Kanuri and Andrews (2019)
Can Recovery Incentives Retain
Customers After a Subscription-
Service Failure?
Industry experts tend to believe recovery incentives can remedy
service failures and urge firms to “be generous”

Kanuri and Andrews (2019)
Short-Term Benefits
• Alleviates customer
dissatisfaction and triggers
positive word of mouth
• Signals a firm’s intention to
remedy a mistake and
improves customer
relationships
Long-Term Risks
• Can give subscribers a new
price point to anchor on, which
can trigger a price comparison
upon contract renewal and lower
the likelihood of renewal
The managerial dilemma of recovery incentives in
subscription-based services

Kanuri and Andrews (2019)
Timeline of service failure & recovery in
subscription-based services

Kanuri and Andrews (2019)
Findings from a study of service delivery
interruptions at a top 50 U.S. newspaper
 Recovery incentives are negatively associated with contract renewal
likelihoods. The larger the recovery incentive, the less likely newspaper
subscribers were willing to renew their contracts at full price
 But this negative effect was weakened (it is less severe) when:
 Subscribers were reminded of the full-service price several times before the renewal
 Subscribers were offered a discount at the time of the renewal
 Subscribers had more time left in their service contracts after the recovery incentive was
administered
 Subscribers were originally acquired through personalized campaigns that emphasized the
value of the service as opposed to the price of the service
 Subscribers were offered the recovery discount when the promotional intensity in the
external environment was low (e.g., non-holiday periods)