The Service Profit Chain

Engaged employees are more loyal, helping create highly satisfied and loyal customers. Highly satisfied, loyal customers lead directly to growth in sales and profits. This progression is called The Service Profit Chain, and it’s the principle SMG was founded on.

service profit chain

What is The Service Profit Chain?

The Service Profit Chain is a concept developed by a group of colleagues at Harvard Business School based on a five-year study linking employee engagement, customer satisfaction, + financial performance. The study revealed that increasing the number of loyal employees + customers is a proven way to drive sustainable, profitable sales growth.

What’s SMG’s connection to The Service Profit Chain?

One of SMG’s co-founders, Harvard Business School professor Len Schlesinger, was part of the group who studied and authored The Service Profit Chain.

Today, SMG uses that foundational principle to inspire experiences that improve people’s lives. Through our software with a service (SwaS) model, we help brands get smarter about their customers, patients, + employees by linking employee engagement and customer satisfaction insights with tangible business outcomes.

engaged employees effect customer loyalty

How can the employee experience impact the customer experience?

A key tenet of The Service Profit Chain maintains that when an organization treats its employees well, they’re more satisfied with their jobs, more loyal to the organization, + provide better customer experiences. When excellent services are delivered by a highly motivated staff, customers feel more connected to the brand in a positive way that drives long-term loyalty.

What’s the impact of the employee-customer relationship on your business?

Happy customers who are supported by a highly engaged staff become more loyal to the brand (e.g., make more purchases more frequently and provide positive word-of-mouth)—enabling the organization to achieve sustainable business growth. This allows the organization to focus resources on improving employee and customer satisfaction.

Companies with highly engaged teams outperform their less engaged counterparts

How can you incorporate The Service Profit Chain into your experience management program?

If your brand already has a customer experience program in place

We recommend prioritizing improvements to the employee experience to have the biggest impact on the customer experience + financial performance.

If you haven’t launched a customer experience program

You should start there. A customer-centric business culture can be built gradually once you are consistently collecting customer feedback. Over time, you will begin to see The Service Profit Chain at work—driving improvements that help you prove ROI.

Learn more about how The Service Profit Chain can impact your business.