Customer satisfaction – a big step towards company profitability?

By |December 22nd, 2011|International Tourism Context, literature review|1 Comment

This literature review is written by Bernd-Niklas Bierbaum as part of his NHTV Master in Tourism Destination Management.

In their paper, Hesket et al. (1994) introduce the concept of the service profit chain.  “The S-PC postulates that operations contribute to the profits of a service firm via the following chain of logical deduction (Yee et al. 2009, p.617):”

Profitability and growth are primarily stimulated by customer loyalty.
Loyalty is influenced by customer satisfaction.
Satisfaction is influenced by the service values provided.
Value is created by loyal productive and satisfied employees.
Employee satisfaction results from support services and policies that enable employees to deliver high quality services. (Heskett et al. 1994)

This paper will focus on the question whether it is enough for a company to simply „satisfy“ their customers in order to achieve loyalty and finally profitability. In the following, the question will be raised and discussed whether there might be more to the concept of profitability than simply being able to satisfy a customer. Therefore, customer satisfaction, customer loyalty, the relationship between loyalty and profitability and finally the importance of the “moment of truth” and the service encounter will be evaluated and highlighted from different standpoints.