Abstract:
In 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.