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The main factors that lead to success in service
organization.
Service an activity or benefit essentially intangible and does
not result the ownership of anything. Its
production may or may not be tied to physical product.
Top level executives started to understand that the new
economies of service that frontline workers and
customers need to be the center of management concern and not
the market share.
The new economics of service requires innovative measurement
techniques, these techniques adjust
the impact of employee satisfaction, loyalty, and productivity
on the value of products and services
delivered so that managers can build customer satisfaction and
loyalty and assess the corresponding
impact on profit.
The service profit chain helps managers target new investment to
develop service and satisfaction for
maximum competitive impact.
The service profit chain establishes relationship between
profitability, customer loyalty, employees
satisfaction, loyalty and productivity. Profit and growth are
stimulated by customer loyalty. Loyalty is a
direct result of customer satisfaction. Satisfaction is
influenced by the value of services provided to the
customer. Value is created by satisfied, loyal and productive
employees. Employee satisfaction results
from high quality support services and policies that enable
employees to deliver results to customers. It
is also defined by special kind of leadership who emphasizes on
importance of each employee and
customer. The audit helps to determine what drives profit and
suggest action that can lead to long term
profitability.
Customer loyalty drives profitability and growth it is a more
important determinant of profit.
5% increase in customer loyalty can produce profit increases
from 25-85%, and it cost 5-10 times as
much to acquire a new customer as it does to retain an existing
one.
Audit shall look at how a company defines loyal customer and
what value potential they bring,
how many repeat purchases, profit of referrals is; whether
enough resources are allocated to retention
and development of existing customers and why customers defect
that can be done thru exit interviews.
Customer satisfaction drives customer loyalty leading companies
trying to quantify customer
satisfaction through different satisfaction surveys. Xerox used
5 point scale in its pole to grade service
level and is targeting to create apostles and avoid creating
terrorists, as they speark out against a poor
service at every opportunity.
Audit: Check if customer satisfaction data periodically and
consistently gathered; the listening
posts(letter of complaint, field reports) are in place and how
related info is used to solve customer
problems. Need to make sure that service providers have latitude
to resolve any situation promptly, if
possible.
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Value drives customer satisfaction customers today are strongly
value oriented, value means
the result they receive in relation to total cost. (Emirates
airline drivers service for business class, priority
booking..)
Audit:
- How company measures service value value is not only cost but
also results achieved forcustomer. Company measures value because
of low or high customer satisfaction and
requires to move all levels of mngnt closer to the customer and
give frontline service
employees a latitude to customize a standard service to
individual needs.
- How information concerning customer perception of value is
shared with responsible fordesigning a product or services
(Southwest responsible for flight scheduling are rotate to
terminal to have a feel of for the impact of schedules).
- And what measures are taken to fill the gap between perception
and experience- Effectively improve external service quality from
service error in addition to provide the
right service the first time. Some org give frontline employee
the latitude to effect recovery.
Employee productivity drives value successful cycle of employees
results successful cycle of
customer. If employees have broadened job design, trained and
empowered to control quality, well paid
it creates employee satisfaction which lead to customer
satisfaction, lowers employee turnover resulting
high service quality with continuity relationship with customer
and customer loyalty and low customer
turnover, then it flows into higher profit margins for employees
that emphasizes of customer loyalty and
retention.
Cycle of failure is resulted by narrow job design, limited
skills, technology used to control the
quality, law wages, job dissatisfaction, high turnover result
customer dissatisfaction, turnover, with theemphasize on attracting
new customers.
Audit:
measure employee productivity To what extent do measures of
productivity identity changes in the quality as well as the
quantity of service produced per unit of input? It may be
customer satisfaction survey to
determine to total output of org.
Employee loyalty drives productivity; turnover is inevitable, it
is not only costly but may be
beneficial, the focus shall be on retention strategy and who is
retained, analyze reasons for leaving.Sometimes cost of turnover is
the loss of productivity and decreased customer satisfaction.
(average
monthly cost of replacing sales rep with 5 y. experience with
employee with less than 1 is $36k)
Audit:
How to create employee loyalty promotion, moving to a larger biz
unit, rewards.
