Put Service profit chain to work.pdf

Best of HBR BY JAMES L. HESKETT, THOMAS O. JONES, GARY W. LOVEMAN, W. EARL SASSER, JR., AND LEONARD A. SCHLESINGER Putting the Service-Profi t Chain to Work TOP-LEVEL EXECUTIVES OF outstanding service organizations customers paramount, a radical shift occurs in the way they spend little time setting profi t goals or focusing on market manage and measure success. The new economics of service re- share, the management mantra of the 1970s and 1980s. Instead, quires innovative measurement techniques. These techniques they understand that in the new economics of service, front- calibrate the impact of employee satisfaction, loyalty, and pro- line workers and customers need to be the center of manage- ductivity on the value of products and services delivered so ment concern. Successful service managers pay attention to that managers can build customer satisfaction and loyalty and the factors that drive profi tability in this new service paradigm: assess the corresponding impact on profi tability and growth. investment in people, technology that supports frontline work- In fact, the lifetime value of a loyal customer can be astro- ers, revamped recruiting and training practices, and compen- nomical, especially when referrals are added to the economics sation linked to performance for employees of customer retention and repeat purchases at every level. And they express a vision of EDITOR’S NOTE: This article of related products. For example, the lifetime leadership in terms rarely heard in corporate sets out a simple, elegant, and revenue stream from a loyal pizza eater can America: an organization’s “patina of spiritu- ultimately tough-minded way be $8,000, a Cadillac owner $332,000, and ality,” the “importance of the mundane.” to build profi tabi