ABSTRACT
One of the most important events that can produce perceptions of inequity in a customer-organization exchange involves product and service failures. Failures are defined as any product or service performance that falls below the customers’ expectations (Hoffman & Bateson, 1997). These events produce losses for customers that can result in negative outcomes for organizations if not properly addressed. Organizations attempt to restore customer losses with recovery strategies, which are the actions and efforts used to restore the losses produced by failures (Gronroos, 1988). Many types of recovery activities are available to organizations including free products, discounts, coupons, refunds, and apologies, among others.
