Applying the service profit chain to analyse retail performance

Abstract

Purpose – The 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/approach – The 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.Findings – Although 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 dif...