Putting the Service – Profit Chain to Work
PUTTING THE SERVICE – PROFIT CHAIN TO WORK
Group - 5
Introduction: Factors that drives profitability
Investment in people
Leadership Vision – Patina of spirituality, importance of mundane
Profitability
Technology supporting frontline workers
Successful service companies: Banc One, Intuit, Southwest Airlines, Service Master, USAA, Taco Bell, and MCI
Compensation linked to performance
Recruiting and training practices
The Service - Profit Chain
• Establishes relationships between profitability, customer loyalty, and employee satisfaction, loyalty and productivity • Measure and management techniques
Support services and policies
Employee loyalty, satisfaction, productivity
Value and service
Customer satisfaction
Customer loyalty
Profit and growth
The Links in the Service-Profit Chain
•The service profit chain is also defined by a special leadership •Examples: Herbert Kelleher – Southwest (Patina of spirituality), William Pollard – ServiceMaster (Teacher-learner managers, servant’s heart), John McCoy- Banc One (Uncommon Partnership, system of support)
Customer Loyalty that drives Profitability and Growth
• 5% increase in customer loyalty can produce profit increases from 25% to 85% • Quality of market share in terms of customer loyalty as important as quantity of share in the market • Example: Banc One
• Measures of Customer retention • No. of services used by each customer – depth of relationship • Level of customer satisfaction
• XEROX
Customer satisfaction Drives Customer Loyalty
• Polled 480,000 customers per year • Five point scale – satisfaction(product and service) • Relationships between the scores - actual loyalty differed greatly between 5s and 4s apostles • Terrorists – unhappy customers
Value drives Customer Satisfaction
• Value – related to the total costs (price and other costs incurred) • Example:
• Progressive – insurance company
– Quick processing and payment to claims – Little
Group - 5
Introduction: Factors that drives profitability
Investment in people
Leadership Vision – Patina of spirituality, importance of mundane
Profitability
Technology supporting frontline workers
Successful service companies: Banc One, Intuit, Southwest Airlines, Service Master, USAA, Taco Bell, and MCI
Compensation linked to performance
Recruiting and training practices
The Service - Profit Chain
• Establishes relationships between profitability, customer loyalty, and employee satisfaction, loyalty and productivity • Measure and management techniques
Support services and policies
Employee loyalty, satisfaction, productivity
Value and service
Customer satisfaction
Customer loyalty
Profit and growth
The Links in the Service-Profit Chain
•The service profit chain is also defined by a special leadership •Examples: Herbert Kelleher – Southwest (Patina of spirituality), William Pollard – ServiceMaster (Teacher-learner managers, servant’s heart), John McCoy- Banc One (Uncommon Partnership, system of support)
Customer Loyalty that drives Profitability and Growth
• 5% increase in customer loyalty can produce profit increases from 25% to 85% • Quality of market share in terms of customer loyalty as important as quantity of share in the market • Example: Banc One
• Measures of Customer retention • No. of services used by each customer – depth of relationship • Level of customer satisfaction
• XEROX
Customer satisfaction Drives Customer Loyalty
• Polled 480,000 customers per year • Five point scale – satisfaction(product and service) • Relationships between the scores - actual loyalty differed greatly between 5s and 4s apostles • Terrorists – unhappy customers
Value drives Customer Satisfaction
• Value – related to the total costs (price and other costs incurred) • Example:
• Progressive – insurance company
– Quick processing and payment to claims – Little