EFFECT OF SERVICE RECOVERY PRACTICE ON CUSTOMER’S SATISFACTION THE CASE OF SELECTED COMMERCIAL BANKS IN GURAGHE ZONE

Abstract

Service providers including commercial banks must recognize that customers often have high expectations for service recovery. When a failure occurs, customers may anticipate a resolution that not only addresses the issue but also exceeds their initial expectations. This understanding can guide service providers in crafting recovery strategies that aim for satisfaction beyond the original service experience. This study is designed to investigate the effect of service recovery practice on customer’s satisfaction the case of selected commercial banks in Guraghe zone. Both quantitative and qualitative data was collected from primary and secondary data sources. Questionnaires and interview were used as a major data collection tool from customers of selected commercial banks in Guraghe Zone. Both descriptive, inferential and regression analysis was conducted to find out the effects of customer satisfaction of service recovery in selected commercial banks. A total of 385 respondents from selected commercial banks in the Guraghe zone participated. Most respondents (44.9%) banked with the Commercial Bank of Ethiopia and had experienced service failures (93.2%), mainly involving ATMs, cash shortages, and delays. Only 28.6% received immediate responses to complaints, with 40% fully satisfied with service recovery. The findings of the regression analysis provide compelling evidence that justice dimensions, particularly distributive and interactional justice, play a critical role in shaping customersatisfaction with service recovery in the commercial banks of Guraghe zone. Qualitative insights further enrich these findings by shedding light on customers’ evolving expectations. The demand for faster, more efficient service; improved digital platforms; and culturally tailored approaches underscores the need for banks to modernize their recovery strategies.