Abstract: Finding out the formation process of service recovery paradox is useful for enterprises to control failures and adopt recovery measures. This paper reveals the entire process of the formation of service recovery paradox based on customer satisfaction. The result shows: the frequency, severity and controllability can cut customer satisfaction down remarkably, among which the severity is the most influential factor; both the level of physical compensation and non-physical compensation can increase customer satisfaction; relationship strength will moderate the change of satisfaction for these two processes, customers with low relationship strength are more sensitive to the frequency and severity and pay more attention to physical compensation.

Key words: service recovery, service recovery paradox, customer satisfaction