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Drive Results Inside-Out to Improve Service Chain Performance

Here’s how to drive service-profit chain performance. A study in the Journal of Marketing suggests that service companies should not just focus on external service quality, but rather start by improving internal service performance chain quality if they want to enhance financial performance. External service quality leads to more satisfied and loyal customers which, in turn, lead to healthy profits. Internal service quality, such as human resource management practices, leads to satisfied employees who provide better service. But internal service quality also directly improves employee productivity, perceptions of external service quality, and firm profitability. The study also found that emotional contagion, customer-company identification, and positive customer relationships are additional levers for enhancing customer satisfaction and loyalty beyond external service quality. Finally, employee satisfaction and external service quality have both positive and negative effects on customer loyalty and firm profitability, respectively.  

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From: Jens Hogreve, Anja Iseke, Klaus Derfuss, & Tönnjes Eller, “The Service–Profit Chain: A Meta-Analytic Test of a Comprehensive Theoretical Framework,” Journal of Marketing, 81 (May).

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