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Putting the Service-Profit Chain to Work: Benefits of Ensuring Employee and Customer Satisfaction

Updated on December 21, 2017

Brief Introduction

In the article, Putting the Service-Profit Chain to Work, the authors emphasize on the significance of organizations moving away from setting profit goals or focusing on market share and instead to concentrate in employee and customer satisfaction as the priority. The article later became the basis for the book, The Service Profit Chain – How Leading Companies Link Profit and Growth to Loyalty, Satisfaction and Value (1997) which has been cited in well over 3261 business papers.

Employee and Customer

Source

Some of the best way to please employees may include:

Recognizing their efforts

Listening to their ideas

Bonuses

Including them in some level of decision making

Promotions or assigning special tasks to employees with great potential

Employee satisfaction equals customer satisfaction


While every business seeks to make a profit, the central idea in the article is that there is a direct relationship between profit and growth and customer and employee loyalty and satisfaction. As the authors explain, growth and profit are directly stimulated by customer loyalty, which is in turn the direct result of customer satisfaction. On the other hand, customer satisfaction is largely influenced by the value of services that employees provide. This value is provided by satisfied, loyal and productive employees who are motivated by high quality support services and policies. Here, it is possible to see the significance of giving priority to employee satisfaction if they are to provide quality services to customers and thus increase both employee and customer loyalty for the ultimate success of the business. In the book, Putting the Service Profit Chain to Work for Unbeatable Competitive Advantage, Heskett, Sasser and Wheeler (2008) explain that with regards to customer satisfaction and success of a business, little would happen without the employee (s) who gradually develops an ownership mentality, exhibited by such behaviors as loyalty, periodic referrals or other high potential employees to the business as well as offering their suggestions on how to make improvements. A good example here is with Rackspace, which has been shown to have made high profits having developed customer/owners. Here, employees and customers were selected and organized in to service teams that would ensure business growth thereby providing customers with easy access to these dedicated service teams. Here, the customers and employees get a sense that they are part of the business and have a role to play in its growth. This ensures that they are not only loyal to the business, but that they continue providing the best services possible and ideas on areas of improvement.

Wise words

Source

Studies

In a study that was carried out in the United Kingdom in an empirical test of service-profit chain, data was obtained from 65.000 employees and 25,000 customers from about 100 individual stores. Barber, Hayday and Bevan (1999) found there to be a relationship between employee satisfaction, customer satisfaction and increased sales. They also found out that employee satisfaction, particularly their commitment to the company resulted in increased sales through customer loyalty and improved staff attendance. In the study, it was shown that employee commitment could directly result in monthly increase of up to 200,000 pounds in sales monthly. In another study that was carried out to explore the dynamic version of service-profit chain using multi-level, dynamic data from both employees and customers, it was shown that transformational leadership behaviors have a positive effect on employee satisfaction and engagement, which subsequently increase customer loyalty and satisfaction. Here, the leader works with the subordinates, which gives the employees a sense of responsibility and ownership. Here, it is possible to see the significance of making employee satisfaction a priority. In doing so, employees feel that they are part of the business, which influences them to provide good services to customers thereby increasing customer satisfaction and consequently customer loyalty and increased sales. Without a good relationship between employees and customers, a business is likely to face increased challenges and consequently poor growth.

Benefits of pleasing the customer

Customer loyalty

Positive word of mouth outcome

Increased sales

Increased profits

Positive growth

© 2017 Patrick

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