Why and When do Stores With Satisfied Employees Have Satisfied Customers?

Abstract

Stores with more satisfied employees also have greater customer satisfaction (CS). Two theoretical mechanisms have been employed to explain why: affective transfer (i.e., emotional contagion) and performance motivation (i.e., extra-effort service behaviors). The authors provide a constructive replication of these relationships, while also arguing for an important boundary condition: store busyness. The authors suggest that in busy stores, employee attitudes (a) are less likely to be emotionally expressed by employees and “caught” by customers, and (b) are less likely to emerge as extra-effort performance, compared to slow stores. In a survey study of 328 warehouse-style retail stores, with multisource and time-separated data and controlling for contextual features, the authors support both direct affective transfer and indirect effects via an objective performance measure (i.e., speed of response to customers' requests for help). However, these associations depended on store busyness: store employee satisfaction had less influence on CS and service responsiveness in busy stores compared to slower stores. The results suggest several practical implications. For example, interventions targeting employee morale will have a greater effect on customer reactions in “less successful” stores with fewer sales transactions, while busy stores will see more benefit from interventions targeting other factors.