Service Profit Chain - Operation Strategy

Prior to their work on the service-profit chain, Heskett and colleagues produced what they considered as the linkages between the employee and the customer. This is depicted in the next figure (page 88) as a 'cycle of failure'. Their contention is that service organisations have failure 'built-in' to their organisations by placing the least paid, least trained member of staff at the customer interface despite the fact that customers are becoming increasingly discerning in their demands. They suggest that many companies are more interested in paying for managerial control, exemplified by multiple levels of management than they are in providing better customer service.

Heskett asked the question 'would we rather pay for control than service?' To support his arguments he refers to a research study in the US of major retailers where it was found that of customers who defected to a rival company, only 14 per cent did so because they were unhappy with the product; the remaining 86 per cent did so because they were unhappy with the service. Heskett (1991) suggested that the research study showed that customer loyalty was a good predictor of not only current but future profits and as an important indicator it should be measured. Reichheld (1996) suggests that as the quality revolution in manufacturing has had a profound impact on competitiveness, so too will 'zero defects' have an impact on service management. The challenges for operations managers in the service sector would appear to be just as demanding as for those in the manufacturing sector.