Service Profit Logic: Ensuring Customer Willingness to Pay

The customer interface of service firms is different than that of conventional goods manufacturing firms, which means that the reality of service firms must also be different. Understanding service profit logic as a basis for management decision-making is important for all kinds of firms that have complex customer relationships, in which customers experience a number of processes, activities, and interactions that influence their perceptions of the firm’s ability and willingness to help them. There are important implications when service profit logic is adopted. First, management must take a process (rather than outcome) focus. Second, goods-centric thinking should be put aside in order to focus on the customers and how to serve them well. As customers experience the service processes and not their outcomes alone, the nature and scope of marketing and of customer perceptions of quality differ from what conventional models assume. Furthermore, productivity management, which traditionally is treated as an issue internal to the firm, must also include the external effects of productivity-related decisions. The competence level of all employees interacting with customers must be enhanced, and the attitudes of such employees must be favourable toward interacting with customers.