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Customer Choice: A Preemptive Strategy to Buffer the Effects of Service Failure and Improve Customer Loyalty

Penn State University

Harish Sujan

Tulane University

This study examined the impact on customer loyalty of giving customers an informed choice. The main objective was to find that if giving customers a choice in determining their service experience, and by providing relevant information about the choices, customer loyalty was maintained or improved following a service failure. The study examined the interactive effects of the foreseeability of the service failure on the choice manipulation. A 3 (choice: no choice, uninformed choice, or informed choice) by 2 (foreseeability: unforeseeable or foreseeable service failure) design was used to test the effects of informed choice on customer loyalty. The principal finding was that customer loyalty was highest in the informed choice and foreseeable condition. This would suggest that hospitality managers should give choices to their customers as well as relevant information about their choices. Additionally, it suggests that management identify possible service failures, making them foreseeable to both customer and management.

Key Words: choice • service failure • foreseeability • relevant information • loyalty

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