cover image The Service Profit Chain: How Leading Companies Link Profit and Growth to Loyalty, Satisfaction, and Value

The Service Profit Chain: How Leading Companies Link Profit and Growth to Loyalty, Satisfaction, and Value

James L. Heskett, James L. Herskett, Earl W. Sasser. Free Press, $32.5 (320pp) ISBN 978-0-684-83256-2

A management equation for understanding the profitability of leading consumer-oriented, or ""service,"" companies, the ""service profit chain"" posited by the authors describes the complex relationships between customer satisfaction and loyalty and employee productivity and work quality. This ""customer's-eye view"" explains financial success better than market share does, say the authors, all of whom teach at the Harvard Business School. Schlesinger also served as CEO of Au Bon Pain, an upscale fast-food chain. All have studied service management for many years. This book culminates their work to date, although they acknowledge that their subject continues to evolve and that no company has mastered all the chain's elements. Profiling dozens of companies that ""manage by the customer-value equation,"" the book focuses on the ""lifetime value of customers"" and postulates a customer-oriented ""three R's"" of marketing: retention, related sales and referrals. Each chapter ends with a series of questions for management. Although the abundance of detail and dense, academic language sometimes overwhelm the reader, this practical book is a landmark in business scholarship and deserves a wide readership. (Apr.)