When recovery goes beyond the focal customer: service recovery in customer-companion contexts

Purpose Firms often must decide how to allocate recovery compensation when service failures occur in customer-companion service encounters. While prior research has examined service recovery directed at individual customers or within larger group settings, less is known about recovery decisions within a customer-companion pair. This study aims to test the companion effect in service recovery by exploring how customer responses vary with companion presence during consumption and companion inclusion in recovery. Design/methodology/approach Across three experiments, this study examines loyalty program customers’ responses to service recovery in social consumption settings. Studies 1 and 2 compare companion-accompanied with solo consumption contexts, using shared and individually allocated compensation, respectively. Study 3 holds companion presence constant and compares companion-inclusive with companion-exclusive recovery, while testing the moderating roles of loyalty status and compensation amount alongside the psychological mechanisms. Findings Customers responded more favorably to recovery in companion-accompanied than in solo consumption contexts. When companion presence was held constant, companion-inclusive recovery proved particularly effective for low-tier customers when compensation was small and for high-tier customers when compensation was large. Recovery satisfaction and felt status emerged as complementary mechanisms underlying these effects. Originality/value This study contributes to the service recovery and loyalty program literatures by shifting the focus of service recovery research beyond individual customers and broader group settings to customer-companion encounters. The findings identify a companion effect in service recovery and distinguish between the effects of companion presence during consumption and companion inclusion in recovery. This study further shows how loyalty status and compensation amount jointly shape customers’ responses to companion-inclusive recovery.