The Service Profit Chain: Implications for the Practice of Management in Service Business - Essay Example

This is gist of service-profit chain propounded by Heskett, Sasser & Schlesinger (1997). A powerful process that stresses the importance of people in terms of both employees and customers linked, service-profit chain can leverage corporate performance (Heskett et al.1997). Specifically, service-profit chain is an equation that goes beyond to establish the relationship between corporate policies, employee satisfaction, value creation, customer loyalty, and profitability (Kotelnikov 2006). With this framework, conventional measures of performance must now include the enthusiasm of the employees and the quality of customer satisfaction.

It requires then service managers to blend marketing, technology, people, and information to achieve a distinctive competitive advantage (Heskett, Sasser & Schlesinger 1997). The flow of the service profit chain is described as follows: According to Kotelnikov (2006), there is a straight line between superior service and sustainable profit growth. Two-thirds of customers, it is said, defect from their previous favorite establishments because of poor service. Employee loyalty, employee capability, job satisfaction, productivity and customer satisfaction must then be strong as they are said to be the links in the service-profit chain (Heskett et al. 1997).Companies.

The case of Xerox, for example, is classic as described by Jack Mackey (2006). Its customer research was said to prove that a "highly satisfied" customer is six times more likely to buy again as one who is merely "satisfied." Before this, Xerox was said to be happy to see its customers rate their experience as either "satisfied" or "highly satisfied." Now Xerox sets the target at achieving "highly satisfied" ratings from 100% of their customers because the probability of keeping one's merely "satisfied" customers coming back is alarmingly low.

The explanation is that one is not really the preferred choice but just an available choice, and the customer with rating of "satisfied" is actually ripe for the picking by the competitor as loyalty is not there. Hence, "good" is to be construed as "vulnerable." This is an example of hitting strong on customer satisfaction for profit performance.Companies have managed to turn customers into advocates who constantly refer their friends and colleagues to those businesses. McConnell, Huba & KawasakiI (2002) called them "evangelists.

" One is said to gain this unbeatable competitive advantage through the step-by-step process of creating loyalty by design (Smith & Wheeler 2002). This may be another term for the much touted concept of "branded customer experience" where a customer finds himself not wanting to do business with another but the choice company.A concept within the service-profit chain framework, "branded customer experience" is described by Smith and Wheeler (2002) as creating a 'significantly memorable' and 'emotionally attaching' experience that satisfies