For decades, we’ve defined service failure with a simple image: the undercooked steak, the delayed flight, the incorrect bill. But what about a data breach that exposes the personal information of your employees? Or an AI chatbot that gives biased advice? The old rules no longer apply.
As customer experience (CX) professionals, we are experts in service failure and recovery. The classic model is straightforward: a customer has a problem, the company fixes it, and if the recovery is good enough, the customer might even become more loyal—a phenomenon known as the service recovery paradox (1).
But this traditional view is becoming dangerously outdated. In a recent editorial in the Journal of Service Research, a team of leading academics argues that our understanding of service failure is stuck in the past, focused on simple, one-to-one interactions between a customer and a company (2). The reality of today’s service landscape, a complex web of digital platforms, AI agents, and interconnected stakeholders, demands a smarter, more expansive model.
This isn’t just an academic debate. An alarming trend persists in practice: customers are experiencing more service failures than ever, and they are increasingly dissatisfied with how companies respond. This disconnect between theory and practice signals an urgent need to redefine the very concepts of service failure and recovery.
An alarming trend persists in practice: customers are experiencing more service failures than ever, and they are increasingly dissatisfied with how companies respond. This disconnect between theory and practice signals an urgent need to redefine the very concepts of service failure and recovery.
The traditional definition of a service failure is a performance that falls short of a customer’s expectations. It implies that the company made a mistake and the customer suffered. But this definition fails to capture the complexity of modern service ecosystems.
To address this, Grégoire and his colleagues propose a new, broader definition:
Service Failure: A detraction that occurs in a stakeholder’s experience with the service offering of a brand or provider.
This new definition has three crucial components that expand our view:
- Detraction: This is more than just a mistake. A detraction is any negative interaction that reduces the value or satisfaction of an experience. It can be an objective error (like a system outage) or a subjective perception (like a customer feeling they are being stereotyped by an employee).
- Experience with the Service Offering: The failure isn’t limited to the moment of transaction. It can happen at any touchpoint in the customer journey, from the design of the service environment to the lack of follow-up after a purchase.
- Stakeholders: This is the most critical shift. It’s not just about the customer. A service failure can affect a wide range of stakeholders, including employees, other customers, the organization itself, and even society as a whole.
This expanded definition gives us a new lens through which to view service failures. The authors identify five “fundamental qualities” that capture the reality of service failures in today’s world. For CX professionals, these are the new truths you need to understand.
|
Description |
Example |
| 1. Failure is subjective |
A failure is defined by the stakeholder who experiences it. What is a minor issue for one person can be a major crisis for another. |
A 10-minute delay in a food delivery might be trivial to a regular customer but a major problem for a parent trying to feed a hungry child. |
| 2. Failure can be anticipated |
A failure doesn’t have to actually happen to cause harm. The anticipation or fear of a negative experience can be a failure in itself. |
A customer from a minority group avoids a store because they anticipate being profiled or treated with suspicion by staff. |
| 3. Failure can be intentional |
Not all failures are accidents. Sometimes, companies intentionally create negative experiences as a result of strategic decisions. |
A bank decides to “fire” its unprofitable customers by closing their accounts, creating a significant service failure for those individuals. |
| 4. Failure can be irrecoverable |
Some failures cause lasting damage that no apology or compensation can fix. |
A massive cyberattack leaks sensitive customer and employee data onto the dark web. The harm is permanent. |
| 5. Failure has a variable scale |
A failure can impact a single individual or escalate into a large-scale crisis affecting thousands or even millions of stakeholders. |
A single rude employee affects one customer. A biased algorithm in a lending application can systematically discriminate against an entire demographic. |
Just as the definition of failure is expanding, so is the definition of recovery. Traditionally, service recovery is seen as the company’s job. But in our interconnected world, recovery can be initiated by anyone.
The authors propose a new definition:
Service Recovery: The actions taken by any stakeholder to offset the consequences of a service failure.
This opens up a new world of possibilities for how we think about recovery:
- Customer Self-Recovery: Customers are increasingly using tools to solve problems themselves, from asking an AI chatbot for help to finding a solution in a user forum.
- Third-Party Recovery: Other customers often step in to help. Think of a regular at a coffee shop showing a new customer how to use the mobile ordering app.
- Competitor Recovery: Your competitor can become part of the recovery process by offering to solve the problems your customers are having (e.g., a telecom company offering to pay the termination fees for customers switching from a rival).
The world of customer experience is no longer a simple, two-way street between a company and a customer. It’s a complex, multi-stakeholder ecosystem. To be effective, CX leaders must move beyond the “undercooked steak” model of service failure.
You need to ask bigger questions:
- Who are all the stakeholders affected by our service, both inside and outside the company?
- Where are the potential detractors in our entire service journey, even before a “failure” occurs?
- Are we creating any intentional failures through our business policies?
- Which failures are irrecoverable, and how do we prevent them at all costs?
- How can we empower all stakeholders—including customers and employees—to participate in the recovery process?
By adopting this smarter, more systemic view of service failure and recovery, you can build more resilient, trustworthy, and ultimately more successful customer experiences.
References
(1) De Matos, C. A., Henrique, J. L., & Vargas Rossi, C. A. (2007). Service recovery paradox: A meta-analysis. Journal of Service Research, 10(1), 60-77.
https://journals.sagepub.com/doi/abs/10.1177/1094670507303012
(2) Grégoire, Y., Gelbrich, K., Orsingher, C., & Van Vaerenbergh, Y. (2025). Breaking the mold: Redefining service failure and recovery. Journal of Service Research, 28(3), 375-381.
https://doi.org/10.1177/10946705251341513
