![]() This link…#…affects this link#ExampleInternal service quality#Employee satisfaction#Financial-services company USAA makes it easier for call-center reps to achieve results for customers by equipping them with state-of-the-art information systems. Starting with internal service quality, each link in the service-profit chain can directly strengthen-or weaken-the next: ![]() To optimize your profitability, the authors recommend these practices: Understand the Links in the Service-Profit Chain To boost profitability across stores, it enhanced internal service quality-for instance, by giving employees more latitude for on-the-job decision making. ![]() For example, fast-food giant Taco Bell found that its stores with low workforce turnover (a key marker of employee loyalty) enjoyed double the sales and 55% higher profits than stores with high turnover. To maximize your profits, strengthen all the links in your service-profit chain. A mere 5% jump in customer loyalty can boost profits 25%–85%. Higher productivity means greater external service value for customers-which enhances customer satisfaction and loyalty. Employee satisfaction in turn fuels employee loyalty, which raises employee productivity. Here’s how the service-profit chain works: Employee satisfaction soars when you enhance internal service quality (equipping employees with the skills and power to serve customers). And to keep those customers profitable, you need to manage all the aspects of your operation that affect customer satisfaction-what the authors call the service-profit chain. What drives growth and profitability in a service business? Highly satisfied customers. Describing the links in the service-profit chain, the authors explain that profit and growth are stimulated by customer loyalty loyalty is a direct result of customer satisfaction satisfaction is largely influenced by the value of services provided to customers value is created by satisfied, loyal, and productive employees and employee satisfaction, in turn, results from high-quality support services and policies that enable employees to deliver results to customers.īy completing the authors’ service-profit chain audit, companies can determine not only what drives their profit but how they can sustain it in the long term. Managers can then use this information to build customer satisfaction and loyalty and assess the corresponding impact on profitability and growth. In this article, Heskett, Jones, Loveman, Sasser, and Schlesinger take a close look at the links in the service-profit chain, which puts hard values on soft measures so that managers can calibrate the impact of employee satisfaction, loyalty, and productivity on the value of products and services delivered. They also express a vision of leadership in somewhat unconventional terms, referring to an organization’s “patina of spirituality” and the “importance of the mundane.” Those managers heed the factors that drive profitability in this service paradigm: investment in people, technology that supports frontline workers, revamped recruiting and training practices, and compensation linked to performance. In exemplary service organizations, executives understand that they need to put customers and frontline workers at the center of their focus.
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