How can businesses effectively translate customer relationships into tangible profits? This paper addresses customer‐relationship economic issues, more specifically the link between service quality and profitability from a relationship marketing and management perspective. In this perspective the task of marketing is not only to establish customer relationships, but also to maintain and enhance them in order to improve customer profitability. In the service quality literature higher quality is assumed to lead to customer satisfaction, which leads to customer loyalty and this drives customer profitability. The framework highlights factors that, in addition to service quality and customer satisfaction, influence the links between service quality and profitability. Also discusses aspects of improving the profitability of relationships, such as enhancing relationship revenues through higher degrees of patronage concentration, and reducing relationship cost by changing the episode configuration of customer relationships. The work discusses improving the profitability of relationships, such as enhancing relationship revenues through higher degrees of patronage concentration, and reducing relationship cost by changing the episode configuration of customer relationships. This underscores the importance of customer relationship management (CRM) for achieving sustainable business success.
Published in the International Journal of Service Industry Management, this article aligns with the journal's emphasis on service quality and customer relationship management. By exploring the link between relationship quality and profitability, the research offers insights for service organizations seeking to optimize their CRM strategies and improve financial performance.