Purpose During service encounters, it has been suggested that emotionally competent employees are likely to succeed in building rapport with their customers, which in turn often leads to customer satisfaction and loyalty. However, these relationships have not been empirically examined. The purpose of the present study is to investigate the effects of customer perceived employee emotional competence (EEC) on satisfaction and loyalty. The paper also examines how and to what extent rapport mediates these effects. Design/methodology/approach Drawing on the theory of affect‐as‐information, suggesting that emotions inform human behavior, the paper develops a structural model and tests it on a sample of 247 customers in a personal service setting. Findings Customer perceptions of EEC positively influence customer satisfaction and loyalty. Rapport partially mediates both effects. Practical implications The extent to which customers perceive employees as emotionally competent is related to the development of rapport, customer satisfaction, and loyalty. Managers of high‐contact services should therefore pay attention to emotional competence when hiring new employees, and/or encourage and train existing employees to develop this type of competence. Originality/value Previous studies have used employee self‐reports or supervisor reports of EEC, both of which have significant limitations when used in service encounters to predict customer outcomes. Furthermore, they essentially capture an employee's potential to behave in an emotionally competent way while service managers are interested in the actual display of emotionally competent behaviors as perceived by customers. Accordingly, to overcome these issues, this study adopts a customer perspective of EEC and uses customer perceptions of EEC to predict customer outcome.
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