Can Loyal Customers Tolerate Service Failure? The Moderating Roles of Service Failure Severity and Transaction Frequency in a B2B Context

Abstract

Fans can tolerate their idol arriving one hour late at a concert, but could perhaps not accept news of an idol’s immoral conduct. Therefore, there likely are some moderators between the loyalty of fans and their zone of tolerance to service failure. This study examines the moderating effects of service failure severity and transaction frequency on the relationship between customer loyalty and the zone of tolerance to service failure within the hair salon industry in Taiwan. By the analysis of survey data from 113 customers, the results of the study show that monthly transaction frequency significantly moderates the relationship between customer loyalty and tolerance to service failure. Service failure severity (product delivery mistakes and poor service attitude) also significantly affects this relationship. Therefore, firms should increase transaction frequency and reduce service failure in order to enlarge the tolerance zone, especially after service failure has occurred. This study concludes with related recommendations for practitioners and academics.