Time lags, non-linearity and asymmetric effects in an extended service-profit chain

Abstract

Purpose This study aims to present an extended service-profit chain (SPC) framework for assessing service performance. This framework is then used to investigate non-linear and asymmetric links between service delivery investments and customer satisfaction, as well as time lags in organisational performance outcomes. Design/methodology/approach The study draws on panel data with repeated measures from a sample of automotive after sales service departments. Data collected comprises both objective and survey-based data, including operational inputs, productivity, service quality, service experience, behavioural intentions, customer retention and organisational performance. Findings Non-linear and asymmetric effects are identified, suggesting that customers’ evaluations of service performance are more sensitive to negative performance (dissatisfaction) than positive performance (satisfaction). Accordingly, focusing on attributes for which customers are experiencing negative performance first, and then allocating resources to attributes for which customers are experiencing positive performance, can be far more consequential for improving customer satisfaction. Practical implications From a practical perspective, the findings deepen current understanding of the relationships between service performance metrics. They also provide guidance for managers seeking to better deploy service resources to enhance service quality, customer satisfaction and customer retention to improve profitability over time. Originality/value Drawing on a unique and rich data set, this study provides a significant improvement on previous SPC frameworks by adding new dimensions identified in recent meta-analyses and addresses calls for more research into non-linear, asymmetric and longitudinal effects within the SPC.