Overcompensation as a service recovery strategy: the financial aspect of customers’ extra effort

Compensation is one of the most important elements of service. Companies often pursue a strategy of overcompensation; however, there are contradictory results in the literature whether overcompensation has a positive or negative effect on postcomplaint customer behaviour. In this paper, based on three studies, we prove that examining the amount of additional effort required of the customer in order to achieve service recovery can help us better explain outcomes of the service recovery. Our results clearly show that the degree of additional customer effort has significant influence both on satisfaction and on perceived fairness and it moderates the effect of the amount of compensation.