Service recovery system and service recovery in retail banks: a multilevel analysis

Abstract

Previous research on customer loyalty primarily viewed it within the framework of constructs at the individual level of analysis. Consequently, prior research has ignored service recovery performance and customer loyalty nested within the branch-level studies of retail banks. However, this multilevel analysis examined how the service recovery system influences customer-level outcomes. Multilevel analysis determined the relationship between the Level 2 and Level 1 constructs. A sample of 1514 responses was drawn from Indian branch heads, frontline employees, and customers of retail banks. This study used a multilevel approach to understand the macro- and micro-level dynamics of service recovery in retail banking. These findings emphasize the importance of effective service recovery systems, standardized definitions, and standardized measurements. This approach allows for a comprehensive examination of the impact of the service recovery system on service recovery performance, recovery satisfaction, and customer service loyalty by considering the nested structure of the data and the influence of higher-level variables on lower-level variables. This study calls for retail banks to invest in well-managed service recovery, recognize and reward employees for exceptional performance, and continuously monitor customer complaints to identify areas for improvement.