The Service Profit Chain: How to Get From High Quality Support Services to Profit and Growth

Accord­ing to the Har­vard Busi­ness Review, CEOs “under­stand that in the new eco­nom­ics of ser­vice, front­line work­ers and cus­tomers need to be the cen­ter of man­age­ment con­cern.” The man­age­ment mantra of set­ting profit goals and estab­lish­ing mar­ket share are phrases col­lect­ing dust on the shelves of busi­ness prac­tices from the 70s and 80s. Today, man­age­ment teams focus on the Ser­vice Profit Chain, know­ing full well that the steps to suc­cess start with deliv­er­ing results to the cus­tomer and end with prof­itabil­ity and com­pany growth.

Com­pa­nies must first invest in the sup­port ser­vices teams that rep­re­sent their orga­ni­za­tion. By invest­ing in their employ­ees with, for exam­ple, train­ing and devel­op­ment and a pos­i­tive work­place envi­ron­ment and cul­ture, com­pa­nies will see stronger employee reten­tion and sat­is­fac­tion rates. Estab­lish­ing high qual­ity sup­port ser­vices company-wide is the first step in assur­ing success.

Hav­ing happy employ­ees at the helm of ser­vice depart­ments and in the front lines of cus­tomer sup­port ensures stronger brand representation—support staff are brand advo­cates and when they are happy and con­fi­dent in their job and abil­i­ties, it shows. Espe­cially to the customer!

There is a rea­son this busi­ness model is ana­lyzed as a chain: the first link leads into the second…but the chain doesn’t stop there! It con­tin­ues with com­pa­nies pro­vid­ing qual­ity sup­port to cus­tomers. Con­sis­tency in ser­vice is para­mount to busi­ness suc­cess. Cus­tomers who rec­og­nize a brand that works hard to ensure their sat­is­fac­tion are will­ing to pay more for that brand. Exter­nal ser­vice value grabs major con­sumer atten­tion. Customer-focused orga­ni­za­tions have greater strength as it relates to the Ser­vice Profit Chain.

Busi­nesses that tar­get their sup­port ser­vices to meet the cus­tomers’ needs on a con­sis­tent and pro­gres­sive basis have greater suc­cess than busi­nesses that focus on pric­ing and profit first. In the same study men­tioned above, HBR writ­ers found that one loyal cus­tomer “is worth more than a hun­dred price-sensitive, non-loyal cus­tomers.” Com­pa­nies that build rela­tion­ships with their cus­tomers have a much higher cus­tomer sat­is­fac­tion rate than those that don’t.

Suc­cess­ful com­pa­nies con­sider cus­tomers as more than just a notch on the scale of rev­enue. They say that cus­tomers are “apos­tles,” not just num­bers. Loyal cus­tomers spread the word to friends and fam­ily mem­bers about the sat­is­fac­tion they expe­ri­enced with a com­pany or brand. They dis­cuss ideas on how things could be improved with those com­pa­nies and those com­pa­nies act upon it. The more cus­tomers are relied upon for feed­back, refer­rals and sug­ges­tions for improve­ment, the more they will stay loyal to the brand. Cus­tomers like being involved and engaged, from the moment they inves­ti­gate the prod­uct to the point of pur­chase to the use of the prod­uct. When com­pa­nies lis­ten and react to cus­tomers, cus­tomer loy­alty rates increase.

What all com­pa­nies strive for: the Sixth Link! How do they get there? Links One through Five! Invest­ing in employee suc­cess, customer-focused pro­ce­dures and poli­cies, cus­tomer sat­is­fac­tion and loyalty—these are the steps com­pa­nies should take to give them the results they set out to achieve in the first place. Writer Bret Sim­mons says it well when it comes to com­pa­nies instill­ing the Ser­vice Profit Chain model: “Improved ser­vice is a result of a change in the sys­tem used to pro­vide ser­vice, and the accom­pa­ny­ing rewards for behav­iors the new sys­tem is designed to encourage.”