Social and Physical Aspects of the Service Encounter: Effects on Trust and Customer Loyalty to the Service Provider

The purpose of this research is to evaluate the influence of two strategic service encounter dimensions on consumer beliefs and service loyalty. A conceptual model was generated with the aim of seeking to reveal the contribution of the physical environment and social interactions with front line employees on customer’s evaluation of the service provider and loyalty. An empirical study is conducted based on a sample of 400 customers of fitness centers. Collected data was analyzed using a structural modeling that highlight the contribution of each predictors. The results revealed that physical and social cues differently influence customer trust and loyalty to the service provider. It seems that social interactions are more effective in building customer trust. Overall, the joint effect of servicescape and social relationships positively influence customer trust and lead to service loyalty. This paper provides empirical evidence on the contribution of two service encounter cues: servicescape and social interaction on customer trust and service loyalty. The research offers a conceptual framework that can be tested in a variety of services. Managerial recommendations focus on improving relational aptitudes of frontline employees, mainly in personal services such as fitness centers.


Introduction
There have been several attempts in service marketing literature to discuss the issue of service encounter dimensions and their effects on service outcomes. Shostack [1] defines a service encounter as "a period of time during which a customer directly interacts with a service".
This definition implies that in the service industry, customer interactions with physical and human elements may be necessary for service delivery. Some authors have suggested that service encounters have more impact on customer evaluation than the service outcome [2,3]. This statement has been illustrated by the Nordic approach of service quality which distinguishes between the technical (service outcome) and functional (service interactions) dimensions. It might seem that customer perception of tangible clues such as the establishment's decor, furniture and front line employees' behavior are greatly significant in service evaluation and future intentions [4].
Many of the researchers on this issue have underlined the relevance of the physical environment and customer-contact personnel in service performance. While Eiglier and Langeard [5] have classified those elements as key factors in service delivery («servuction theory»), Booms and Bitner [6] emphasize their strategic relevance by integrating them in the service mix marketing.
A review of the existing literature on this subject reveals that prior research has employed different methods to understand the role of the physical environment and/or customer-contact personnel on customer evaluation. Although qualitative research has focused on service experience, quantitative studies have tried to examine these two elements (separately) as predicators of service quality, satisfaction and patronage intentions [7]. Scant empirical researches have combined the role of physical environment and customer-contact employees' relationship [7,8] in customer's beliefs, in particular, trust in the service provider.
This research attempts to address this gap by (1) jointly investigating the effect of physical environment and customer-contact personnel relationship on trust and loyalty and (2) comparing their influence on customer evaluation of the service provider.
After reviewing the literature, the paper describes the study designed to test the conceptual model. This is followed 2 Social and Physical Aspects of the Service Encounter: Effects on Trust and Customer Loyalty to the Service Provider by a discussion of structural modeling results, managerial implications and finally a suggestion of future research.

Physical Environment in Service Encounter
Previous physical environment research in marketing has attempted to define and illustrate the influence of the physical setting in retailing and service organizations. Kotler [13] used the terminology of atmospherics to describe «the effort to design buying environments to produce specific emotional effects in the buyer that enhance his purchase probability». This definition points out the managerially controllable dimension of environmental stimuli and explains the internal mechanisms leading to consumer's emotional and behavioral reactions.
The Kotler [13] framework is anchored in the environmental psychology paradigm [14]. Models were developed in this area to examine the direct physical environment influence on affect and the mediating role of emotion in understanding consumer behavior.
Based in this research tradition, the seminal study of Bitner [10], illustrated the cognitive, affective, physiological and behavioral reactions of both customers and employees to the physical environment. This conceptual framework has encouraged many scholars to investigate the influence of physical cues in the service context by taking into account the frontline employee's behavior and the social dimension of the service [7][8][9]. However, those studies focus only on the passive role of the contact employees such as appearance and attitude.
Referring to Bitner [10], we consider that the physical environment or what the author named servicescape is the "manmade, physical surrounding as opposed to the natural or social environment". This conceptualization only focuses on "objective'', "measureable" and "managerially controllable" environmental cues [11].
Serviscape as tangible facilities must run in tandem with intangible services to create value to customers [3,4,12]. The service intangibility is mainly attributed to the attitude and behavior of contact employees who play a key role in the service encounter [5].

Social Influence in the Service Encounter
Interactions between the customer and contact personnel derive from the nature of services and the customer involvement in the service delivery process. In the majority of service encounters, customers interact with front-line employees as coworkers and share conversations that go beyond the core service. This social aspect of service encounters is viewed as a key concept in service literature because it reveals that several service encounters are closer to friendship than to economic transactions [15].
To support this idea, Rémy and Kopel [16] proposed the concept of "linking services" to address the customer need of social interaction and communitarian links. They suggested that the physical setting, the customer involvement in service delivery and interactions with contact-personnel are fundamental cues in creating social bonds. The customer-employees interaction is a determinant of customer assessment of its relationship with the service provider. Hening-Thurau et al. [17] showed the power of the employee smiling in generating customer positive emotions and a favorable assessment of the relationship with the service provider.
Many authors draw on the exchange theory to illustrate the nature of service relationships [18]. In this research, there is consistent evidence that the boundaries between transactional and social relationships are unclear. This statement supports the idea that service relationships vary on a continuum from transactional to social. Somewhat similar inferences can be found in the framework of Goodwin and Gremler [18]. The authors identify two types of social behavior in service delivery, functional aspects (that refers to "provider personalization"; "friendliness"; "empathy" and "Appreciation") and communal aspects that reflect friendship behaviors.
In the same way, Butcher et al. [19] emphasize interpersonal relationships in the service process and distinguish relational outcomes from service partner's characteristics or behaviors. We propose to retain their definition of Relational outcomes to capture the construct of social interactions "the feelings, thoughts, and perceived relationships arising from the social interaction with the service employee".

A conceptual Framework of the Influence of Physical and Social Aspects of Service Encounter on Consumer's Trust and Loyalty
Empirical studies on this issue are relatively scant, particularly regarding the investigation of the joint impact of servicescape and social interactions with front-line employees. In the following sections, the influence of the two aforementioned constructs will be discussed in order to propose a model that explains how consumers form beliefs and behaviors in service encounters.

Physical and Social Aspects of the Service Encounter as Predicators of Loyalty
In service marketing literature, the loyalty phenomenon is mainly conceptualized as a tri-component construct that encapsulates behavioral, attitudinal and cognitive dimensions [20]. Thus, service loyalty is depicted as customer commitment to a particular service provider, which Advances in Economics and Business 5(1): 1-10, 2017 3 led to a repetitive purchasing behavior, an advocacy of the service to others and a strong belief that this service provider is a first choice among a set of competitors. In service, it is argued that loyalty is linked to interpersonal relationships and tangible cues of the service encounter. For this research, it is assumed that the physical setting and social interactions with the contact-personnel are salient in explaining service loyalty. Further support can be found in the works of some researchers. In her conceptual framework, Bitner [10] suggests that behavioral outcomes such as spending money and returning to the service provider are influenced by the servicescape. However, this influence reflects an indirect causal relationship that can be mediated by "internal responses" (cognitive, emotional and physiological responses). Numerous researches have also been inspired by the SOR paradigm and have illustrated that the perceived servicescape can predict behavioral outcomes through the costumer's beliefs and emotions. Investigating on this issue, research in retailing stores has demonstrated the direct impact of environmental stimuli on returning, advocacy behavior and spending money [9]. Hui et al. [21] have found a positive influence between ambient conditions and advocacy behavior in service area. In the same way, Keillor et al. [22] confirm the same results in an intercultural study in the hotel industry. In order to thoroughly understand this influence it is useful to examine the following hypothesis: H1: Perceived servicescape has a positive and direct influence on service loyalty.
H1a: Fitness center's space design has a positive and direct influence on service loyalty.
H1b: Fitness center's ambient conditions have a positive and direct influence on service loyalty.
Regarding the social aspect of the service encounter, researchers tend to support the vital role of front-line employees on loyalty to the service provider. It's often argued that loyalty is a relational construct [23,24] that could be predicted by social interactions. On the basis of this assumption, many researchers have found a positive and direct impact of customer-service employee relationships on repurchasing behavior, advocacy and positive word-of-mouth. In his study, Barnes [25] found that a strong relationship between the customer and the contact-personnel lead to repurchasing intentions and advocacy of the service provider. Similarly, Butcher et al. [26] illustrated the positive impact of relational outcomes on loyalty. The authors specifically demonstrated that friendship was a strong predicator of service loyalty. Similar results were found by Goodwin and Gremler [18] and Price and Arnould [15]. Therefore, the following hypothesis is advanced: H2: The relationship with front line employees has a positive and direct influence on service loyalty

Physical and social Aspects of the Service Encounter as Predicators of Trust
Physical and social aspects of service encounters are also linked to the customer's beliefs. In Bitner's [10] framework, the physical setting may reduce cognitive reactions as beliefs, categorization or symbolic meanings. In service literature, the customer's beliefs toward the service organization are also considered as an outcome of interpersonal bonds with frontline employees.
In this research, trust in the service organization will be investigated as an outcome variable reflecting the customer's beliefs. Trust will be incorporated in the conceptual model as a central relationship-building construct.
Researchers have yielded a variety of terms such as confidence, reliability, integrity, expertise, to define trust. Relationship marketing theory has suggested that trust could be defined as the customer's confidence or willingness to rely on the exchange partner's competence, reliability and integrity [27,28]. It would seem that customer trust arises from the perceived intentionality of the service provider to fulfill their promises.
The service encounters present to the customers an opportunity to test the service provider's intentionality. Any interactions with the servicescape or the frontline employees act as an indicator of the trustworthiness of the service provider. Insufficient inferences exist on this issue, so this investigation attempts to fill this gap in the research.
The study of Julien and Dao [29] has suggested an influence of frontline employees' behavior on customer trust. The findings indicate that perceptions of employees' expertise have a positive impact on customer trust. Similar inferences can be drawn from Berry [30]. However, the authors didn't find a link between benevolence behavior and customer trust. Regarding retail banking services, Shainesh [31] highlights the role of consumers' beliefs of trustworthiness arising from the competence, benevolence and problem solving orientation of front line employees in building trust in the service provider. In line with these theories and some empirical results we expect that: H3: The customer-front line employees' relationship has a positive and direct influence on trust in the service provider.
Little research has examined the link between the physical environment and trust in the service context. In their study, Guenzi et al. [32] generated some interesting results about the influence of the store environment on customer trust in the supermarket retailer. Somewhat similar inferences can be drawn from the study of Bitner [2], showing the influence of travel agency decor on customer attribution for the agent behavior. Bitner [10] supports the idea that "The perceived servicescape may elicit cognitive responses…influencing people's beliefs about a place and their beliefs about the people and products found in that place". By logical extension, it can be argued that: H4: perceived servicescape has a positive and direct influence on trust in the service provider.
H4a: Fitness center's space design has a positive and direct influence on trust in the service provider.
H4b: Fitness center's ambient conditions have a positive and direct influence on trust in the service provider.

The Physical Environment's Effect on Customer-Frontline Employees' Socialization
The conceptual framework of Bitner [10] has addressed the question of the influence of the physical environment on social interactions. This idea underlines the role of environment clues in shaping individual behaviors in the service encounter. Thus, "all social interaction is affected by the physical container in which it occurs" (Bennett and Bennett, 1970 in [10]). Equipment and furniture arrangement in the service could enhance or limit social interactions between customers and front line employees. This implies that the physical environment affects the nature and the quality of social interactions. This is consistent with Varlander and Yakhlef's [33] results. The authors have performed interviews and observation in the travel, banking and book-selling industries in order to examine the effects of the implementation of the Internet on spatial designs. The results show that furniture and artifacts model social interactions in terms of spatial orientation (proximal or distant), temporal orientation (accelerated or decelerated), behavioral outcomes (approach or avoidance) and service outcomes (suboptimal or optimal). Thus the following hypothesis is formulated:

Service Loyalty and Trust
Extensive literature in social psychology and relationship marketing has emphasized the role of trust in creating long lasting relationships. Doney and Cannon [34] suggest that customer trust refers to a psychological state, an expectation or a belief. Whereas Moorman et al. [27] associate trust with the willingness to rely on the exchange partner and trustworthy behavior. Trust seems to be an implicit condition leading to loyalty and a key factor in long-term customer orientation toward the service firm [35,29]. The link between trust and service loyalty has been supported by numerous empirical studies [35,29]. To test that relation, the following hypothesis is formulated: H6: Customer trust has a positive and direct influence on service loyalty.

Research Setting and Sample
To test the hypothesized relationships a survey was conducted in fitness centers. This choice is advantageous since it offers a setting where customers spend a lot of time observing, experimenting with the physical environment and developing interactions with frontline employees. In addition, few studies have investigated hedonic service with a high linking value [16] as Fitness centers.
A total of 400 customers of fitness centers were interviewed face to face. The sample was proportionally distributed with regard to gender (52 percent women and 48 percent men). Interviewed customers were predominately young (45 percent aged between 20 and 30 years). The majority of the respondents had an occupation (53.8 percent).

Measures
To measure customer loyalty, four items were selected from the behavioral consequences of service quality scale developed by Zeithaml et al. [36]. This scale has been used in several studies to determine customer loyalty [15].
In order to measure the servicescape, scales proposed by researchers in different service context have been also considered [37]. The customer-contact personnel relationship was measured by Butcher et al.'s [19] relational factors. Customer trust in the service provider was measured by a three-dimensional indicator (benevolence, integrity and competence) developed by Bartikowski and Chandon [38]. All the indicators were measured by a 5 points Likert scale ("strongly disagree" to "strongly agree").

Results
An exploratory factor analysis (EFA) was carried out to examine the construct structure. Then, the two-step approach recommended by Anderson and Gerbing [39] was used with LISREL 8.3. Firstly, a confirmatory factor analysis (CFA) was performed to ensure the validity of the measurement model. Secondly, a path analysis revealed the hypothetical causal relations of the research model. We have checked the appropriateness of the data for EFA. The KMO (Kaiser-Myer-Olkin) range from 0.745 to 0.861 and Bartlett test of sphericity is significant at the level of 0.01 which means that the set of data is factorable. A component principal analysis (PCA) is then carried to examine the scale structure (Table 1). Through a Varimax rotation, two components are generated for the scale of the perceived physical environment. "Space design" is the first dimension with 7 items and "Ambient conditions" is the second one including 3 items. The PCA generate one-dimensional scale for the other constructs. The amount of variance extracted for each scale is equal or close to 60%. To ensure the scale's reliability, we use the popular test of Cronbach's alpha [40]. The scores ranged from 0.72 and 0.82 which is considered as acceptable [41].
The CFA method is then performed to assess the model measurement fit and to test the reliability and the validity of the scales. The CFA confirm all the scale's structures, generated from the PCA, providing a good fit. Joreskog's Rho ranged from 0.68 to 0.87 indicates an acceptable reliability of the constructs [42]. However, there was a less satisfactory reliability and validity score for "ambient conditions" dimension ( Table 2).
The factor contributions are significant (p value =.05) and the Rho of convergent validity (AVE) exceeds the recommended threshold by 0.50 except for the "ambient conditions" dimension ( Table 2). The discriminant validity is carried using the Fornell and Larcker [43] criterion. Table 3 shows that, the AVE is superior to the shared variance (the square of the correlation between a two variables) for all the constructs (Table 3).
After verifying measurement model fit we tested the structural model. The values of the indices show an acceptable fit between the empirical and theoretical model (RMSEA = 0.059, SRMR=0.054, Khi ² / dl=2.39, GFI=0.88, CFI = 0.91, IFI=0.91, NFI=0.85 NNFI=0.89). The predicators of the model satisfactorily explain the dependent variables. Thereby, the SMC relative to "customer trust" and "loyalty" is 0.40 and 0.52. The physical environment dimensions only explain a small part of the social interactions between the customer and the service employees (SMC=0.08). The results of the path analysis support the hypotheses ( Table 4). The examination of the standardized estimates and the significance of the relationships highlight the influence of social interactions and the physical environment on customer trust and loyalty towards the service provider. As assumed, the interaction between the customer and the service employees acts positively on consumer's beliefs in the service provider's integrity (H4) and increases their loyalty intention (H2). The physical environment dimensions do not act directly and significantly on loyalty to the service provider (H1). The results ( Table 2) similarly validate hypothesis H6. It thereby appears that consumers who trust the service provider are more likely to develop repatronage and advocacy behaviors. The results do not totally support the relation between the physical environment dimensions and the social interaction between the customer and the service employees. Only the ambient conditions seem to positively influence the customer-frontline employees' relationship (H1a).

Discussion and Managerial Implications
The purpose of this research was to examine the influence of physical environment dimensions and social interaction on trust and loyalty towards the service provider. The results provide some important insights that could enhance theoretical and managerial understanding of the role of servicescape and customer-frontline employees' relationship on behavioral outcomes. The social interaction between the customer and the contact personnel appears to be an effective factor that reveals the customer loyalty level to the service provider. This result confirms previous research, which insists on the strategic role of service employees in customer trust [27] and loyalty [26]. From a managerial point of view, this result suggests developing the relationship between the customer and frontline employees by promoting interactions based on respect and even friendship. Coaching sessions should be considered to improve service employees' awareness of the importance of their role in the formation of consumers' beliefs.
Trust is also an outcome of physical environment dimensions. It seems in this framework that the ambient conditions have a more significant effect on customer trust than the design. Thus, the service providers should focus on ambient clues such as local cleanliness, temperature or even lighting which seems indispensable to the creation of an atmosphere inspiring confidence and denoting the service provider integrity and professionalism. Furthermore, the design relative to the aesthetic level, the architecture, and the furniture of the fitness centers act slightly positively on customer trust. These factors would be probably more associated with evaluative judgment variables like service quality, perceived value and satisfaction.
However, the two dimensions of the service encounter explain 40 percent of the scores for variation of customer trust. This result consolidates the choice of the explanatory variables and enables emphasis on their importance in the formation of the consumer's beliefs towards the service provider. The relationship between the dimensions of the servicescape and loyalty did not find any empirical support. No significant relationship has been found between loyalty and ambient conditions, on the one hand and between loyalty and design, on the other hand. This result points to the possibility of an indirect relationship between physical environment dimensions and loyalty. It is possible to consider a mediating effect of customer trust. This option confirms the theoretical Bitner's [10] framework which suggest an indirect effect induced by servicescape components on loyalty and behavioral outcomes. However, the results indicate that loyalty is positively influenced by social interactions between frontline employees and customers. This finding converges with other research [19,26,15]. The relationship with contact personnel is an important dimension in the formation of the consumer's behavioral intentions.
Indeed, it seems that the influence of social interactions on the consumer's loyalty is stronger in the case of services with high spatial and psychological proximity like fitness centers [26]. Within this context, service providers would benefit from focusing their attention on the nature of the interactions between their customers and the service employees. This attention should begin with the implementation of hiring procedures in order to choose candidates with undeniable relational qualities. Training seminars are also necessary to anchor the customer orientation in the mind of the employees. The valorization of friendly and respectful interactions also passes through an effective reward system. The loyalty is also affected by the degree of customer trust, which the consumer grants to the service provider. Thus, as it has been confirmed by a variety of research in different domains, the intention of consumer loyalty depends on the consumer's perception of the benevolence and the integrity of the partner exchange [35]. Trust and social interaction seem to be effective predicators of service loyalty. However, the physical environment dimensions seem to indirectly contribute to service loyalty. This study validates the combined role of servicescape, customer-frontline employees' relationship and trust as drivers of service loyalty. They explain 52% of the variation in loyalty scores. Thus, loyalty is a process determined by consumer beliefs regarding their level of interaction with service employees and their perception of the physical environment dimensions. Service providers could develop sensory and relational 8 Social and Physical Aspects of the Service Encounter: Effects on Trust and Customer Loyalty to the Service Provider stimuli that would engender positive beliefs and would denote their good intentions towards the customer. The ambient conditions and space design should first reassure customers in regards to the competence and integrity of the service provider. Social interactions would then play an essential role in the development of customer trust and the demonstration of loyalty intention. By verifying the relationship between the two dimensions of the service encounter, it has been possible to highlight a significant impact between environmental factors and social interaction. Thus, social interaction is directly affected by lighting, temperature and cleanliness in the servicescape. Pleasant ambient conditions will generate more positive social interactions between the consumer and service employees. However, the predictive power of the physical environment on the social interaction remains marginal (R² = 0.08). This result suggests that an adapted physical environment is essential but not a sufficient element to direct the interaction between the customer and the service employees.

Limitations and Future Research
The findings of the current study should be interpreted with caution due to several limitations.
This research raises new interrogations and several points which should be improved in future research. A test of the proposed conceptual model, with other measurement scales of the research variables, would improve the internal validity of the study. In spite of the significant size of the sample (400 people), generalization of results always remains raised up and other applications of the model with larger samples would be desirable. Another limitation is in the choice of studying a single survey context. An empirical test of the conceptual framework in a variety of services could provide a better understanding of the variation of variable's scores between service settings. Future researches should investigate this conceptual model in utilitarian (financial services) and hedonic services (hotels, restaurants, etc.).
Service encounter literature offers directions for other important dimensions such as customer to-customer interactions that could enhance the explained variance of behavioral outcomes in the service setting Furthermore, the integration of mediating and moderating factors could improve this framework. The absence of direct relationships between loyalty and the two dimensions of the physical environment questions the trust mediating role. It would then be promising to widen the potential track of the possible moderating effects of situational factors (temporal perspective, objectives of the visit) or individual (familiarity with the service, customer personality) between the dimensions of service encounter (physical environment and social interactions) and the consumer's reactions (trust and loyalty).