Understanding Whether Effective Service Recovery Enables Retention of Complaint-averse Savvy Customers

Effective service recovery is pivotal in most service industries, and despite much research, how to manage recovery after service failure remains a central question in service research. Understanding customer loyalty remains one of the most important and intangible competitive advantages for any service provider. This study examined whether the relationship between service recovery and customer loyalty was statistically significant, and examined the influence of firm responses on customer loyalty. A descriptive cross-sectional survey and stratified random sampling were used to produce a sample of 384 phone subscribers. The primary data for the study was collected from Makerere University mobile telephone subscribers (students and staff) using a semi-structured, self-administered questionnaire. The pilot study established the reliability and validity of the questionnaire and tested for parametric assumptions performed. Descriptive statistics and inferential statistics (factor analysis, correlations, and regression tests) were used to analyze the data. Results indicated that these relationships were all positive and statistically significant. Moreover, the combined impact of service recovery, firm responses, and service quality on customer loyalty was the strongest. Based on the findings, policymakers, and managers of mobile phone companies in Uganda should focus more on service quality, which showed the highest beta values and had a relatively high predictive value for customer loyalty. This study contributes to the extant literature by illuminating firms’ responses to service recovery, by offering more explicit clarification of the relationship between service recovery, firm responses and customer loyalty. Mobile phone companies should improve how customer complaints are handled by considering the various dimensions of firm responses. Because of the study’s cross-sectional design, there remains a need to expand our knowledge by conducting similar but longitudinal studies. Future studies should explore the following: service recovery, customer satisfaction and sales performance in the health sector in Uganda.