Authors: Philipp Sauer, Brandon D. Spradley, Fred J. Cromartie
Affiliations: United States Sports Academy
Philipp Sauer, Ed.D.
+49 151 44510307
Philipp Sauer received his doctoral degree (Ed.D.) in Sports Management from the United States Sports Academy. Furthermore, he is an alumnus of the University of Liverpool, UK and the European University of Applied Sciences, Germany. His academic work mainly focuses on service and customer relationship management.
Organizations have learned that services contribute largely to the success of product selling. The arrival of the Internet has transferred power from the suppliers to the customers. There are several industries, which have experienced heavy changes in the last few decades. The financial and travel industries are two prime examples of how rigid structures have changed significantly.
Like organizations from traditional industries, sport organizations face the challenge of meeting the rising expectations of spectators. A successful philosophy that focuses on total quality orientation in the transaction of the provider with the consumer asks organizations to clearly define their customers for being able to identify and respond to needs, but also to influence what is perceived service quality by the targeted segment of the market (Papadimitriou & Karteroliotis, 2000).
Keywords: service, employees, customer contact, customer relationship, service profit chain, relationship marketing
Over the past decade, the size of the service sector has significantly increased in both developed and emerging countries. Technological advancements have led to an overall decrease of physical activity around the world. According to the International Trade Association (2012), service activities in the U.S. accounted for nearly 80% of the private sector Gross Domestic Product (GDP) and 82% of all private sector employment in 2011 (see Figure 1). The U.S. is both the top importer and top exporter of services in the world with services comprising 29% of total U.S. exports in 2011 (ITA, 2012).
Fig. 1 Shares of U.S. Private Sector GDP 2011
The World Wide Web has not only changed the way people work, but also the way they socialize and share information and ideas. In this context, customer behavior and customer needs have evolved in response to changing demographics and lifestyles (Lovelock & Wirtz, 2007). Organizations have realized that research into customer needs and priorities might provide useful insights into what specific features to emphasize and how much they might be worth to customers (Lovelock & Wirtz, 2007). Service providers should be able to identify customer needs and expectations constantly in order to meet customer demands.
The consumers’ encounter with the service staff is probably the most important aspect of a service, as the intangibility of services automatically makes the customer contact a vital determinant of the quality of service experience. In this context, Verma (2012) classified service employees according to customer-contact and non-customer-contact employees. “Customer-contact employees come into contact with customers in the process of the service provision” (Verma, 2012, p. 170). Examples for customer-contact employees in a sports environment are stewards, or sales personnel in retail. Non-customer-contact employees are employees who contribute to the service production but do not come into contact with the customers. Those back-end employees, such as electricians or kitchen help, support the delivery of the product but are not seen in any as customer-contact employees.
As mentioned above, special importance must be paid to customer-contact employees, as they have direct bearing on the quality of the service experience. Verma (2012) differentiated high-contact and low-contact services. This might automatically provide little inside in the operational and system requirements (Verma, 2012). Customer contact refers to the physical presence of the customer in the situation (Verma, 2012). “The extent of contact refers to the percentage of time a customer ought to be in the system out of the total time it takes to serve him or her” (Verma, 2012, p.170). In high-contact service, service personnel interact for a certain period of time with the customers, like a guest service employee. In contrast, a low-contact service describes a very short period of interaction with the customer, like a ticket-taker, or an attendant. Furthermore, service personnel may also be classified according to visibility. There are visible service personnel, like salespersons, and invisible service personnel such as cooks.
It is common that sport organizations receive varying feedback from their customers depending on different employees. When interacting with high-contact service personnel, customers assume significance to skills like social graces, communication, language, and also to personality traits like friendliness, extroversion, energy or politeness (Verma, 2012). A key success factor for service personnel is being able to relate emotionally with the customer. To ensure the high-contact service personnel being dexterous in public relations and inter-personal skills, and the low-contact employees having high technical and analytical attributes, Chowhan (2015) identified several factors, which may significantly improve the quality and performance:
- Careful selection and training of personnel.
- Laying down norms, rules, and procedures to ensure consistent behavior.
- Ensuring consistent appearance, and
- Reducing the importance of personal contact by introducing automation and computerization wherever possible.
Customer-contact employees have a key role in delivering service quality. However, setting standards and communicating rules and norms are not enough to guarantee service quality in an environment, which is devoid of other positive motivators and stimuli (Kandampully, Mok, & Sparks, 2001). Marriott & Brown (1997) formulated a simple but meaningful philosophy about the treatment of employees in a service environment: “Take care of your employees, and they will take care of your customer” (p. 34). As Kandampully et al. (2001) worked out, it is essential for sport managers to create a service environment that is not accomplished by words alone but by observable actions that promote good service.
Creating a successful and healthy working climate is a key success factor for service business success. As Cook (2004) reported, “The quality of external service delivery is a reflection of the quality of service that people within the organization provide each other” (p. 6). This means that employees who do not feel valued or appreciated are less likely to deliver excellent service (Cook, 2004) that in turn results in a correlation between employee satisfaction measures and customer satisfaction measures. According to Figure 2, customer satisfaction management therefore not only requires systematic analysis and monitoring of customer behavior, but also and especially creative service training and providing a pleasant working environment. By improving employee satisfaction, successful service organizations are able to deliver superior service to customers.
Fig. 2 Customer Satisfaction Management (Cheil Industries, 1999)
Employee Customer Relationship
Grönroos (1998) used a triangle to illustrate that customer and employee relationships of services are directly affected by traditional external marketing and the interactive marketing between customers and employees in the service encounter, and indirectly affected by the internal marketing directed at employees (Hennig-Thurau & Hansen, 2000).
Fig. 3. Relationship Marketing (Grönroos, 1998)
In general, the aims of relationship marketing are both to attract and acquire new customers and to retain existing ones. For being able to build a successful relationship, a service organization needs to use all available resources to serve the customer. As the interaction between the employee and the customer seriously affects the overall customer experience, service organizations must ensure that their employees have the traits of customer service orientation.
As illustrated in Figure 3, the fundamental for service organizations is to establish a relationship marketing culture in their internal markets. Ultimately, every employee within a company is an internal customer of some other employee, and thus forms an internal customer relationship (Hennig-Thurau & Hansen, 2000). Hennig-Thurau & Hansen (2000) noted that relationship marketing should not be limited to frontline employees but should be extended to all personnel, as “high internal service quality and internal customer orientation are just as important as external service quality and customer orientation” (p. 162).
Getting and retaining employees, who are customer conscious, is the basic requirement to achieve this. Bellou (2007) suggested that it is important to establish a culture that allows employee involvement, facilitative management styles, and decentralized decision-making in order to create an organizational culture, which promotes a customer service orientation. In this context, Bennett & Durkin (2002) emphasized that such an organizational culture requires spontaneity, flexibility, creativity and customer conscious employees. While centralization of the decision-making process in the service industry would only create barriers, employees have to be empowered and have to derive their identity mainly from association with the organization and customer base, rather than the nature of their job (Nasir, 2015). A prime example of being parochial and responding primarily to customer needs, can be found in the statement of the chairman and CEO of Starbucks, who said “…at Starbucks, I’ve always said we’re not in the coffee business serving people, we’re in the people business servicing coffee” (Satterfield, 2015, para. 2).
Empowerment can be a key management strategy for service organizations in a sports environment. According to Daft (2000), empowerment means giving employees the power, freedom, knowledge, and skills to make decisions and perform effectively. Ina sports environment, the main focus of service providers is to resolve any service failure quickly. Service providers, who are able to solve problems quickly can easily turn unsatisfied customers into loyal ones. As Li & Bernoff (2011) found out, it is expected that customers who experienced a problem that has been solved in a quick and professional manner are more likely to be loyal to a company than customers who have never experienced a problem. Especially in a fast-paced environment, service providers must empower their employees for being able to deal with complaints and failure effectively.
The major advantages of employee empowerment in a service environment are as follows:
- Quicker responses to customer needs.
- Quicker recovery to service failures.
- Increased motivation among the workforce.
- Empowered employees can provide better care for customers.
- Empowering employees may become a great way to promote new service ideas (Nasir, 2015)
Though special attention must be paid to empowering frontline employees, all employees within a service organization work together to delight the customers. Therefore, it is critical for every employee to understand the role he/she plays in delivering experiences.
The Service Profit Chain
Heskett, Jones, Loveman, Sasser, & Schlesinger (1994) established relationships between profitability, customer loyalty, and customer satisfaction to the value created by satisfied, loyal, and productive employees. Figure 4 provides a detailed illustration about the links and relationships of those factors.
Profit and growth are stimulated primarily by customer loyalty. Loyalty is a direct result of customer satisfaction. Satisfaction is largely influenced by the value of services provided to the customers. Satisfied, loyal, and productive employees create value. Employee satisfaction, in turn, results primarily from high-quality support services and policies that enable employees to deliver results to customers. (Heskett et al., 1994, p.164)
Fig. 4. The Links in the Service-Profit Chain (Heskett et al., 1994, p.166)
As illustrated in Figure 4, the starting point of the service profit chain is the internal service quality. Factors like workplace design, job design, employee selection and development, employee rewards and recognition, and tools for serving customers are major influential factors of the internal service quality. This emphasizes the role of the employees being the basic fundamentals of the entire service profit chain. Kotler & Keller (2009) discovered, excellent service companies are aware that positive employee attitudes will promote stronger customer loyalty. More precisely, “employees thrive in customer-contact positions when they have an internal drive to (1) pamper customers, (2) accurately read customer needs, (3) develop a personal relationship with customers, and (4) deliver quality service to solve customer problems” (Kotler & Keller, 2009, p. 407) Successful companies like Hallmark, John Deere, and Four Seasons Hotels, possess employees who demonstrate real company pride and reflect a high level of internal service quality.
In this context, service companies need to pay particular attention to frontline employees. Sport managers must always be conscious that the internal service quality is reflected in their employees’ attitude towards the job, people, and the organization (Verma, 2012). Continuous investments must be made in employees, to ensure productivity and employee retention. In addition, regular communication and obtaining feedback are also essential tasks for service providers. Knowing what service employees value most on their job is important for continuous improvements. Heskett, Jones, Loveman, Sasser, & Schlesinger (2008) mentioned an example of how service organizations can ensure a high level of internal quality. “At USAA, for example, telephone sales and service representatives are backed by a sophisticated information system that puts complete customer information files at their fingertips the instant they receive a customer’s call” (Heskett et al., 2008, para. 9). Furthermore successful service organizations offer state-of-the-art job-related training and various other education offerings (Heskett et al., 2008). Service managers should regularly check that in most service jobs, the real cost of turnover is the loss of productivity and decreased customer satisfaction (Heskett et al., 2008).
Social media and new technological possibilities allow customers to have a more value-oriented experience today. As a result, the power of consumers has significantly increased over previous years; as consumers can easily publish their own field reports and experiences online. This automatically asks sport managers to create a sustainable external service value. Despite the factors of employee retention and employee productivity, particular attention must be paid to the service encounter level. Customer loyalty and satisfaction are results of the external service value. “External service value refers to the value received by customers based on the extent in which the service designed and delivered meets their needs” (Chang, 2010, p. 93). Customers automatically focus on outcomes, results and experiences, which in turn leads to higher customer satisfaction (Collier & Evans, 2010). Combining both internal and external values will create a self-marketing environment that will perpetuate itself (Varey & Lewis, 2000).
Every service provider tries to satisfy his/her customers. Hernon & Altman (2010) define customer satisfaction as “an emotional reaction – the degree of contentment or discontentment – with a specific transaction or service encounter” (p. 5). In a sports environment, customer satisfaction may or may not be directly related to the performance of the service encounter. There are several environmental factors that cannot be influenced by the service encounter but which may influence the overall customer satisfaction. Weather, long waiting queues, or even the performance of the favorite team are just a few factors that can influence customer satisfaction negatively or positively. All those factors illustrate that customer satisfaction is a “uniquely personal and internalized experience that generates a spontaneous perception based consciously or subconsciously, on expectations” (Hernon & Whitman, 2001, p. 32).
In this context, Hernon & Whitman (2001) illustrated three types of expectations that play a role in determining the customers’ level of satisfaction (Figure 5).
Fig. 5 The Expectations Kernel (Hernon & Whitman, 2001)
Core expectations refer to most basic expectations, like respect, dignity, and attributes that make human interaction civilized (Hernon & Whitman, 2001). Those core expectations may exist unconscious from birth and are common to all people (Hernon & Whitman, 2001). It can be fatal for the success of a service provider if those core expectations are violated. However, especially in service environments, those core expectations can be violated very easily.
The next part of the expectations kernel refers to learned expectations. Learned expectations derive from individual experiences and influential factors of any kind. Particular attention must be paid to influential factors. In general, customers’ expectations have expanded significantly. This results from customers having access to more information than in the past, and also from customers being more educated about the service offerings. Internet portals like TripAdvisor have become a widely accepted source for customers, looking for quality information. This also means that power has shifted in favor of the customer. Since the evolution of social media, customers are able to share their experiences easily to people from all over the world. Service organizations must be aware that unsatisfied customers can damage one’s own reputation much easier than in the past.
The final component of the expectations kernel is a class of anticipated expectations “that come into play when one imagines that a dimension of the experience should be provided, whether it is offered or not” (Hernon & Whitman, 2001, p. 34). In this context, Hernon & Whitman (2001) identified a competitive opportunity, as customers may anticipate a quality of service that is not currently offered. Innovative service providers are asked to anticipate these expectations and offer them before the competition does. Innovative service providers in sports environments have introduced various methods, like the introduction of electronic payment systems with individual payment cards, automated admission, or premium concierge staff.
Those three components implicate customers’ expected experience. “When actual experience meets one’s expectations, the customer is content, and when actual experience exceeds expectations, the customer is delighted” (Hernon & Whitman, 2001, p. 34).
The ultimate goal for all service organizations is to build customer loyalty, as this leads to profit and growth (Heskett et al., 2008). However, the special characteristic of a sports environment which is similar to a monopoly, automatically forces the majority of the customers to stay with the services offered because they simply have no place else to go. This should not lead service organizations in sports environments to rely on their monopolistic position, but motivate them to create new opportunities and improve the customer service. Therefore, service managers have to find ways to entice customers to be loyal. As Figure 6 describes, customer satisfaction is the basic fundamental for customer loyalty. The more satisfied a customer is, the more loyal he/she will be.
Fig. 6 A Satisfied Customer is Loyal (Heskett et al., 2008)
Despite the potential harm that extremely dissatisfied customers may create, very satisfied customers are not only loyal to the service organizations, they are also willing to repurchase and willing to recommend. In fact, Goldstein (2010) found loyalty being the intersection of satisfaction and willingness to both repurchase and recommend, as illustrated in Figure 7.
Fig. 7 Customer Loyalty (Goldstein, 2010)
Goldstein (2010) recommended including two questions at the end when conducting a satisfaction survey: “Would you be willing to recommend (Company) to your colleagues and industry acquaintances?” and “Would you be willing to repurchase from (Company)?” (p. 28). Customers who are willing to recommend a service organization are not only indicating that they have confidence in the company, but also that they stand behind their reference (Goldstein, 2010). Furthermore, customers’ willingness to repurchase gives a very good indication about both, prior customer experiences and about future customer relationships. Service managers must be aware that an increase in customer loyalty can produce significant profit increases. This is what makes customer loyalty the ultimate goal for every service organization. “In general, fans who are loyal to their teams attend their teams’ games more frequently than less loyal fans, and loyal fans purchase more of the team’s – and team sponsors’ – merchandise” (Swayne & Dodds, 2011, p. 521).
The Service Environment: Additional Factors Affecting the Customer Experience
The core product of any sport event is the competition between two teams or two athletes. This means that the core product is unpredictable and beyond all managerial control (Yoshida & James, 2010). It is the ancillary services like stadium employees, parking and seating comfort, and facility layout that can be controlled and should be designed carefully to serve customer expectations. Finally, the service environment plays a major role in the overall customer experience and customer perception of the service provider’s image and positioning. While the influence and importance of service employees has been illustrated earlier in this paper, this section focuses on additional important dimensions of the service-scape, like stadium factors.
In the United States, about 100 new major league professional sport venues are constructed, renovated, under construction, or in the planning process (Siegfried & Zimbalist, 2000). This number shows that sport managers and team owners have recognized that sport facilities are a very powerful way to enhance the customers’ stadium experience and improve customer satisfaction. However, in 1992, Bitner, discovered the major role of a sport stadium’s physical surroundings on customer satisfaction and especially on future attendance.
In this context, Kajioka (2014) has identified three major groups of factors that influence customer satisfaction in a sport environment – sensory experience, novelty of the stadium, and stadium structure.
The effect of ambient conditions can be very powerful. “Ambient conditions refer to those characteristics of the environment that pertain to your five senses” (Lovelock & Wirtz, 2007, p. 295). Though customers may not even be aware of those conditions, they can still affect an individual’s well-being, perceptions, and even attitudes and behaviors (Lovelock & Wirtz, 2007). This means that a clever design of a stadium’s ambient conditions can positively impact the desired behavioral responses among customers. Factors like music, scent, or color can have a powerful impact on customer perceptions and behavior. Lee, Ryder, & Shin (2003) worked out that cleanliness most affected fan attendance at sport events, while Dhurup, Mofoka, and Surujlal (2010) also identified an arena’s seating comfort as a factor, which directly determines future spectator attendance.
Furthermore, an arena’s spatial layout and functionality are particularly important. Sport managers have to take care that customer needs are met right from the beginning. In a sports environment, the beginning refers to purchasing tickets, travelling to the arena and the parking situation. Hill and Green (2000) found out that parking is the most influential factor on the home team fans’ future attendance. Sport managers must ensure that arriving to the stadium is as customer friendly as possible, by providing sufficient parking space, and easy access to the arena with well-trained service personnel on site. It must be avoided that customers become afraid of a crowded event, as perceived crowding greatly impacted fans’ decisions to attend (Wakefield & Sloan, 1995). In general, limited stadium space and access were found to significantly affect customer satisfaction (Wakefield & Sloan, 1995).
The use of signs and symbols also needs to be designed carefully. “The challenge for service-scape designers is to use signs, symbols, and artifacts to guide customers clearly through the process of service delivery and to teach the service process in as intuitive a manner as possible” (Lovelock & Wirtz, 2007). The challenge for sport arenas is particularly high, as sport arenas usually welcome a high proportion of new or infrequent customers and also a high degree of self-service. If customers are not able to derive clear signals, they can easily feel disoriented and lost in the environment. This, in turn, leads to frustration and anger and negatively influences the customer experience.
Despite the factors mentioned above, the novelty of a stadium itself has significant influence on customer attendance. According to Howard & Crompton (2003), the stadium novelty effect is defined as sport stadiums and arenas ability to accumulate fans regardless of the sports team’s performance. On average, major league teams experienced a 22.2% increase of fan attendance during the opening year of their venues, as a result of the stadium novelty effect (Howard & Crompton, 2003). Roy (2008) found out that attendance at minor league stadiums even increased more in comparison to major league stadiums. The fans’ initial excitement and their curiosity to experience a new facility were major drivers for this development. Clapp and Hakes (2005) worked out that a personalized architecture and advanced technology contributed to keeping a high level of fan attendance after a stadium’s opening year.
Lovelock & Wirtz (2007) concluded that beyond esthetic and technological considerations, the best service environments must be designed with the needs of the customers in mind if they are to achieve the goal of guiding these customers smoothly through the service process.
As mentioned above, service organizations need to consider the holistic customer experience if they want to achieve creating superior customer value. Service managers must be aware that it is the customers’ total experience which affects perceptions of value, word-of-mouth endorsements, and patronage intentions (Lovelock & Wirtz, 2007). An exciting soccer match consumed in a crowded stadium with uncomfortable seating, too few sanitary accommodations, and long queues at refreshment kiosks can be one bad experience for customers. The same match in a comfortable relaxing environment, with enough sanitary accommodation and the possibility to get refreshments or food without having to experience long waiting queues, is a completely different experience.
In this context, Lovelock & Wirtz (2007) “have identified three fundamental principles that provide a foundation for creating distinctive customer value through experiences” (p. 353).
- Fuse experiential breadth and depth. “Experiential breadth refers to the sequence of experience customers have in interacting with the organization” (Lovelock & Wirtz, 2007, p.353). Such experiences begin well before a customer accesses a stadium. In a sports environment, the customer experience usually starts with purchasing the tickets. How difficult was it for him/her to purchase the tickets? Was the service employee competent? Was the stadium easy to find? What about the parking situation? There are many clues along the holistic customer experience. Sport organizations should manage these clues in order to evoke positive customer perceptions. Organizations might provide information about arriving at the stadium and the parking situation with the delivery of the tickets. They may also ensure well-trained service personnel at the parking facility and an adequate usage of signs and symbols to inform customers about directions, etc.
Depth refers to the number and diversity of sensory clues at each stage (Lovelock & Wirtz, 2007). A sport organization will be more successful in sustaining an impression in customers’ perceptions, the more it uses layers of multi-sensory clues that reinforce the targeted impression.
- Use mechanics and humanics to improve function. “Mechanics and humanics must be simultaneously addressed and blended with the functional clues of the offering into reciprocally supported experience clues” (Lovelock & Wirtz, 2007, p. 353). Service organizations should use stimuli to affect customer’s perceptions of functional quality.
- Connect emotionally. To respond to the emotional needs of the customers, sport organizations need to integrate the emotional value in the total customer experience. Especially, in a sports environment, emotional connection is of particular importance. The use of a team’s logo, a team’s colors, the team’s song, or video clips of emotional victories are just a few ways to connect with the customers in a sensory way. It is crucial for the success of every service organization to manage positive emotional elements of the experience.
SUMMARY AND APPLICATION IN SPORT
In summary, there are only a few studies which investigate the field of service offerings in a sports environment and its impact on the customer experience. There is a need to identify those service offerings which are of particular importance from a customer’s perspective and determine the total experience.
Based on the literature investigated, it is evident that the quality of service employees is of particular importance from the customers’ perspectives. Sport managers need to pay particular attention to the quality and motivation of frontline employees as they are in the first line of customer communication. In this context, the service-profit chain and the unique employee-customer relationship illustrate that employee satisfaction has a direct impact on customer satisfaction. Satisfied employees will provide customers with interpersonal and emotional sensibility, as they have a high motivation and energy to provide excellent customer service. Satisfied and motivated employees build the foundation for an effective customer relationship management and customer loyalty.
The increasing customer demand for high-quality services and the extensive competition in the professional sport industry asks sport managers to be innovative and competitive to be able to attract new customers and to satisfy existing ones. As a result of the growing importance of Internet portals like TripAdvisor, sport managers are required to continuously monitor customer satisfaction and also to establish effective complaint management.
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LIST OF FIGURES
- Shares of U.S. Private Sector GDP 2011
- Customer Satisfaction Management
- Relationship Marketing
- The Links in the Service-Profit Chain
- The Expectations Kernel
- A Satisfied Customer is Loyal
- Customer Loyalty