The effects of
organizational
responses to complaints
on satisfaction and
loyalty: a study of hotel
guests in Northern
Cyprus
Osman M. Karatepe and
Erdogan H. Ekiz
The authors
Osman M. Karatepe is Assistant Professor of Marketing in the
School of Tourism and Hospitality Management, and
Erdogan H. Ekiz is in the Center for Tourism Research, both at
the Eastern Mediterranean University, Gazimagusa,
Turkish Republic of Northern Cyprus.
Keywords
Organizational behaviour, Complaints, Customer satisfaction,
Customer loyalty, Cyprus
Abstract
This study investigates the effects of various organizational
responses to complaints on post-complaint customer behaviors.
Specifically, the study investigates the effects of apology,
atonement, promptness, facilitation, explanation, attentiveness
and effort on complainant satisfaction and loyalty, and the
association between satisfaction and loyalty. The study uses a
sample of Turkish guests in the Northern Cyprus hotel industry.
The hypothesized relationships are tested using LISREL 8.30
through path analysis. Results provide empirical support for ten
of the 15 hypotheses examined. The path analysis reveals that
apology, explanation, and effort are three organizational
response options that exert significant positive effects on
complainant satisfaction and loyalty. Empirical findings also
suggest that effort appears to be the most influential
organizational response affecting satisfaction and loyalty.
Discussion of the results, implications, and limitations of the
study are also presented.
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Introduction
In a world of increasingly global competition,
understanding customers’ expectations is critical if
superior service quality is to be delivered
(Parasuraman et al., 1991). However, service firms
face challenges in providing customers with
exceptional service quality. Mistakes, failures and
complaints are frequent occurrences in service
encounters (Babakus et al., 2003). Managing and
resolving complaints are therefore essential if
dissatisfied customers are to be converted into
satisfied and loyal customers (Johnston and
Mehra, 2002; Tax and Brown, 1998).
Although effective service recovery results in
complainant satisfaction and loyalty (Spreng et al.,
1995; Smith and Bolton, 1998; Gilly and Hansen,
1992), many complainants are dissatisfied with the
way in which their complaints are handled
(Johnston and Mehra, 2002). It is still the case that
few service firms learn from their mistakes and
problems (Tax and Brown, 1998). Unresolved
complaints may lead to double deviation from role
expectations that complainants hold for service
providers (Bitner et al., 1990), and this can result
in detrimental outcomes such as negative word-of-
mouth communication and permanent loss of
customers (Kelley et al., 1993; Boshoff, 1997).
Recognizing this, service firms have been seeking
effective organizational responses to complaints
with a view to satisfying aggrieved and unhappy
customers. These responses can include apologies,
refunds, free gifts, company policies and
procedures, increased employee effort, and speedy
response (Kelley et al., 1993; Mattila, 1999, 2001;
Boshoff and Leong, 1998; Hoffman and Chung,
1999; Gilly, 1987; McDougall and Levesque,
1999; Tax et al., 1998).
Against this background, the present empirical
study develops and tests a model that examines the
effects of various organizational responses to
complaints on satisfaction and loyalty. The study
also investigates the association between
satisfaction and loyalty. The study is conducted on
a sample of Turkish guests in Northern Cyprus
hotels.
The study is useful and relevant for at least two
reasons. First, although service recovery has been
an important research topic (Fisk et al., 1993),
little is known about the effects of organizational
responses to complaints on satisfaction and loyalty
(Davidow, 2000; Gilly, 1987), and relatively little
research exists on complaint processes and service
recovery (Johnston and Mehra, 2002; Andreassen,
1999). In particular, service recovery in hospitality
services is still in its developmental stages (Becker,
2000). The present study therefore contributes to
the existing literature by investigating the effects of
Managing Service Quality
Volume 14 · Number 6 · 2004 · pp. 476-486
q Emerald Group Publishing Limited · ISSN 0960-4529
DOI 10.1108/09604520410569810
476