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


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The Service Profit ChainAccord­ing 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.”

Republished with author's permission from original post.

Jodi Beuder
We help organizations create a positive connection between customers and brands. We promote synergy through integration as it builds on the decades of collective history of renowned expertise. MHI Global is your comprehensive source for customer-management excellence solutions to compete in today's ever-changing, customer-centric environment.


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