Investigating the Role of Service Encounter in Enhancing Customer Satisfaction

Introduction

Virtual stores exist in the cyberspace and offer merchandise and services through an electronic channel to their customers with a fraction of the overhead required in a bricks-and-mortar store (Chen & Tan, 2004; Hoffman, Novak, & Chatterjee, 1996; Yesil, 1997). Given the lower setup costs, lower cost per customer contact, and lower maintenance cost of virtual stores, individuals can now easily own a virtual store (i.e., to become an e-tailer). In recent years, several pure e-retail companies have created wealth and successfully built up reputations of their business and brands of product. It is found that some of these e-tailers set up a customer service center where on-line shoppers can access a real person over the phone to answer their questions.

Levary and Mathieu (2000) indicated that market share is determined by a retailer's ability to attract new customers and retain existing customers; customer total satisfaction with the purchasing experience affects retailer ability to attract new customers and retain existing customers. Krampf (2003) suggested that customer satisfaction is a key to a firm’s survival in today’s marketplace, it has been embraced by practitioners and academics alike as “the highest order goal of a company” (Peterson & Wilson, 1992). Even though the online retailing is becoming a common business model, and some of the e-tailers have set up a customer service center, there has been a lack of research examining the role of such service encounter in enhancing customer satisfaction.

There is growing consensus that service quality is an antecedent of satisfaction with services (Birgelen, Ruyter, Jong, & Wetzels, 2002). Prior studies have suggested that service quality and information quality can predict customer satisfaction (Wang, 2008; Schaupp, Belanger, & Fan, 2009), and service encounter can predict service quality and information quality. In the context of online purchase, Zeithaml et al. (Zeithaml, Parasuraman, & Malhorta, 2002, p. 362) argued that companies need to shift the focus of e-business from e-commerce (the transaction) to e-service (all cues and encounters that occur before, during and after the transactions). Buckley (2003) also suggested that understanding, measuring and managing service quality on the web has become a topical issue for ensuring customer satisfaction.

Gounaris et al. (2005) indicated that in the context of e-shopping the replacement of human-to-human interactions with human-to-machine interactions may cause a constraint on the growth of online purchase. Although firms gained efficiencies from selling online (e-commerce), their failure to focus on customers’ needs and wants resulted in poor online service performance (Loonam & O'Loughlin, 2008). Therefore, according to extant literature of Internet marketing (e.g., Buckley, 2003; Gounaris, Dimitriadis, & Stathakopoulos, 2005), providing high quality human-to-human service over the phone in virtual stores is as important as that in physical stores.

A service encounter is defined as the period of time during which a customer interacts with a service (Shostack, 1985). Groth et al. (Groth, Butek, & Douma, 2001) suggested that there are different service modes of the service delivery: face-to-face, telephone, and Internet. For customers who shop on-line, they can contact a ‘real’ customer service representative over the phone. Mallalieu (2006) stated that we typically trust the advice of experts to help us make effective decisions; salespeople often spend time trying to establish some type of rapport with a consumer prior to attempting to complete a sale. Customers’ perceived quality of the service and information they receive based on the service encounter interactions will impact their overall feeling of online purchase experiences.