The Effects of Service Recovery on Customer Satisfaction and Loyalty: an Empirical Study on Commercial Bank of Ethiopia

Organizations cannot avoid service failure. Service failure is inevitable due to the unique characteristics of the service itself. Therefore, they should develop effective recovery strategy to handle service failures properly. However, developing effective recovery strategy is not an easy task especially in the banking industry. Most customers who complained were not pleased with the banks' recovery efforts because they were not treated fairly and the service recovery efforts were far away from adequate justice. Consequently, failed service recovery following the initial service failure is leading the banks' customers to dissatisfaction and to switch their patronage to competitors. This study provides brief explanations on how justice oriented recovery affects customer satisfaction and how recovery satisfaction in turn affects customer loyalty.