The document discusses the importance of customer engagement and the service profit chain, emphasizing that wealth is created by transforming resources into customer-valued offerings. It outlines key dimensions of customer experience, including reliability, empathy, and responsiveness, and highlights the significance of aligning organizational practices with customer expectations to enhance satisfaction. Additionally, it addresses challenges such as silo mindsets and the necessity for a customer-centric organizational approach to drive profitability and value maximization.

1. World Class “Customer Engagement” Practices
comes to your doorstep

2. Understanding and Managing
the Service Profit Chain
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3. What is the objective of the business?
Creation of Wealth
For Whom
Employees?
 Shareholders?
 Customers / Society?
Ok, let’s agree it is for shareholders.
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4. How is Wealth Created?
By transforming the resources
Men, Money, Technology, Raw Materials
Into something that customer’s
“VALUE”
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5. What is Value?
Economic Definition:
Economic Value = Reference Value + Differentiation Value
(price of best alternative) (difference +ve/-ve with best alternative)
Consumer Value = Rational + Emotional benefits
Price (Financial + Physical and emotional efforts
to acquire and consume products)
Summing up:
The difference between the cost of your product or service and
what the consumer is willing to pay.
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Value is always what is attributed by the customer

6. How is Value processed by Consumers
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Psychological Dimension
Reassurance / Status /
Trust/Affection
Economic Dimension
Price Perception
(Cheap, Expensive and Fair)
Functional Dimension
Features Offered
(Relevant /irrelevant)
While the bottom two relate to the core product ,the upper dimension mostly comes
from services facilitating the core product

7. How do Firms Deliver Value?
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Customization
Mass customization of products / processes / communication for affinity groups
(Consumer experience Life cycle management)
Standardization
Mass production
Mass Advertising
Innovation
Newer & better
product features
Innovation / Standardization Staccato
Customization Contiguous

8. What creates Attachments / Affinity?
Quality of experience –Good / Bad, Indifferent
Depth of experience – Degree to which
expectations were exceeded either way
Memorability – Driven by the extent to which all 5
senses were engaged
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9. 9
What is Experience?
Operational Excellence + Customer intimacy
Expectation
To experience is to feel.
Customer Experience =
Expectation is key determinant of the impact
of the experience being delivered

10. Through a sum total of our interactions a customer has with a firm’s…
How do firms deliver Experience?
People + Process + Products + Physical / Virtual Environment
• Enablement
• Orientation
• Professional
Acumen
• Role clarity
• Customer
facing
• Backend
TAT’s
• Escalation
matrix
• Technology
enablement
• Tangible
• Intangible
• Physical areas
• Virtual areas
• Where customers
transaction encompasses
every channel of contact
• All Customer engagement processes are driven by people.
• Physical environment maintained by people.
• All things being equal people the only differentiator.
• All things being unequal people the only leveler.

11. Key Dimensions of Experience
TANGIBLES
• The appearance of physical facilities, equipment,
personnel and information material/meets exceeds
standards in terms of features/quality
RELIABILITY
• The ability to perform the service accurately and
dependably/ both in routine as well as exceptional
circumstances
RESPONSIVENESS
• The willingness to help customers and provide a
prompt service/responding in the emotions/feelings to
people & events

12. Key Dimensions of Experience
ASSURANCE
• Competence - having the requisite skills and knowledge
• Courtesy - politeness, respect, consideration and friendliness of
contact staff
• Credibility - trustworthiness, believability and honesty of staff
• Security - freedom from danger, risk or doubt
EMPATHY
• Access (physical and social) - approachability and ease of contact
• Communication - keeping customers informed in a language they
understand and really listening to them
• Understanding the customer - making the effort to get to know
customers and their specific need

13. My People Matter
• People are the only continuous &
unique difference between
organisation as we are all unique
• This display varying degrees of
customer centricity i.e. tendency
to enable vs. seek to be enabled
• Customers always blame people
for anything good or bad that
happens to them.

14. Customer centricity is the practice of putting customer first in everything the
individual does and organising all the activities around the basic objective of
delivering superior customer Service and Value.
Service Provider Attributes Customer’s Views Weight age( %)
Reliability Reliability 32 %
Basic Respect, Resourcefulness,
Professional Acumen
Assurance 19 %
People Orientation, Customer 1st Mindset Empathy 16 %
Personalised Responsiveness, Positive
Outlook
Responsiveness 22 %
Product + Place Tangibles 11 %
Defining & Measuring Customer Centricity

15. What catalyses Customer Centricity
• Customer centric
people
• Level to which they
feel “Engaged”

16. What is Engagement?
Engagement connotes “activation”
Trait Engagement State Engagement Behavioral Engagement
• Driven by an
inclination to
experience the world
from a particular
viewpoint –
Optimistic /
Pessimistic view of
life
• Reflected in energy
& enthusiasm
• Influenced by nature
of work
• Willingness to make
“discretionary effort
• Organisational
citizenship behaviour
• Influenced by trust
arising out of the
quality of leadership

17. What are the conditions of Engagement?
SAFETY
• Employees
must feel safe
to be truly
engaged
FAIRNESS
• Distributive
Fairness: How
rewards are
distributive
• Interactional
Fairness: How
interpersonal
roles are played
out
• Procedural
Fairness: How
processes that
impact people
get carried out
DEGREE
OF
SELF
DETERMINATION
• Availability of
resources to do
the job well & a
sense of
psychological
empowerment

18. Understanding Customers’ Expectation?
• The expectation norms are pretty much the same for both B2B & B2C customers
• Customer expect service basics i.e. fundamentals to be right
• Customers link expectations to price being paid
• Customers expect companies to play “fair”
• Reliability is the most important dimension in meeting expectations
• The process dimension of empathy/Assurance & Responsiveness are more
important for exceeding expectations
• Customer expectations operate in a zone of tolerance namely from “adequate” to
“desired”.

19. Are the customers expectations reasonable?
Do they need to be managed?
Un-
anticipated
Desired
Expected
Basic

20. Service Profit Link
 Customer centric people
 Empowered and engaged
 Spirit of service
 Engaged customer
 Enhanced life time value
 Minimization of cost to serve and acquire
 Profit and value maximization
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21. Challenges towards making the Service Profit
Chain a Reality
• Top Management Mindset
• Silo mindset – micro organization
− Presence of multiple silos and not just one as is commonly understood
− Silos between the multiple customer contact channels
− Silos between front and back end of functional department
− Silos between the different functions department
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22. Challenges towards making the Service Profit
Chain a Reality
Expected Service vs Perceived Service
Service Quality Gap
 Mismatch between management perception of expected service
 Translation of management perception of expected service into service
standards
 Variance between standards and delivery
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Word of Mouth Personal Needs Past Experience
Sales & Marketing
Communication
Service Quality Gap Defined

23. Management Mindset
Strategy Mindset Organisation Behaviour Likely Results
Seen as short term. Don't trust either customers or staff Customers buy on price & availability
Not seen as necessary Make no exception
Staff stay based on salary levels - low
engagement
Organisation first, customer second Organization operates as a commodity
Short terms focus, guidelines
Required because
competitors are offering it
Limited empowerment to staff
Repeat business mainly due to customer
inertia
Seen as a cost, rather than
marketing investment
Do only what is necesssary to hold
customers
Organization operates as a commodity
Concerns primarily with reacting to
customer problems
Strategic measure to
develop business
Exceed customer expectations High level of repeat business
Adequate staff empowerment Positive engagement with company
Create Customer Delight
Seen as the brand in action
Brand pormise reflected in policies &
procedures
Customers as brand advocates
Tailored brand education for everyone Engaged and empowered staff
Increased brand equity & higher profits
CE as an
Expression of
the Brand
CE as a cost
CEas a
necessity
CE as a
Competititive
Advantage
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Significance of Customer Experience
Inappropriate management mindset is a major hindrance

24. Enablers of The Service Profit Chain
• Free flow of information across organisation levels both
informally & through formal platform
• Audit of data capture mechanism and nomenclature
• Cross-verification of qualitative inputs and external research
• Process blue printing
• Process fail-safing
• Service recovery procedures
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25. Enablers of the Service Profit Chain
• Hiring of customer centric team members
• Mystery audits of all customer facing processes
– Frontlining
– VoC Forums
– CSaT
– ESaT
– Service TATs
• Escalation Mechanism
• Service guarantees
• Price of non-conformance
• Company Wide CSAT linked bonus
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26. Audit of the Service Profit Chain
• Net Cost to acquire
• Cost to secure
• Ration of companies to revenue
• Customer attrition rates
• Portfolio of attrited customers
• Quality of referrals
• Average Lifetime value
• Active to dormant customer ratio
• Nett promoter score
• CSAT score
• Employee attrition rate
• Sales and margin contribution per employee
• ESAT scores
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27. Acknowledgements
• James Heskett, Earl Sasser & Leonard Schlesinger- Harvard Business
School
• Janelle Barlow-TMI America
• Dr. Deepak Jain- Dean-Insead
• Bruce Temkin- Temkin Group
• Dr. Fred Webster Jr.- Tuck School of Business
• Dr. Benjamim Schneider
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