The service-profit chain model links employee satisfaction to customer loyalty and profitability in service businesses. It shows how investing in employees and internal service quality can boost customer satisfaction, creating a virtuous cycle that improves financial performance.

The services marketing triangle illustrates the relationships between a company, its employees, and customers in service marketing. It emphasizes aligning external marketing, interactive marketing during service encounters, and internal marketing to employees to deliver on service promises.

The Service-Profit Chain Model

Service-profit chain model linkages

• Establishes connections between employee satisfaction, customer loyalty, and profitability in service businesses
  • Employee satisfaction drives higher service quality and value for customers
  • Higher service quality and value increase customer satisfaction
  • Satisfied customers become loyal, repeat customers
  • Loyal customers drive revenue growth and profitability
• Emphasizes investing in employees and internal service quality to boost customer satisfaction and loyalty
• Focusing on employee satisfaction and excellent service creates a virtuous cycle leading to improved financial performance

Components of service-profit chain

• Internal service quality
  • Quality of support and resources provided to employees (training, tools, supportive work environment)
  • High internal service quality enables employees to deliver excellent customer service
• Employee satisfaction
  • Level of contentment and motivation among employees
  • Influenced by job satisfaction, recognition, and growth opportunities
  • Satisfied employees are engaged, productive, and committed to delivering high-quality service
• Customer value
  • Perceived benefits customers receive from the service relative to costs (price, time, effort)
  • Determined by service quality, convenience, and personalization
  • Higher customer value increases customer satisfaction and loyalty

Customer Experience and Service Quality

• Customer experience encompasses all interactions and touchpoints between a customer and a company
• Service quality is a key component of customer experience, influencing overall satisfaction
• Employee empowerment enables staff to make decisions and resolve issues, enhancing service quality
• Customer retention is closely linked to positive experiences and high service quality
• A strong service culture fosters consistent, high-quality customer experiences across all touchpoints
• Service blueprints help map out the customer journey and identify areas for improvement in service delivery

The Services Marketing Triangle

Services marketing triangle relationships

• Depicts three key players in service marketing and their relationships
  • Company (management)
    • Sets overall strategy, makes promises to customers, enables employees to deliver
    • Communicates service vision and establishes service standards
  • Employees (providers)
    • Interact directly with customers and deliver the service
    • Represent the company and bring service promises to life
    • Require training, support, and motivation from management
  • Customers
    • Recipients of the service and target of the company's marketing efforts
    • Form perceptions and expectations based on company's external marketing
    • Engage in service encounters with employees and evaluate the service experience
• Emphasizes aligning three key relationships
  1. External marketing (company to customers)
     • Advertising, promotions, and communications that shape customer expectations
  2. Interactive marketing (employees to customers)
     • Occurs during service encounter and heavily influences customer satisfaction
     • Employees must have skills and motivation to deliver on service promises
  3. Internal marketing (company to employees)
     • Focuses on training, supporting, and motivating employees to deliver excellent service
     • Ensures employees are equipped to meet customer expectations set by external marketing