The market share impact of service failures

Julie M. Hays, Arthur V. Hill

Research output: Contribution to journalArticlepeer-review

36 Scopus citations


This paper develops a simple but powerful model that relates service satisfaction/dissatisfaction to market share. The model is based on an intuitive service satisfaction framework that relates three service system parameters (service success rate, complaint rate, and service recovery rate) to the percent of satisfied customers. A dynamic model is then posited that relates the defection rate and the addition rate to market share changes. The service satisfaction/market share model yields useful insights into how market share is influenced by these service system parameters. The surprisingly simple model predicts changes in market share due to changes in customer satisfaction.

Original languageEnglish (US)
Pages (from-to)208-220
Number of pages13
JournalProduction and Operations Management
Issue number3
StatePublished - 1999


  • Complaint management
  • Customer satisfaction
  • Service guarantees
  • Service recovery


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