Introduction This paper's purpose is to illustrate the relationship of profitability to intermediate, customer-related outcomes that managers can influence directly. It is predominantly a general management discussion, consistent with the Nordic School's view that services are highly interdisciplinary, requiring a "service management" approach (see Grönroos, 1984, 1991). Its findings support the theory that customer satisfaction is related to customer loyalty, which in turn is related to profitability (Heskett et al., 1994, and discussed in Storbacka et al., 1994). While this theory has been advocated for service firms as a class, this paper presents an empirical analysis of one retail bank, limiting the findings' generalizability. The service profit chain (Heskett et al., 1994) hypothesizes that: Customer satisfaction-> customer loyalty-> profitability. The research presented here, while unable to demonstrate causality because of its reliance on OLS regression of cross-sectional data, does illustrate that customer satisfaction, customer loyalty, and profitability are related to one another. Thus: Customer satisfaction <-> customer loyalty <-> profitability. To this end, this research examined two hypotheses: H1: Customer satisfaction is related to customer loyalty. H2: Customer loyalty is related to profitability. This research intentionally focuses at a relatively high level of abstraction in an effort to contribute to the growing body of theoretical and empirical knowledge on the relationships among customer satisfaction, customer loyalty, and profitability (see

The Internet’s influence in creating e‐services has been revolutionary for providers and their customers. Unfortunately, there has been a wide gap between inspiring applications of the Internet that help increase service customization while maintaining or even improving delivery efficiency, and downright flops in which companies that have made bold promises have failed to deliver on even a portion of their pledges. This paper provides an examination of e‐services utilizing three approaches in order to provide guidance on how to fly rather than flop. First, we develop a model of the e‐service customer retention. Second, we offer a case study of Sothebys.com to illustrate how a well‐known, but not typically technologically adventurous, company can utilize e‐services to expand its offerings and streamline its services. Finally, we offer a profiling technique for analyzing the benefits and challenges of e‐services for particular industries.

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This paper develops a framework exploring the question,``How does service affect the economics of e-commerce?'' Development of the framework requires an understanding of the different forms service takes in e-commerce. These are described as``virtual'' (either pure information or automated) and``physical'' (requiring some degree of human intervention). The framework suggests that because the nature and quantity of physical service necessary to deliver value to customers influences the quantity of human intervention required, it also influences a firm's ratio of variable to fixed costs, which alters its``scalability''. The paradox comes in that while reduced scalability is viewed negatively by many venture capitalists and proponents of ecommerce, the cause of that reduction in scalability, human intervention, may help a firm to differentiate its offering to customers, thus providing a source of competitive advantage.

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