The effects of relationship length on customer profitability after a service recovery

Relationship length and its implications for service recovery have rarely been quantified in terms of cross-buying and customer profitability. Based on a sample of 935 customers in the retail banking sector, the current research provides two core contributions. First, the results reveal that change in cross-buying is a crucial mediator to capture how service recovery contributes to a change in customer profitability. Second, this research contributes to the ongoing debate regarding the role of relationship variables on customers’ reactions to service recovery by investigating the moderating role of relationship length. From the use of archival data, the results show that when customers are dissatisfied with a recovery, a favorable protective effect arises, prompting an increased change in cross-buying. However, as the relationship gets longer, the positive effect of a successful service recovery on change in cross-buying keeps decreasing. The theoretical and managerial implications of these findings are discussed.