Value Chain Management:

Customer Retention

Service-Profit Chain

Leveraging Corporate Performance Through Linking and Satisfying Your Employees and Customers

Why Service-Profit Chain?

It is estimated that two-thirds of customers who defect do so because of poor service. In order for customer service to drive profits, every link in your service-profit chain – employee capability, job satisfaction, productivity, employee loyalty and customer satisfaction – must be strong.

What is Service-Profit Chain?

The service-profit chain is a powerful phenomenon that stresses the importance of people – both employees and customers – and how linking them can leverage corporate performance. The service-profit chain is an equation that establishes the relationship between corporate policies, employee satisfaction, value creation, customer loyalty, and profitability.

Straight Line between Superior Service and Sustainable Profit Growth

Delivering top quality service must be brought to the top of your company's needs hierarchy as one can draw a straight line between superior service and your sustainable profit growth. To achieve success, you must make superior service second nature of your organization.

Need for Seamless Integration of the Service-Profit Chain Links

A seamless integration of all components in the service-profit chain – employee satisfaction, value creation, customer satisfaction, customer loyalty, and profit and growth – links all the critical dynamics of top customer service. "The company guides, nurtures, and empowers its employees, and the employees play a vital role in securing customer satisfaction and the benefits that accrue from it."¹

Customer Partnership

"Customer partnership is a shared journey to create a future for both parties that is better than either could have developed alone."³ The customer is the foundation of your organization's success. In today's turbulent times of rapid and chaotic change, "no force is more grounding and stabilizing than a partnership with customers."³

Creating a partnership with customers will help your organizations maintain the focus you need to make good decisions and harness the power and commitment you need to weather volatile times. Customer partnership is more than "putting customers first", or  finding mutually satisfactory solutions to shared problems, or  a dedication to excellence in every sale or service encounter.

It also requires commitment to forging long-term relationships that create synergies of knowledge, security, and adaptability for both parties... More

The purpose of a business is to create and keep a customer. If a business successfully creates and keeps customers in a cost-effective way, it will make a profit while continuing to survive and thrive. If, for any reason, a business fails to attract or sustain a sufficient number of customers, it will experience losses. Too many losses will lead to the demise of the enterprise... More

 Case in Point  Dell Inc.

"We learned to identify our core strengths," says Michael Dell, Founder of Dell Inc. “We wanted to earn a reputation for providing great customer service, as well as great products. Engaging the entire company – from manufacturing to engineering to sales to support staff – in the process of understanding customer requirements became a constant focus of management, energy, training, and employee education.“ ... More

Process-managed Enterprise

A process-managed enterprise supports, empowers and energizes employees, encourages their initiative, enables and allows its people to perform process work. "Process work is work that is focused on the customer, work that is directed toward achieving results rather than being an end in itself, work that follows a disciplined and repeatable design. Process work is work that delivers the high-level of performance that customers now demand."⁶... More

Deming's 14 Point's Plan for Total Quality Management (TQM)

Point 1: Create constancy of purpose toward improvement of the product and service so as to become competitive, stay in business and provide jobs... More

References:

1. "Extreme Management", Mark Stevens

2. "Motivate to Win", Richard Denny

3. "The Basics of Leadership", Merlin Ricklefs

4. "Exceptional Customer Service", Lisa Ford, David McNair, and Bill Perry

5. "The Seven Deadly Skills of Competing", James Essinger & Helen Wylie

6. "Creating, Winning, and Retaining Customers," Vadim Kotelnikov

7. "Effective Selling," Vadim Kotelnikov