Applying the service profit chain to analyse retail performance

Abstract

PurposeThe purpose of this paper is to apply Heskett, Sasser and Schlesinger's service profit chain to a single retail service with a view to developing a better understanding of the performance linkages between employee perceptions and performance, customer perceptions and behaviour, and financial performance.Design/methodology/approachThe research was based on the case study of a UK home improvement store chain. Measures of each of the variables in the service profit chain were analysed using Pearson's correlation coefficient, with a dataset based on 75 stores.FindingsAlthough analysis of the performance relationships revealed many interesting correlations, the data lent little support for some of the expected linkages; in particular, the “satisfaction mirror” effect between employee and customer satisfaction and loyalty, and the link between customer loyalty and financial performance. The possible asymmetries and non‐linearity of certain performance relationships may also have added to the difficulty in applying the model to this organisation. Furthermore, the study revealed many performance linkages between variables which are not aligned in the service profit chain model.Originality/valueThe value of the paper lies in the conclusions directed at both practising managers and academics. It is contended that the service profit chain model cannot be applied generically to services but that managers should undertake the development of context‐specific models of their organisations. Unquestioning acceptance of Heskett et al.'s configuration of the service profit chain may indeed constrain managerial understanding of the complexities of business performance; whilst there is also a danger of applying a strait‐jacket to academic thinking on performance relationships and performance improvement.

If employees “go the extra mile,” do customers reciprocate with similar behavior?

“…There is support in the literature for this proposition (Bell & Menguc, 2002;Pritchard & Silvestro, 2005;Yoon & Suh, 2003). Previous research shows that ECB contributes to CS (Castro, Armario, & Ruiz, 2004;Netemeyer & Maxham, 2007).…”

“…Likewise, prior research has established the positive effect of employee satisfaction on customer satisfaction (e.g., Homburg & Stock, 2004Payne & Webber, 2006;Pritchard & Silvestro, 2005) as well as on customer perceptions of service quality (e.g., Snipes et al, 2005).…”

Perceived Service Quality and Customer Loyalty: The Mediating Effect of Passenger Satisfaction in the Nigerian Airline Industry

“…Other researchers further established the causal reciprocity of service quality and customer satisfaction, which creates further confusion [Salazar, Paulo, 2004;Wang, Chich-Jen, 2006]. Similarly, the claim that customer satisfaction leads to loyalty appears even less convincing [Egan, 2004;Pritchard, Silvestro, 2005]. Although a number of researchers have examined the relationship among perceived Unauthenticated Download Date | 5/12/18 12:34 PM service quality, customer satisfaction and loyalty in the airline industry internationally [Faheed, 1998;Saha, Theingi, 2009], to the best of the author's knowledge no study has yet investigated these relationships in the Nigerian airline industry.…”

Lean in UK Government: internal efficiency or customer service?

“…In others words, are they recognising the relationship between the internal and external processes and services? While this has been considered in the for-profit arena (see for example (Rust et al 1995;Pritchard and Silvestro 2005), the objective of this paper is to explore this within public sector organisations.…”