Abstract:
n a service experience the customers will react to the service outcome to show their satisfaction or dissatisfaction. In a situation where the service fails the customers may show dissatisfaction actively by complaining to the service firm or spreading negative word of mouth to inform others about a dissatisfactory experience. This study examined the effect of service failure severity and relationship quality on customers' satisfaction. This study also evaluated the interactive role of relationship quality on the relationship between service failure severity and customer satisfaction. This research was grounded by social exchange and disconfirmation theory. The study employed explanatory design. A sample of 316 customers from selected commercial banks was selected while individual respondents were identified using systematic sampling technique. A self-administered questionnaire was used to collect primary data. Factor analysis was used to validate preconceived variables while Regression analysis was utilized to test the hypotheses. The results of this study reveal that service failure severity (β=-0.517, p<0.001) and relationship quality (β=0.211, p<0.01) are significant determinants of customer satisfaction; they accounted for 34.1 % of the variation in customer satisfaction. Furthermore, relationship quality was found to moderate the effect of service failure severity on customer satisfaction; the interaction terms accounted for a significant proportion of the variance in customer satisfaction, ΔR2 = .061, F=17.107, p <.001. From the findings, it is recommended that service firms should purpose to provide quality services capable of satisfying customer needs and in the event of service failure, the severity of the failure is an important determinant of satisfaction. However, the negative outcome of service failure can be attenuated by the quality of the relationship quality the firm has with its' customers. Therefore, firms are advised to invest in building quality relationship with their customers to buffer them from negative consequence of service failure