The Ownership Quotient: Putting the Service Profit Chain to Work for Unbeatable Profitability

Citation

Sigala, M. (2009), "The Ownership Quotient: Putting the Service Profit Chain to Work for Unbeatable Profitability", Journal of Consumer Marketing, Vol. 26 No. 6, pp. 459-460. https://doi.org/10.1108/07363760910988274

Since its introduction in the 1990s, the “service profit chain” concept has been positively and widely received by industry and academia alike. Simply stated, the “service profit chain” advocates a mirror relationship between employee and customer satisfaction that can drive profits: i.e. value leads to customer satisfaction that creates customer loyalty, which in turn drives profitability and growth. To create value, firms need employee capability and productivity, which in turn are driven by quality of work life and employee loyalty. However, marketplace changes, technology advances, and innovations demanded the revision of the “service profit change” concept in order to consider the marketplace realities and possibilities such as: value creation by customer themselves in the form of co‐creation and co‐production, inter‐customer support (e.g. in virtual or real brand communities), customer relationship management programs, and employee loyalty and commitment in turbulent times of high labour turnovers and mobility.

Such concepts are integrated into this book by extending the “service profit chain” to include customer and employee “owners” of value creation. The book analyses how customer‐owners that are satisfied relate their stories to others, persuade them to try a product, and provide constructive criticism and new product ideas. Similarly, book chapters illustrate how employee “owners” are so enthusiastic with their organisations that they infect customers with similar satisfaction, loyalty, and dedication.

The book is written by the two initial authors of the “service profit chain” (Heskett and Sasser) and by Wheeler (Executive Director of the Service Profit Chain Institute), and it is based on recent research into exemplar companies such as, Fairmont Hotels & Resorts, ING Direct, Baptist Health Care, PrairieStone Pharmacy, SAS, Harrah's Entertainment, Irving Oil Ltd, Build‐a‐Bear Workshop, and Victoria's Secret. The book is structured into eight chapters providing both professional evidence and theoretical underpinning for creating, managing and measuring customer and employee ownership. All chapters are rich with industry examples and several practical implications as well as highlighting the need of firms to adopt a holistic and integrated management of their functions, including human resources, operations and marketing management practices. The book is reader‐friendly (demonstrated in its writing style and language), and chapters are sequenced in a logical order based on the sequence of the concepts' relationships of the “service profit chain”.

The book starts with an introductory chapter setting the rational and context of the book. The chapter first reintroduces the concept of the “service profit chain”, and then it identifies the changes that currently demand the rethinking of the “service profit chain”.

The second chapter, titled “Build ownership into your strategic value vision”, analyses how firms can create and deliver differentiated, customised value to customers and employees. The industry examples provided stress the need to initially identify the different segments of employees and customers a firm wishes to serve and then to align and co‐ordinate operating systems, marketing and human resources practices to create appropriate benefits and values for the former.

The third chapter, “Leverage value over cost”, analyses business cases showing that the provision of customised value does not need to cost more to firms. To achieve this, the industry cases show how to manage the following six key value levers for managing cost: the management of employees' and customers' experiences; the design of mutually reinforcing processes, jobs, and facilities; the selection of appropriate technology applications to support these operations; the attributes of the prospective employees; the structure and the systems that organise work; and the nature of performance metrics and incentives.

Chapter 4, “Put customers to work,” reviews and analyses industry cases showing how to engage and involve customers and/or communities of customers into the firm's value system and operations. By participating in business operations, customers become co‐creators of value by getting personalised products/services, gaining control over the purchase and service process, and providing inter‐customer social support to other customers (e.g. Toronto's Shouldice Hospital). To take full benefit of customers' work and innovation, the chapter provides practical implications on how to motivate customer participation and eliminate negative customer work.

Chapter 5, “Boost your employee ownership quotient,” discusses way of fostering value and a sense of ownership for employees. Issues and practical examples are identified regarding the following topics: employee recruitment and selection skills; professional development and employee training; employee evaluation and metrics; and employee recognition and reward systems. The chapter effectively shows how the customer ownership quotient is a function of the employee ownership quotient (i.e. a mirror effect).

Chapter 6, “Engineer ownership through anticipatory management,” analyses industry cases showing how to address employee and customer needs before they arise rather than merely react to them. Core and pillar elements in such practices are data warehousing and mining systems, customer relationship management, supply chain management, and other enterprise wide systems that operate from a common base of extensive information and encourage multifunctional coordinated activities to achieve customer‐centred solutions.

Chapter 7, “Build a strong and adaptive ownership culture,” highlight the importance of creating and maintaining a strong organisational culture for achieving sustained and long‐term profitability. Industry best practices from Healthcare, Irving Oil and SAS demonstrate the art of creating organisational culture values, communicating them, and instilling them into employees' and customer behaviour.

The last chapter, “Sustain your success,” continues and extends further the discussion about sustaining good performance. Examples are drawn primarily from Google, a company identified as the best place to work by Fortune magazine. The chapter also debates topics related to leadership and metrics for measuring employee and customer ownership quotient as they are important factors for managing long term performance.

Overall, this is an easy‐to‐read book that provides a rich set of industry best cases showing the interplay relationship between customers' and employees' loyalty and their combined impact on firm's profits. The book nicely integrates theoretical concepts, analytical tools and models mainly from the human resources, the marketing, and the service operations management fields, highlighting the reality that successful service management requires an enterprise wide integrated and well coordinated strategy. Overall, the book provides a nice rethinking and update of the “service profit chain” concept in order to consider the new management paradigms such as customer co‐creation in the development of firm's profits. The book constitutes a comprehensive guide and useful source of numerous case studies to graduate students, university faculty, marketing, operations, CRM and HRM professionals alike.