Sunday, 14 September 2014

The service-profit chain


Research across a wide variety of industries confirms that profitability and growth are strongly related to variables such as:

  • Employee capability
  • Employee satisfaction
  • Employee productivity
  • Employees' ability to deliver good value to customers
  • Customer satisfaction
  • Customer loyalty

For example: Employee capability—built by hiring the right people, giving them training, support, latitude, and rewards—promotes employee job satisfaction. When employees enjoy their work and believe they are making a difference, they tend to stay longer and become more productive and knowledgeable. Such employee loyalty, in turn, creates greater customer satisfaction. After all, customers are more likely to be happy when they are being served by motivated employees who take the time to get to know their specific needs and circumstances. Not surprisingly, happy customers tend to buy more from the company and also to refer other customers to the company more frequently. Thus, customer satisfaction breeds customer loyalty. And there is a dramatic cause-and-effect relationship between customer loyalty and profitability: in some industries, a small percentage of a company's most valuable and loyal customers can account for more than half of total profitability.

No comments:

Post a Comment