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Understanding the co-creation effect: when does collaborating with customers provide a lift to service recovery?

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Abstract

Because co-creation allows customers to help shape or personalize the content of their experience, it can affect customer satisfaction with recovery efforts, as well as offer a more cost-effective alternative to compensation. This article identifies specific situations in which co-creation is and is not useful. Study 1 tests the impact of co-creation in comparison with compensation for enhancing satisfaction with the recovery process and demonstrates that co-creation offers a cost-efficient strategy for companies when customers must deal with severe delays. Study 2 extends these results by showing that the impact extends to repurchase intentions. Study 3 details conditions in which co-creation harms evaluations. Finally, Study 4 explores whether it is necessary for the company to meet the customer’s requests when co-creating a recovery, as well as what happens when the company exceeds a customer’s requests. The article concludes with a discussion of the theoretical and managerial implications, limitations, and research directions that emerge from the studies.

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Notes

  1. Although the sample size is relatively small, recent evidence shows that the convergence and accuracy of confirmatory factor analysis solutions are affected by the quality of the latent variable indicators rather than by the sample size or observations per free parameter (Guadagnoli and Velicer 1988; Marsh et al. 1998).

  2. Recent evidence (Chen et al. 2008) suggests using multiple indicators of model fit and claims that the arbitrary cut-off point of .05 for RMSEA rejects too many valid models with small sample sizes (n = 100); it performs better with larger samples (but accepts too many when n > 800).

  3. Post-hoc power analysis for interaction justice indicates low power (.35). Thus, the non-significant results are more likely due to the test being underpowered for a small effect at the .10 level (Cohen 1992).

  4. Mediation tests for the individual justice measures are available via web appendix. We find full mediation for all justice measures.

  5. Here, ab represents the indirect effects of the independent variable on the dependent variable through the mediator, c represents the direct effect of the independent variable on the dependent variable, and c’ represents the total effect of the independent variable on the dependent variable.

  6. Post-hoc power analysis for interaction justice indicates low power (.45). Thus, the non-significant results are more likely due to the test being underpowered for a small effect at the .10 level (Cohen 1992).

  7. Mediation tests for the individual justice measures are available via web appendix. We find full mediation for all justice measures.

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Author information

Authors and Affiliations

  1. Babson College, Babson Park, MA, 02457, USA

    Anne L. Roggeveen & Dhruv Grewal

  2. University of Miami, Miami, FL, 33133, USA

    Michael Tsiros

  3. ALBA Graduate Business School, Athens, Greece

    Michael Tsiros

Authors
  1. Anne L. Roggeveen
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  2. Michael Tsiros
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  3. Dhruv Grewal
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Corresponding author

Correspondence to Anne L. Roggeveen.

Appendices

Appendix A Study 1

Co-Creation, Less Severe Delay, No Compensation (Compensation)

You have been planning a vacation trip with your friends for some time now and the day of the trip finally arrives. You arrive at the airport and go to the airline counter to check in your luggage only to find out that the flight is cancelled.

Anticipating your concern, the airline agent takes the time to explain to you the reason for the cancellation. It turns out that the flight is cancelled due to current weather conditions at the destination.

The airline agent acknowledges the inconvenience that this will cause and promises to rebook you on a new flight. You stand with the agent, who thinks of many alternatives for you. Both of you look at these alternatives together. After about 10 minutes, the agent is able to book you on a new flight that departs in 3 hours. (Due to the inconvenience that you experienced, the airline has decided to offer you a $105 coupon toward your next domestic flight. On average, you spend about $350 per ticket, so the $105 coupon would result in a savings of approximately 30% off your next ticket purchase.)

No Co-Creation, More Severe Delay, No Compensation

… The airline agent acknowledges the inconvenience that this will cause and promises to rebook you on a new flight. The agent asks you to wait in the lounge while he rebooks you. After 10 minutes, the agent calls you and explains that he was able to book you on a new flight that departs in 9 hours.

Study 2

Co-Creation, Less (More) Severe Delay

… The airline agent acknowledges the inconvenience that this will cause and promises to rebook you on a new flight. You stand with the agent, who thinks of many alternatives for you. Both of you look at these alternatives together. After about 10 minutes, the agent is able to book you on a new flight that departs in 3 (9) hours.

No Co-Creation, Less (More) Severe Delay

… The airline agent acknowledges the inconvenience that this will cause and promises to rebook you on a new flight. The agent asks you to wait in the lounge while he rebooks you. After 10 minutes, the agent calls you and explains that he was able to book you on a new flight that departs in 3(9) hours.

Study 3

Co-Creation Perceived Negatively, Less (More) Severe Delay

… The airline agent acknowledges the inconvenience that this will cause and promises to rebook you on a new flight. You stand with the agent who is not able to think of many alternatives for you. You end up spending most of your time and effort suggesting alternatives to the agent, which he then tries out. After about 10 minutes, the agent is able to book you on a new flight that departs in 3 (9) hours.

Co-Creation Perceived Positively, Less (More) Severe Delay

… The airline agent acknowledges the inconvenience that this will cause and promises to rebook you on a new flight. You stand with the agent who thinks of many alternatives for you. Both of you look at these alternatives together. After about 10 minutes, the agent is able to book you on a new flight that departs in 3 (9) hours.

No Co-Creation, Less (More) Severe Delay

… The airline agent acknowledges the inconvenience that this will cause and promises to rebook you on a new flight. The agent asks you to wait in the lounge while he rebooks you. After 10 minutes, the agent calls you and explains that he was able to book you on a new flight that departs in 3 (9) hours.

Study 4

Exceed Co-Creation Request, Less (More) Severe Delay

… The airline agent acknowledges the inconvenience that this will cause and promises to rebook you on a new flight. You stand with the agent, who thinks of many alternatives for you. Both of you look at these alternatives together. After about 10 minutes, the agent is able to book you on a new flight that departs in 3 (9) hours. Due to the inconvenience you have experienced you request a $100 coupon towards your next domestic flight (you usually spend about $400 on your plan tickets). The agent gives you a $180 coupon.

Meet Co-Creation Request, Less (More) Severe Delay

… The airline agent acknowledges the inconvenience that this will cause and promises to rebook you on a new flight. You stand with the agent, who thinks of many alternatives for you. Both of you look at these alternatives together. After about 10 minutes, the agent is able to book you on a new flight that departs in 3 (9) hours. Due to the inconvenience you have experienced you request a $100 coupon towards your next domestic flight (you usually spend about $400 on your plan tickets). The agent gives you a $100 coupon.

Do Not Meet Co-Creation Request, Less (More) Severe Delay

… The airline agent acknowledges the inconvenience that this will cause and promises to rebook you on a new flight. You stand with the agent, who thinks of many alternatives for you. Both of you look at these alternatives together. After about 10 minutes, the agent is able to book you on a new flight that departs in 3 (9) hours. Due to the inconvenience you have experienced you request a $100 coupon towards your next domestic flight (you usually spend about $400 on your plan tickets). The agent gives you a $20 coupon.

Appendix B

 

Factor Loadings

Study 2

Study 4

Satisfaction with the Recovery Process (Crosby and Stephens 1987)

  

Please indicate your level of agreement with the following statements:

  

Study 1: CR = .93, Study 3: CR = .95; 1 = strongly disagree, 5 = strongly agree

  

Study 2: CR = .97, Study 4: CR = .97; 1 = strongly disagree, 7 = strongly agree

  

I am satisfied with the way the company handled the situation.

.94

.95

I feel favorably about how the company handled the situation.

.98

.96

I liked how the company handled the situation.

.95

.97

Repurchase Intentions (Zeithaml et al. 1996)

  

Please indicate your level of agreement with the following statements:

  

(Study 2: CR = .90, Study 4: CR = .96; 1 = strongly disagree, 7 = strongly agree)

  

I will fly again with this company in the future.

.92

.92

I will consider this company as my first choice when traveling again in the future.

.76

.93

I will use this company next time I travel.

.91

.97

Distributive Justice (Smith et al. 1999)

  

Please indicate your level of agreement with the following statements:

  

(Study 2: CR = .90, Study 4: CR = .95; 1 = strongly disagree, 7 = strongly agree)

  

The outcome I received was fair.

.84

.92

I got what I deserved.

.72

.86

In resolving the problem, the company gave me what I needed.

.83

.89

The outcome I received was right.

.92

.95

Procedural Justice (Smith et al. 1999)

  

Please indicate your level of agreement with the following statements:

  

(Study 2: CR = .92, Study 4: CR = .94; 1 = strongly disagree, 7 = strongly agree)

  

The way in which the problem was resolved was appropriate.

.91

.93

The way the agent dealt with this issue was reasonable.

.90

.94

I feel the process of rebooking me was fair.

.77

.80

The company showed adequate flexibility in dealing with my problem.

.84

.88

Interactional Justice (Smith et al. 1999)

  

Please indicate your level of agreement with the following statements:

  

(Study 2: CR = .94, Study 4: CR = .95; 1 = strongly disagree, 7 = strongly agree)

  

The agent was appropriately concerned about my problem.

.91

.92

The agent’s communications with me were appropriate.

.87

.87

The agent put in the proper effort to resolve my problem.

.93

.94

The agent gave me the courtesy I was due.

.86

.89

  1. CR Composite Reliability

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Roggeveen, A.L., Tsiros, M. & Grewal, D. Understanding the co-creation effect: when does collaborating with customers provide a lift to service recovery?. J. of the Acad. Mark. Sci. 40, 771–790 (2012). https://doi.org/10.1007/s11747-011-0274-1

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