A company who does the job right thing first time and can resolve problem effectively is a company who can create customer satisfaction which eventually resulting in a buildup of customer loyalty; however we cannot ignore the fact that failures continue to occur. Moments of truth in service encounters are vulnerable to breakdowns. Hence, company must have the established process to handle customer’s complaints and way to manage service recovery. Customer may react to a services failure in following different ways:
Take some forms of public action e.g. complain to the firm or take legal actions, etc.
Take some form of private action e.g. stop buying services
Take no action

There are lots of factors influencing complaining behavior i.e. level of dissatisfaction, cost of complaining, benefits of complaining, likelihood of resolution, available resources, access, knowing who to blame, demographics.
The standard for complaint handling is to override aim of any complaints handling process is to turn dissatisfied consumers into satisfied consumers. This is best done by speedy and effective remedies at the first point of contact. The research has shown that:
The faster the immediate response time, the better the level of customer satisfaction.
The less number of contacts to get problem solved, the better the level of customer satisfaction.
However, some of the customers do not complain due to the reasons of attribution to self, uncertain of evaluation and embarrassment.

Effective service recovery can, in many cases, avoid customer switching and restore confidence in the service firm. When customer complains, they give the firm a chance to correct problems, restore relationship with the complainer and improve future satisfaction. Service recovery is therefore