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Purpose This paper aims to explore service encounters from a social behavior perspective. By proposing that employees’ emotional labor strategies are influenced by customer displays of emotion, this paper answers calls to investigate the reciprocal nature of service interactions and the importance of taking both customers and service providers into account when delivering high-quality service is the goal. Design/methodology/approach The sample consisted of 121 dyads of customers and service employees from hairstyling salons. Data were collected from observations of the customers’ emotional displays, self-report surveys administered to the service employees measuring strategies of emotional labor and self-report surveys administered to the customers to assess their rapport with the service providers and their loyalty intentions. Findings Length of acquaintance was positively related to customers’ positive display, which mediated the relationship between length of acquaintance and employee-customer rapport. Customers’ positive display was negatively related to employees’ deep acting (i.e. modifying inner feelings) but not to surface acting (i.e. modifying superficial expressions). Customers’ positive display and employees’ surface acting were related to loyalty intentions through the mediation of rapport. Originality/value This study provides a better understanding of the customer’s role as the target, and a possible cause of emotional regulation among service employees. It underscores the role of service relationships in customers’ emotional behavior and customer-related outcomes.

Many studies have explored emotional regulation on the part of service employees, and its antecedents. However, customers' emotional regulation in general, and how it is affected by service employee behavior in particular, have received only scant attention. The present article explores a model suggesting that service employees' ingratiatory behavior relates to customer emotion regulation strategies, which in turn are related to customer satisfaction and loyalty. The model was tested with 131 service employee-customer dyads. The results show that service employee ingratiation was positively related to customers' deep acting but not related to surface acting. Customers' deep acting was positively related to their satisfaction. A positive relationship was found between customer satisfaction and loyalty.