Applying the service profit chain in a retail environment - Challenging the "satisfaction mirror"

This paper reports the result of an exploratory study of the application of Heskett, Sasser and Schlesinger's service profit chain to a single organis ation, one of the UKs leading grocery retailers. The results showed correla tions between profit, customer loyalty, customer satisfaction, service valu e, internal service quality, output qualify and productivity; however there was no support for the claim that these ave driven by employee satisfactio n and loyalty. In fact, to the contrary, there was a strong correlation bet ween employee dissatisfaction and store profitability. This research raises questions about the robustness of a central premise of the service profit chain, which is that strong business performance is the result of a mirror- effect between employee and customer satisfaction. The paper considers the implications for management and calls for the development of a contingency based understanding of the drivers of business success.