needs to be proportional to the magnitude of the service failure (e.g. Miller et al., 2000). As shown in this study, $5.00 coupons are likely to be less effective when the dining experience is plagued with multiple failures, while such compensation might be considered acceptable with minor failures (e.g. running out of a particular menu item). It is important to keep in mind that it is the customer s perception of the importance of the failure that matters rather than the service provider s perspective since two customers might rate an identical failure differently in terms of personal importance (Mattila, 2001). Managerial implications In sum, the results of this study suggest that service organizations might benefit from offering several choices among recovery options instead of merely compensating for the failure with a standardized recovery method. This strategy might be particularly effective among female customers who want to be part of the recovery process. Consequently, service firms that cater to a female-dominated clientele (e.g. beauty salons; weight loss programs; spas) might want to develop gender-specific recovery strategies that emphasize choice for 504

7 female customers. For instance, a hair stylist might ask the customer to choose between a coupon for a free shampoo on a next visit and a coupon for a free bangs trim as compensation for a long wait. Or a spa owner might offer choices such as aromatherapy upgrade for a massage or free nail polish change as compensation for a minor service failure. However, the positive impact of choice is less pronounced with male customers and with failures that are perceived as highly salient by the customer. Therefore, service providers need to understand that serious failures cannot be fixed by simply offering the dissatisfied customer some recovery choices. As prior research shows, the compensation needs to match the magnitude of the failure. Our results further suggest that service firms might want to expand their compensation methods to include both hedonic and utilitarian options. For example, a hotel might offer a choice between a free spa treatment and free Internet access to complaining customers. Yet, in choosing the array of compensation methods, it is important to keep in mind that options that come across as too pampering might be perceived as condescending. Limitations and future research As with any experiment, the findings of this study should be interpreted with care. First, to maximize internal validity, hypothetical scenarios rather than actual consumption experiences were used as stimuli. The sample size in the follow-up study was relatively small, thus further hampering the generalization of our findings. Second, our manipulations were limited to two types of recovery options: hedonic and utilitarian. Since the choice between utilitarian and hedonic recovery options is partly driven by taste preferences and idiosyncratic characteristics of the company s compensation methods, our results are conservative. In other words, different choice of recovery options might have led to different responses. Psychological testing of varying needs of respondents should be addressed in future studies. Third, this study held the compensation methods constant across high and low severity failures. It can be argued that other compensation methods (e.g. cash refunds or discounts) might produce different results. Therefore, future studies should examine the impact of monetary choices on postrecovery satisfaction. Moreover, future research in other service categories and natural settings is needed to broaden our understanding of the joint effects of choice and gender on customer perceptions of service recovery options. In other words, appropriate recovery choices might be context-dependent. Lastly, other individuallevel factors such as familiarity with the service provider might influence customer evaluations of the company s compensation practices. References Do women like options more than men? Adams, S. (1965), Inequity in social exchange, in Berkowitz, L. (Ed.), Advances in Experimental Social Psychology, Academic Press, New York, NY, pp Alexander, M. and Wood, W. (2000), Women, men and positive emotions: a social role interpretation, in Fisher, A. (Ed.), Gender and Emotion: Social Psychological Perspectives, Cambridge University Press, New York, NY, pp Areni, C., Kieker, P. and Palan, K. (1998), Is it better to give than to receive? Exploring gender differences in the meaning of memorable gifts, Psychology & Marketing, Vol. 15 No. 1, pp Beattie, J., Baron, J., Hershey, J.C. and Spranca, M.D. (1994), Psychological determinants of decision attitude, Journal of Behavioral Decision Making, Vol. 7 No. 2, pp Blodgett, J., Hill, D. and Tax, S. (1997), The effects of distributive, procedural and interactional justice on postcomplaint behavior, Journal of Retailing, Vol. 73 No. 2, pp Botti, S. and Iyengar, S. (2004), The psychological pleasure and pain of choosing: when people prefer choosing at the cost of subsequent outcome satisfaction, Journal of Personality and Social Psychology, Vol. 87 No. 3, pp Botti, S. and McGill, A. (2006), When choosing is not deciding: the effect of perceived responsibility on satisfaction, Journal of Consumer Research, Vol. 33 No. 2, pp Bougie, R., Pieters, R. and Zeelenberg, M. (2003), Angry customers don t come back, they get back: The experience and behavioral implications of anger and dissatisfaction in services, Journal of the Academy of Marketing Science, Vol. 31 No. 4, pp Burger, J. (1989), Negative reactions to increases in perceived personal control, Journal of Personality and Social Psychology, Vol. 56 No. 2, pp Chebat, J.-C. and Slusarczyk, W. (2005), How emotions mediate the effects of perceived justice on loyalty in service recovery situations: an empirical study, Journal of Business Research, Vol. 58 No. 5, pp Chitturi, R., Raghunathan, R. and Mahajan, V. (2008), Delight by design: the role of hedonic versus utilitarian benefits, Journal of Marketing, Vol. 72 No. 3, pp Cordova, D. and Lepper, M. (1996), Intrinsic motivation and the process of learning, Journal of Educational Psychology, Vol. 88 No. 4, pp Craighead, C., Karwan, K. and Miller, J. (2004), The effects of severity of failure and customer loyalty on service recovery strategies, Production and Operations Management, Vol. 13 No. 4, pp Davidow, M. (2003), Organizational responses to customer complaints: what works and what doesn t, Journal of Service Research, Vol. 5 No. 3, pp Deaux, K. and Major, B. (1982), Individual differences in justice behavior, in Greenberg, J. and Cohen, R. (Eds), Equity and Justice in Social Behavior, Academic Press, New York, NY, pp De Jong, A. and de Ruyter, K. (2004), Adaptive versus proactive behavior in service recovery: the role of selfmanaging teams, Decision Science, Vol. 35 No. 3, pp Deutsch, M. (1975), Equity, equality and need: what determines which value will be used as the basis for distributive justice?, Journal of Social Issues, Vol. 31 No. 3, pp Dube, L. and LeBel, J. (2003), The content and structure of laypeople s concept of pleasure, Cognition and Emotion, Vol. 17 No. 2, pp Eagly, A. (1987), Sex Differences in Social Behavior, Lawrence Earlbaum, Hillsdale, NJ. 505

8 Eagly, H. and Johnson, B. (1990), Gender and leadership style: a meta-analysis, Psychological Bulletin, Vol. 108 No. 2, pp Fontenelle, S. and Zinkhan, G. (1993), Gender differences in the perception of leisure: a conceptual model, Advances in Consumer Research, Vol. 20, pp Hart, C., Heskett, J.L. and Sasser, W.E. Jr (1990), The profitable art of service recovery, Harvard Business Review, July-August, pp Hasseldine, J. and Hite, P. (2003), Framing, gender and tax compliance, Journal of Economic Psychology, Vol. 24 No. 4, pp Hoffman, K.D., Kelley, S.W. and Rotalsky, H.M. (1995), Tracking service failures and employee recovery efforts,, Vol. 9 No. 2, pp Homburg, C. and Giering, A. (2001), Personal characteristics as moderators of the relationship between customer satisfaction and loyalty an empirical analysis, Psychology and Marketing, Vol. 18 No. 1, pp Iacobucci, D. and Ostrom, A. (1993), Gender differences in the impact of core and relational aspects of services on the evaluation of service encounters, Journal of Consumer Psychology, Vol. 2 No. 3, pp Kalamas, M., Laroche, M. and Makdessian, L. (2008), Reaching the boiling point: consumers negative affective reactions to firm-attributed service failures, Journal of Business Research, Vol. 61 No. 8, pp Kivetz, R. and Simonson, I. (2002a), Earning the right to indulge: efforts as a determinant of customer preferences toward frequency program rewards, Journal of Marketing Research, Vol. 39 No. 2, pp Kivetz, R. and Simonson, I. (2002b), Self-control for the righteous: toward a theory of precommittment to indulgence, Journal of Consumer Research, Vol. 29 No. 2, pp Langer, E.J. (1975), The illusion of control, Journal of Personality and Social Psychology, Vol. 32 No. 2, pp McColl-Kennedy, J.R. and Sparks, B.A. (2003), Application of fairness theory to service failure and service recovery, Journal of Service Research, Vol. 5 No. 3, pp McColl-Kennedy, J.R., Daus, C.S. and Sparks, B.A. (2003), The role of gender in reactions to service failure and recovery, Journal of Service Research, Vol. 6 No. 1, pp McCollough, M.A., Berry, L.L. and Yadav, M.S. (2000), An empirical investigation of customer satisfaction after service failure and recovery, Journal of Service Research, Vol. 3 No. 2, pp Mattila, A.S. (2001), The effectiveness of service recovery in a multi-industry setting,, Vol. 15 No. 7, pp Mattila, A.S. and Enz, C. (2002), The role of emotions in service encounters, Journal of Service Research, Vol. 4 No. 4, pp Mattila, A.S. and Patterson, P.G. (2004), The impact of culture on consumers perceptions of service recovery efforts, Journal of Retailing, Vol. 80 No. 3, pp Mattila, A.S., Grandey, A.A. and Fisk, G.M. (2003), The interplay of gender and affective tone in service encounter satisfaction, Journal of Service Research, Vol. 6 No. 2, pp Maute, M.F. and Dubé, L. (1999), Patterns of emotional responses and behavioral consequences of dissatisfaction, Applied Psychology, Vol. 48 No. 3, pp Miller, J.L., Craighead, C.W. and Karwan, K.R. (2000), Service recovery: a framework and empirical investigation, Journal of Operations Management, Vol. 18 No. 4, pp Moss, G. and Colman, A. (2001), Choices and preferences: experiments on gender differences, Journal of Brand Management, Vol. 9 No. 2, pp Oakley, J. (2000), Gender-based barriers to senior management positions, Journal of Business Ethics, Vol. 27 No. 4, pp Okada, E. (2005), Justification effects on consumer choice of hedonic and utilitarian goods, Journal of Marketing Research, Vol. 42 No. 1, pp Payne, J.W., Bettman, J.R. and Johnson, E.J. (1993), The Adaptive Decision Maker, Cambridge University Press, New York, NY. Prelec, D. and Loewenstein, G. (1998), The red and the black: mental accounting of savings and debt, Marketing Science, Vol. 17 No. 1, pp Powell, M. and Ansic, D. (1997), Gender differences in risk behavior in financial decision-making: an experimental analysis, Journal of Economic Psychology, Vol. 18 No. 6, pp Schmitt, B., Dubé, L. and Leclerc, F. (1992), Intrusions into waiting lines: does the queue constitute a social system?, Journal of Personality & Social Psychology, Vol. 63 No. 5, pp Smith, A.K. and Bolton, R.N. (2002), The effect of customers emotional responses to service failures on their recovery effort evaluations and satisfaction judgments, Journal of the Academy of Marketing Science, Vol. 30 No. 1, pp Smith, A.K., Bolton, R.N. and Wagner, J. (1999), A model of customer satisfaction with service encounters involving failure and recovery, Journal of Marketing Research, Vol. 36 No. 3, pp Spreng, R., Harrell, G. and Mackoy, R.D. (1995), Service recovery: impact on satisfaction and intentions, Journal of Services Marketing, Vol. 9 No. 1, pp Tax, S.S. and Brown, S.W. (2000), Service recovery: research insights and practices, in Swartz, T. and Iacobucci, D. (Eds), Handbook of Services Marketing and Management, Sage, Thousand Oaks, CA, pp Tax, S.S., Brown, S.W. and Chandrashekaran, M. (1998), Customer evaluations of service complaint experiences: implications for relationship marketing, Journal of Marketing, Vol. 62 No. 2, pp Thaler, R. (1985), Mental accounting and consumer choice, Marketing Science, Vol. 4 No. 3, pp Voss, K.E., Spangenberg, E.R. and Grohmann, B. (2003), Measuring the hedonic and utilitarian dimensions of consumer attitude, Journal of Marketing Research, Vol. 40 No. 3, pp Wallendorf, M. and Arnould, E. (1988), My favorite things: a cross-cultural inquiry into object attachment, possessivness, and social linkage, Journal of Consumer Research, Vol. 14 No. 4, pp Weiner, B. (1985), An attributional theory of achievement motivation and emotion, Psychological Review, Vol. 92 No. 4, pp

9 Weun, S., Beatty, S.E. and Jones, M.A. (2004), The impact of service failure severity on service recovery evaluations and post-recovery relationships, Journal of Services Marketing, Vol. 18 Nos 2/3, pp Williams, T.G. (2002), Social class influences on purchase evaluation criteria, Journal of Consumer Marketing, Vol. 19 Nos 2/3, pp Wilson, T.D. and Schooler, J.W. (1991), Thinking too much: introspection can reduce the quality of preferences and decisions, Journal of Personality and Social Psychology, Vol. 60 No. 2, pp Wilson, T.D., Lisle, D.J., Schooler, J.W. and Hodges, S.D. (1993), Introspecting about reasons can reduce postchoice satisfaction, Personality and Social Psychology Bulletin, Vol. 19 No. 3, pp Zeithaml, V.A. (1985), The new demographics and market fragmentation, Journal of Marketing, Vol. 49 No. 3, pp Zuckerman, M., Porac, J., Lathin, D., Smith, R. and Deci, E.L. (1978), On the importance of self-determination for intrinsically motivated behavior, Personality and Social Psychology Bulletin, Vol. 4 No. 3, pp Appendix You and another person go to a casual dining restaurant for dinner to celebrate a special occasion. You are seated at your table. The waiter comes to take your order. You place your order. The waiter informs you that the restaurant is out of the entrée you selected. The waiter informs you that the restaurant is also out of your second choice of entrée. You make another selection. After 30 minutes of waiting, the waiter returns with your food orders. What happened next? You complain about the situation and the waiter apologizes and offers you to choose one of the following options as compensation for the service failure. Please circle the option that you would pick and underline your preferred compensation: (items adapted from Kivetz and Simonson, 2002a,b) 1 a $5 coupon for a massage package or gourmet foods or movie tickets; 2 a $5 coupon for gas or groceries. About the author Do women like options more than men?, is the Marriott Professor of Lodging Management at the School of Hospitality Management at the Pennsylvania State University. She holds a PhD from Cornell University, an MBA from University of Hartford and a BS from Cornell University. Her research interests focus on consumer responses to service encounters and cross-cultural issues in services marketing. Her work has appeared in the Journal of the Academy of Marketing Science, Journal of Retailing, Journal of Service Research, Journal of Consumer Psychology, Psychology and Marketing, Journal of Services Marketing, International Journal of Service Industry Management, Cornell Hotel and Restaurant Administration Quarterly, Journal of Travel Research, International Journal of Hospitality Management, Tourism Management and in The Journal of Hospitality and Tourism Research. She is a recipient of John Wiley & Sons Lifetime Research Award and The University of Delaware Michael D. Olsen Research Achievement Award. can be contacted at: asm6@psu.edu Executive summary and implications for managers and executives This summary has been provided to allow managers and executives a rapid appreciation of the content of the article. Those with a particular interest in the topic covered may then read the article in toto to take advantage of the more comprehensive description of the research undertaken and its results to get the full benefit of the material present. Vive la différence, say the French who know a thing or two about men being from Mars and women from Venus. While Professor Henry Higgins might have pleadingly asked Why can t a woman be more like a man? service marketers have to deal with the situation as it is women and men often think differently about things. Take service recovery, for instance as does in Do women like options more than men? an examination in the context of service recovery. She discovers that women are more satisfied with the compensation when given the opportunity to choose from alternatives than are men. Moreover, women seem to value the act of choosing more than their male counterparts. Her findings suggest that service operators and retailers might benefit from offering the customer a choice between hedonic and utilitarian compensation options as part of the service recovery process. Letting the customer choose his or her preferred recovery option enhances satisfaction with the chosen compensation method, thus somewhat mitigating the ill-effects of service failures. In a study based on poor service at a restaurant, the study focuses on the redress or compensation dimension, specifically in understanding how offering the consumer choices among several compensation methods influences his or her post-recovery perceptions, and bearing in mind that service recovery success depends on both what is done and how it is done. Service firms have a tendency to focus on the monetary aspects of compensation while customer preferences might lie elsewhere. If customizing the service recovery process helps to mitigate the ill-effects of occasional mishaps, then service organizations might want to consider a range of options in their service recovery strategies. Incorporating choice into the recovery process can be easily accomplished with minimal costs. For example, a hotel manager can offer the customer the choice between a coupon for a free drink (hedonic option) and free internet (utilitarian option). Offering both types of compensation methods is beneficial because such actions give the consumer an opportunity to either indulge in hedonic choices with minimal guilt feelings or to pick an easily justifiable utilitarian option. And as women seem to value the act of choosing more than men, they are more likely to be satisfied with their preferred compensation method. If choice can have a positive impact on satisfaction with redress, then adding choice as a part of the service recovery process can be an easy and cost-effective way to improve the firm s complaint-handling practices. Moreover, previous research on service recovery attributes has failed to differentiate between hedonic and utilitarian compensation 507

10 methods. This is an important distinction because prior research in loyalty reward programs suggests that people react differently to hedonic and utilitarian options, Findings confirm that it is more difficult to recover from serious than less severe failures. In the study, satisfaction with consumers preferred recovery option was lower when the importance of the failure was high. Consequently, offering choices might not add as much value to post-recovery satisfaction with serious failures. A fair fix implies that compensation needs to be proportional to the magnitude of the service failure. As shown in this study, $5 coupons are likely to be less effective when the dining experience is plagued with multiple failures, while such compensation might be considered acceptable with minor failures (e.g. running out of a particular menu item). It is important to keep in mind that it is the customer s perception of the importance of the failure that matters rather than the service provider s perspective since two customers might rate an identical failure differently in terms of personal importance. In short, service organizations might benefit from offering several choices among recovery options instead of merely compensating for the failure with a standardized recovery method. This strategy might be particularly effective among female customers who want to be part of the recovery process. Consequently, service firms that cater to a female-dominated clientele (e.g. beauty salons; weight loss programs; spas) might want to develop gender-specific recovery strategies that emphasize choice for female customers. For instance, a hair stylist might ask the customer to choose between a coupon for a free shampoo on a next visit and a coupon for a free bangs trim as compensation for a long wait. However, the positive impact of choice is less pronounced with male customers and with failures that are perceived as highly salient by the customer. Therefore, service providers need to understand that serious failures cannot be fixed by simply offering the dissatisfied customer some recovery choices. The compensation needs to match the magnitude of the failure. (A précis of the article Do women like options more than men? an examination in the context of service recovery. Supplied by Marketing Consultants for Emerald.) To purchase reprints of this article please reprints@emeraldinsight.com Or visit our web site for further details: 508