Service failures and recovery strategies implemented by third party logistics service providers

Improving service quality and customer retention rates are amongst the most significant goals for third party logistics service providers as well as for most companies. Typically, as customer loyalty increases, costs decline and profits rise. However, business customers do switch suppliers; one of the main reasons being service failures, problems and ineffective service recoveries. This is why it is vital for service providers to observe the service failures experienced by customers thoroughly, to guarantee recovery strategies for these failures in a short period of time, to find out the reasons underlying the failure and to prevent these failures from reoccurring in the future in order to sustain the service quality of the firm, form long- lasting relationships with their customers and eventually achieve high customer retention. The primary objective of this study is to explore the different dimensions regarding the service failure and recovery and to figure out what kind of an impact they have on the business relationship between the service providers and their customers. It is also aimed to investigate the both sides of the service failure incidents and to portray the differences and similarities between the two sides to get a better understanding of the concept, and to provide useful information for logistics service provider professionals for future use. According to the findings the service failures in third party logistics service providers are classified as customer service and operation, documentation, marketing and sales, finance and accounting and port operations. Moreover, the recovery strategies utilized by third party logistics service providers are classified as mixed, symbolic and utilitarian recoveries. Finally, relationships between the third party logistics service providers and their customers posterior to service failure and recovery are classified as improved, weakened, adjourned and not influenced. The findings indicate that third party logistics service providers' and customers' perspectives show differences in failure, recovery and relationship posterior to failure and recovery. The hypotheses formed parallel to the literature with the data collected from third party logistics service customers show that failure magnitude, customers' satisfaction from the recovery, time it took for recovery, third party logistics service providers' importance to the customer by transaction volume, the length of the past relationship between the third party logistics service providers and their customers and the relationship posterior to service failure and recovery have a significant relationship. Moreover, third party logistics service providers' importance to the customer and the implemented recovery strategy show a significant relationship as well. The hypotheses formed parallel to the literature with the data collected from third party logistics service providers show significant relationships only in between the customers' satisfaction from the implemented recovery strategy, time it took for the recovery and the relationship posterior to service failure and recovery. According to these findings it can be suggested that third party logistics service providers have different perceptions on the failure magnitude, their importance to the customer and the past relationship they have with their customers compared to customers' and due to that the information they shared is unparallel to their customers' perceptions on the aforementioned topics.