Positive Service Encounter: A Tool for Customer Loyalty in Retail

Abstract

Customers’ perception of service depends on service encounter. The purpose of this paper is to build and test a model of relationship between service quality, customer satisfaction and loyalty in a retail context. It also aims at understanding different factors that effect service quality. The subject is approached by a cross-sectional survey on a random sample of 230 customers after their service encounter with store employees in retail outlets. Structural Equation Modeling is used to test the model developed during the study. The findings indicate that responsiveness and assurance provided by the retail employees are the most important contributors of good service quality. Although competence is a better tool of customers’ measurement of service quality, appeal of the employees’ in terms of looks and personality are not found to effect customers’ perception of service quality. Results suggest that good service quality contributes to development of customer loyalty through customer satisfaction. The study would give an insight into understanding the importance of positive service encounter along with the implications of employees’ behavior for customer loyalty in service setting. This study contributes to marketing practice by offering an understanding to acquire customer loyalty. It also emphasizes the need to understand a positive service encounter which impacts the service quality.