Resource exchange theory suggests service recovery compensation is optimal when it is commensurate with what was lost (e.g., refund for overcharging). However, in practice, companies cannot always follow the theory-driven prescriptions, and the complaint recovery literature remains silent on how to best recover in such suboptimal situations. This study takes a resource-based theory stance to propose Mix&Match, a complaint recovery framework for tangible compensation offers (refunds, redeliveries, or credits) to optimize customer retention and lifetime value in both optimal and suboptimal complaint recovery scenarios. We find that matching tangible compensation with the complaint cause (e.g., redelivery for expired products) is the most effective recovery response for improving customer retention and lifetime value. However, in suboptimal nonmatching scenarios, monetary compensation in the form of store credit proves to be the most effective response.
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