The book effectively gives away the "secrets" of how Southwest has managed to grow every year, be profitable every year, and pretty much lead the entire industry for 30 years without much serious competition. In a nutshell, it's not certain things they do, it's everything they do.
This article sets out a simple, elegant, and ultimately tough-minded way to build profitability in a service business.
Originally published init offers as much today as it did then and is a perennial best seller.
Top-level executives of outstanding service organizations spend little time setting profit goals or focusing on market share, the management mantra of the s and s.
Instead, they understand that in the new economics of service, frontline workers and customers need to be the center of management concern. Successful service managers pay attention to the factors that drive profitability in this new service paradigm: And they express a vision of leadership in terms rarely heard in corporate America: The new economics of service requires innovative measurement techniques.
These techniques calibrate the impact of employee satisfaction, loyalty, and productivity on the value of products and services delivered so that managers can build customer satisfaction and loyalty and assess the corresponding impact on profitability and growth.
In fact, the lifetime value of a loyal customer can be astronomical, especially when referrals are added to the economics of customer retention and repeat purchases of related products.
It helps managers target new investments to develop service and satisfaction levels for maximum competitive impact, widening the gap between service leaders and their merely good competitors. The Service-Profit Chain The service-profit chain establishes relationships between profitability, customer loyalty, and employee satisfaction, loyalty, and productivity.
The links in the chain which should be regarded as propositions are as follows: Profit and growth are stimulated primarily by customer loyalty. Loyalty is a direct result of customer satisfaction.
Satisfaction is largely influenced by the value of services provided to customers. Value is created by satisfied, loyal, and productive employees.
Employee satisfaction, in turn, results primarily from high-quality support services and policies that enable employees to deliver results to customers. CEOs of exemplary service companies emphasize the importance of each employee and customer.
For these CEOs, the focus on customers and employees is no empty slogan tailored to an annual management meeting. For example, Herbert Kelleher, CEO of Southwest Airlines, can be found aboard airplanes, on tarmacs, and in terminals, interacting with employees and customers.
Jones is the president of eLanes, in Andover, Massachusetts.Southwest AirlinesA By James L. Heskett-Roger Hallowell Suntech Power Competition and Financing in Chinas Solar Industry By Sunil Gupta-Emir Hrnjic Spyder Active Sports By Belen Villalonga-Dwight B.
Crane. James L. Heskett is a Baker Foundation Professor, Emeritus, of Harvard Business School, in Boston, and a coauthor, with W. Earl Sasser, Jr., and Joe Wheeler, of The Ownership Quotient: Putting the Service-Profit Chain to Work for Unbeatable Competitive Advantage, forthcoming from .
James Heskett, Earl Sasser, and Leonard Schlesinger reveal powerful new evidence that paying close attention to the employee-customer relationship will enable any organization to be a low-cost provider and achieve superior results -- proving that you can have it all, a goal thought inadvisable just a few short years ago.
At the heart of this bold assertion is the authors' indisputable. Southwest Airlines: In a Different World Case Solution, This is the fourth in a series of 35 cases of HBS an organization that has changed the playing field globally for an entire industry that offers the servic. In this pathbreaking book, world-renowned Harvard Business School service firm experts James L.
Heskett, W. Earl Sasser, Jr. and Leonard A. Schlesinger reveal that leading companies stay on top by managing the service profit grupobittia.com Rating: % positive. The companys management is faced with long-term questions regarding the rate and manner of growth in the wake of the 9/11 attacks and general industry.