Service Delivery Profit Chain

Tony O'Brien, Head of Emergency Call Answering Service at Comreg and CCMA Board member takes a closer look at the Service Delivery Profit Chain

The theoretical concept regarding the SDPC was devised by James Heskett et al and published in the Harvard Business Review in 1994. Although the concept is nearly 20 years old, it is worth checking to see if it is still relevant today.

Haskett's theory is that there is a direct correlation between the way in which employee satisfaction, customer loyalty and productivity is achieved and the corresponding impact on profitability and growth in service-centric organisations. The SDPC attempts to put hard values on soft measures and helps organisations to focus on achieving service excellence as a competitive advantage. The theory goes that:

  • Internal quality drives employee satisfaction
  • Employee satisfaction drives loyalty
  • Employee loyalty drives productivity
  • Employee productivity drives value
  • Value drives customer satisfaction
  • Customer Satisfaction drives customer loyalty
  • Customer Loyalty drives profitability and growth
It may be an age-old theory but is it still alive today?

Here are 7 questions you should ask in your own organisation:

  1. Do service driven organisations pay much attention to the way in which the employees are selected and developed or how their workplace is designed?
  2. We know that most organisations measure customer satisfaction (or a derivative of it) but do they measure and value employee satisfaction?
  3. How is productivity and the employee effort measured and how is value for customers created?
  4. How does the perceived and realised value for customers get measured and does this translate readily into their satisfaction levels?
  5. Where does quality feature for customers?
  6. How does customer satisfaction drive repeat business and referrals to other potential customers?
  7. How does the organisations profitability and growth potential become realised because of customer loyalty?

Take a look at your own organisation and ask these open questions? Is there a link? Is the SDPC still valid or has it been overtaken by other factors? Please comment below.

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