This study seeks to investigate the effect of internal marketing—treating employees as internal customers—on salesperson’s engagement in customer-oriented behaviors and resultant customers’ responses. The data were collected from dyadic interactions between salespeople and customers in banking firms in Vietnam. The results showed that internal marketing is significantly associated with salesperson’s performance of adaptive selling behavior, customer-oriented selling behavior, and relational selling behavior, which result in customer relationship continuity, purchase intention, and positive word-of-mouth. In addition, salesperson’s customer-oriented behaviors play partial mediating roles between internal marketing and external customer responses. The study extends the extant literature of internal marketing and offers useful managerial implications for service firms, particularly banking firms in Vietnam. The study concludes with suggestions of potential research directions for future studies.

INTRODUCTION

In the sphere of services marketing, satisfying employees has been accentuated as a critical factor to customer service satisfaction (Awan, Siddiquei, Jabbar, Abrar, & Baig, 2015). Customers tend to be more satisfied and intend to return to the companies whose employees are happy and do not leave the company at a rapid pace. However, the recent expansion of services industries enables customers to have more options for their products and services (Ferrell & Hartline, 2014; Marshall, & Johnston, 2015), which make them become more demanding particularly during interactions with salespeople (Zeithaml, & Bitner, 2003). Their unreasonable demands may cause stress and depression to salespeople and ultimately force them to quit their jobs or produce counterproductive behaviors (Schwepker, 2003). Intense competition among service firms also affords skillful employees ample opportunities to switch to other competitors whose offers are more attractive. Their leaving results in a big loss for the organization because the customers who like them are likely to go with them (Marshall, & Johnston, 2015). Therefore, it is critical for service firms to seek progressive practices to motivate service staff in their jobs in order to serve customers effectively. Internal marketing—treating employees as internal customers (Berry, 1981) has been identified as an effective approach to motivating employees and enhancing their competence in providing services to customers (Ahmed, & Rafiq, 2003), and its effectiveness has been well documented in developed Western economies (Bruhn, & Georgi, 2000). However, research on effectiveness of internal marketing in Asian contexts with vastly different cultural and economic characteristics compared to Western contexts (Nguyen, Bryant, Rose, Tseng, & Kapasuwan, 2009) has been sparse. This void restricts companies in Asian economies from having full confidence and strategies to apply internal marketing practices. As a result, study on the effect of internal marketing in Asian contexts will be useful to the companies in the area. The service–profit chain by Heskett, Jones, Loveman, Sasser, and Schlesinger (1994) indicated that internal marketing is conducive to employees’ satisfaction and performance of behaviors, which later influence customer satisfaction and loyalty. Consistent with this framework, a considerable number of studies have investigated the effect of internal marketing on employee job satisfaction and employee behaviors (Altarifi, 2014). In the latter category, organizational citizenship behavior has received the most attention of internal marketing researchers (Alshurideh, Alhadid, & Barween, 2015; Awan et al., 2015; Awward, & Agti, 2011). Regrettably, while adaptive selling behavior, customer-oriented selling behavior, and relational selling behavior have been suggested as the most effective approaches to establishing and nurturing long-term relations with customers as well as yielding higher sales performance (Bayaa, Goedegebuure, & Jones, 2009), they have not been studied in relation to internal marketing. This lacuna in research needs to be addressed because it is employee behaviors directed at customers, rather than behaviors directed at organizational members including coworkers (i.e., organizational citizenship behaviors) that directly affect customers related outcomes (Bansal, Mendelson, & Sharma, 2001).