Service Profit Chain Relationship between Employee satisfaction and loyalty will lead to Productivity which will lead to Customer satisfaction and loyalty leading to Profitability bring it back around to employee satisfaction and loyalty The idea that profit and growth are stimulated primarily by customer loyalty is a fundamental proposition 5 increase in customer loyalty can lead to an increase in profits from 25 85 Retaining customers for one year will increase a firm s bottom line Loyalty is a direct result of customer satisfaction Value results process quality in relation to the total cost to the customer Result coffee Process quality how it was made the environment and employees Cost dollar amount and cost to access Employee capability and productivity deliver value to targeted customers Top Box Customers spend the most money and give the best advice to firms Latitude within limits gives employees empowerment to correct unsatisfied customers Employee loyalty drive productivity which lowers turnover percentage impacting recruiting and training Quality of work drives employee satisfaction and loyalty through incentives and job training If customers believe that value is delivered in relation to cost long term profits will be yielded Develop a working environment with Highly capable engaged employees Creating customer value superior than competition Interacting with customers Bottom Line Results Customer loyalty Customer buys more The Four R s Retention Related sales Tells others Customer suggestions Referrals Research and development Career Tidbit The Three Wells Read well speak well and write well Never communicate when you re angry especially through email notes letters verbal communication and non verbal communication Joe Wheeler CEO of the service profit chain institute Boston based consulting firm Chapter 1 Rackspace IT hosting services Carefully selects its customers based on specific criteria Provides easy access to customer centered teams Personalized fast responses Listens to and acts on reaction and suggestions Rackspace results High customer satisfaction and loyalty High referral rates Low marketing costs High annual business growth from 2003 to 2007 Customers act like they own the company creating customer owners Shared values that do not include financial gain or interest Share desired outcomes with the firm and employee owners Key Points on customer owner Worth more than 100 price sensitive customers Generate more money over the customer owners lifetime Lifetime value of an employee owner who promotes customer ownership is priceless Organizations that learn how to cultivate ownership attitudes create a self reinforcing relationship between customers and front line employees Offer new suggestions to make the firm better and can even help select new employees Employee Owner Won t leave unless a life changing event occurs Give ideas and suggestions to better help the firm Recruit high potential employees that will boost the team Advance Service Profit Chain Concept Retention customers remain loyal Who in turn buy more related sales Tell others about their experience referrals Suggest how to improve research and development Customers who Complain constructively Suggest new products and services Process improvement Can enhance their experience and work to align key components to consistently exceed the customers expectations Services companies should create strategies policies and practices that integrate logic and technology that support frontline employees Set out to create a core of employees and customer known as owners Employee ownership quotient must be more than customer ownership quotient Ownership Quotient Harrah s Database Yields are astonishing Accounts for the spending habits of guests Shows the amount of customer owners Koster GM found that his supervisors were Hung up on administravia they were in the office a lot but had no personal interaction with employees Not training subordinates or holding people accountable Baptist Health Care High OQ for both employees and customers Career Tidbit Integrity is adherence to moral and ethical philosophies Building the OQ Harrah s Owner no financial interest and shares values with the firm Return to buy more Helps with research and development Tells others about the company referrals Give constructive criticism New suggestions for products or services Select and refer new employees Target employee ownership to be 100 loyal and contribute ideas and recruit more employees Employee ownership drives customer ownership and must be several times higher RETENTION REFERRAL RESEARCH DEVELOPMENT RELATED SALES Organic growth natural growth within the company not acquisition High OQ differentiates your company from the competition Ownership Hierarchy Ownership Recruiting apostle Commitment Loyalty Satisfaction Trial Awareness curiosity Friendly greeting Smiling eye contact Positive attitude Check for guest satisfaction Warm farewell Bottom is less like a customer owner while top is being a customer owner Harrah s uses data mining to view and examine customer trends Koster evaluated most valuable customers within CRM and reformed arrival and check in procedures for their all expense paid trips Reinforced five service behaviors Redesigned guest interaction process through a data drive program throughout the hotel Measure three aspects for employee through surveys using a rational or emotional index or leadership Harrah s established diamond platinum and gold customers creating their marketing plan with CRM Chapter 2 Build Ownership into your Strategic Value Vision Ownership return to buy more retention Buy related products related sales No financial gain related Refer to others referrals Give constructive criticism research and design Refer potential new hires Strategic Value Vision organization s process of defining direction Allocation of capital and resources Plan of how to achieve goals What do we do Who do we do it for How do we do it Deliver differentiated value in the product for the customer KFC vs Art Soul Leveraging customer value over operating income Optimize labor and operating expenses through the delivery system how the food goes from producer to consumer Strong OQ starts with the strategic vision Which customers will you serve Specific customized results Does this approach differentiate you Customers and employees must find value in work Anticipating and Exceeding needs and wants of individual customers and