429
Improving customer retention rates is a major
goal for most firms. Typically, as customer
loyalty increases, costs decline and profits rise
(Fornell and Wernerfelt, 1987; Rust and
Zahorik, 1993). This is particularly true in
many business-to-business markets where
suppliers and their customers have invested in
systems that create efficiencies for both par-
ties and interfirm relationships are the pre-
ferred method of doing business (Iacobucci
and Ostrom, 1996; Lusch and Brown, 1996).
However, businesses do switch suppliers; one
of the major reasons being service problems
(Quelch, 1993). Understanding the types of
service problems encountered is necessary in
order to determine appropriate recovery
strategies, recommend improvements to
service quality, and maintain existing relation-
ships.
Using the critical incident technique, this
project identified and classified the problems
encountered by business customers and their
suppliers. The types of problems were related
to the supplier’s service recovery efforts. The
effects of problems and recovery strategies on
the customer-supplier relationship were then
examined.
The objectives of this research were to
explore the:
(1) value of the critical incident technique in
identifying and analyzing business-to-
business service problems;
(2) effectiveness of existing service recovery
strategies in a business-to-business con-
text; and
(3) similarities and differences in classifica-
tion schemes in consumer versus business
markets with respect to service problems.
To accomplish these objectives, information
was gathered from businesses involved in
distributing wine to retail outlets (e.g. wine
shops, bottle shops) or to on-premise con-
sumption outlets (e.g. hotels, restaurants).
Managers in these businesses were asked to
recall a critical incident in their dealings with
wine suppliers. Using this and additional
information gathered in the interview, impli-
cations were drawn regarding both the value
of the methodology and the results for service
managers in this type of business-to-business
market.
International Journal of Retail & Distribution Management
Volume 26 · Number 11 · 1998 · pp. 429–438
© MCB University Press · ISSN 0959-0552
Service problems and
recovery strategies: an
examination of the
critical incident
technique in a
business-to-business
market
Larry Lockshin and
Gordon McDougall
The authors
Larry Lockshin is a senior lecturer at the Wine and Food
Business Group, University of Adelaide, Adelaide, Australia.
Gordon McDougall is Professor at the School of Business
and Economics, Wilfrid Laurier University, Waterloo,
Ontario, Canada.
Abstract
A range of wine retailers identified critical incidents that
had occurred with their suppliers. The resulting classifica-
tion of the problems differed from previous consumer
studies by revealing primarily outcome problems, such as
timeliness of delivery or delivery of complete order, rather
than process-based problems. The critical incident tech-
nique provided sufficient information to evaluate the
suppliers’ recovery strategies. The effectiveness of recov-
ery strategies was influenced by whether the problem was
solved and the time and number of calls required to solve
the problem. A major implication for managers in this
industry was to anticipate potential difficulties and inform
their customers. This proactive strategy would improve
relationships with buyers and reduce defections.
The financial assistance of Tucker Seabrook Pty
Ltd is gratefully acknowledged.