How Decisions in Customer Service Impact the Level of Sales and the Ultimate Profitability

A lot of companies have invested significant resources in developing the quality of customer service in their companies in order to increase customer satisfaction and increase the level of customers who become loyal to the company. Gilbert and Veloutsou (2006) acknowledge that indeed customers are the key to long term business success, profitability, and growth. In response to a business environment that is increasingly competitive, a growing number of companies are increasingly using their customer service personnel to build long term relationships with clients, with different organizations adopting IT-based strategies in order to better manage their customer relationships. The benefits of a satisfied customer are recognized widely in marketing as well as management literature (Sui-Hua Yu, 2007. Palic, Maricic, Kovac, 2011). Indeed various research has linked a positive relationship between high-quality customer service, o customer loyalty in terms of repeated purchases, cross buying behavior and reduce price sensitiveness of the consumers (Ibrahim Najjar, 2008. Oliver, 1997. Bloemer Odekerken-Schroder, 2002. Yu, Shean-Yuh, Yu-Yi, 2011). Most organizations have to deal with the issues of high-quality customer service and the impact that such services have on corporate profitability in their course of business. This research considers the relationship between these two specifically analyzing the impact that customer service decisions have on company sales and hence profitability. Company sales and profitability are in this case impacted by high customer loyalty due to their satisfaction with the quality of services that they receive. Over the past two decades, there has been an increase in customer-focused strategies towards increasing company growth. Notably in the new economics of customer service orientation, customers are the central concern of the management of any organization. In this sense, the management focuses on factors that drive profitability within the service paradigm ranging from training and development of customer service, compensation that is linked to performance, investment in customer service management systems, and investment in frontline employees (Heskett, Jones, Loveman, Sasser, Jr, Schlesinger, 2008). There has been a wide array of research that has been carried out on the connection between customer service, customer loyalty and the impact that these have on profitability within an organization. While a lot of studies have focused on fast consumer moving goods or the financial products or service (Bloemer Odekerken-Schroder, 2002. Yu, Shean-Yuh, Yu-Yi, 2011. Sui-Hua Yu, 2007. Palic, Maricic, Kovac, 2011), none has looked into the mass merchandising sector.This paper focuses on this sector by analyzing consumer shopping behavior and customer service in Beira Mar Mall, which houses a wide array of stores ranging from grocery, jewelry, clothing, shoes, toys, luxury goods to a movie theater.