Performance Dashboards and The Service-Profit Chain
Author: Mark Christensen
Let’s get right to the bottom-line:
A 5% increase in customer loyalty can boost profits by 25 to 85 percent.
This figure was first estimated in an 1990 HBR article by Reichheld and Sasser entitled “Zero Defections: Quality comes to Services” and then quoted in the watershed “Putting the Service-Profit Chain to Work” four years later. The “service” in the “service-profit chain” comes from the assumption that we’re talking about a business in a service economy, and the idea behind the Service-Profit Chain is deceptively simple:
Internal quality drives employee satisfaction which in turn drives employee loyalty. Employee loyalty drives employee productivity, employee productivity, value. Value drives customer satisfaction, and customer satisfaction drives customer loyalty. And finally, customer loyalty drives profitability.
Much of the power of the Service-Profit Chain comes from its simple view of the complex interconnectedness within enterprises—not only across departments and functions, but also across the three overarching enterprise constituents: employee, customer and shareholder. What we’re talking about here is the full premise and promise of Business Performance Management: sustainable prosperity comes only through the daily management of the service-profit chain—from culture and infrastructure to productive, loyal employees, to real value delivered to customers, to customer satisfaction and loyalty, to sustained growth and profits. And at the heart of Business Performance Management is the Performance Dashboard.
The Performance Dashboard might be a strategic dashboard in the style of Kaplan’s and Norton’s balanced scorecard. Or it might, again through data visualization, be a tactical performance dashboard providing alignment around and informing decisions on sales performance. Or it might be an operational dashboard, visually tracking and alerting the process-intensive world of a manufacturing line. But in all its forms, the Performance Dashboard is a lush, tranquil island in a roiling sea of BI, blending the attributes of reporting and analysis to create a dynamic status and exception report that meets the demands of 80% of a workforce. It has been called by Wayne Eckerson “the BI sweetspot.”
A Performance Dashboard is really the modern face of BI, meeting the information requirements of most users by hitting the sweet spot, blending the reporting and analysis capabilities within an intuitive dashboard to provide the right data in the right format to the right people at the right time in order to optimize decisions and accelerate results. Performance Dashboards are windows into the Service-Profit Chain, and the Service-Profit Chain is the genetic code about which the protein of Business Performance Management is ultimately assembled.
Posted on February 29th, 2008 by Guest
Filed under: View Points & Perspective
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