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"Well, there goes another satisfied customer", I used to hear from the manager of a radio rentals shop I used to work in during student vacations some twenty five years ago, and we all would snigger. Clearly there was not much commitment to customer satisfaction in that organisation; but what exactly is the purpose of satisfying the customer when such a commitment does exist?
The answer to this question is provided by "The Customer Service Profit Chain" modeled below. The theory behind this diagram encapsulates all you will need to know about how customer satisfaction, and then customer loyalty, are linked to the quality of customer service and ultimately to you own firm's profitability.
In short - keeping the customers satisfied translates to benefits in your own bottom line!
Useful References on the Customer Service Profit Chain
André, M. M. and Saraiva, P. M., 2000, Approaches of Portugese companies for relating customer satisfaction with business results, Total Quality Management, 11 (7), pp 929-939
Heskett, J. L., Jones, T. O., Loveman, G. W., Sasser, W. E. and Schlesinger, L. A., 1994, Putting the service profit chain to work, Harvard Business Review, 72 (2), pp 165-174
Iacobucci, D., Grayson, K. A. and Ostrom, A. L., 1994, The calculus of service quality and customer satisfaction: Theoretical and empirical differentiation and integration, In: T. A. Swartz, D. E. Bowen and S. T. Brown (ed.), Advances in services marketing and management, Greenwich, CT, JAI Press.
The Customer Service Profit Chain