Excerpt: The New Math of Customer Relationships

Back in April Harvard Business School published a paper in its Working Knowledge series called "The New Math of Customer Relationships." It was based on an interview with James Heskett, the co-author of The Service Profit Chain, a seminal work that diagnosed and promoted the cause-effect relationship between employees, customers, and profits. This concept is foundational to managing customer experience, which cannot be maximized without employee engagement and cannot be considered successful unless it is impacting business performance.

Given our present economic situation I thought this quote from the interview was worth sharing:

Q: As we head into what appears to be an economic slowdown, what should companies be considering in terms of the service profit chain? Can it be a tool for competitive advantage in a cooling economy?

A: Relationships between customer and employee satisfaction, loyalty, and productivity become even more critical during times of economic stress. During such times, the most important advice that one can give is first remember that the service profit chain starts with employees—therefore, preserve that resource; second, consider dividing jobs at lower pay rather than laying off customer-facing employees; third, seek economic ways of making both employees and targeted customers know that you value their loyalty—this doesn't require a lot of money; and fourth, work even harder at creating "owners" by eliciting suggestions from employees and customers alike about ways of cutting costs while enhancing customer service.

While I would quibble with the last phrase--it should be customer experience, not customer service--this is nonetheless sage advice.