INTERACTION OF EMPLOYEE LOYALTY AND CUSTOMER LOYALTY IN THE SERVICE INDUSTRY

The subject of customer loyalty is a focal concern of marketers who seek to identify its antecedents and casual structure with the aim of better understanding of its relationship with employee loyalty, particularly in the service sector. In the service industry the role of staff in creating value is significant, therefore it is argued that maintaining customer loyalty is almost impossible without having loyal employees, since loyal employees offer higher quality services and make major contribution to customer satisfaction and loyalty. The purpose of this study is to evaluate the relationship between employee loyalty and customer loyalty in the service industry. Data has been collected using a sample of 303 employees and 356 customers of Shahrvand and Refah chain stores, respectively. The four hypotheses have been tested by Structural Equation Modeling and Pearson Correlation analysis. Findings imply that employee loyalty and customer loyalty are strongly interdependent. Also, there is a positive and significant relationship among employee loyalty and service quality, service quality and customer satisfaction and customer satisfaction and customer loyalty.