Monthly Archives: December 2015

Aligning Business Model & Culture to Maximize the Analytics Opportunity

In a recent blog post Analytics in Services: Actions versus Talk, we reviewed how companies are applying big data and analytics for both internal and external uses. That review led to a survey and executive panel discussion at the November 2015 Arizona State University Center for Services Leadership (CSL) Annual Compete Through Service Symposium where we further explored adoption rates, challenges, and lessons learned.

Adoption rates

The survey of 42 CSL member-companies and Symposium attendees revealed that roughly 25% have actually deployed initiatives using this technology, 25% have not considered how they will utilize analytics, and approximately 50% are developing a plan or are in pilot. Interestingly, these percentages are consistent whether companies are trying to improve marketing effectiveness and operational efficiency, helping set service levels, or attempting to expand markets and build new sources of services and solutions revenue.



The survey also asked respondents to describe what they were doing in each of these areas, from which the panel discussed several case studies in some detail. What emerged was an interesting set of objectives that can be captured as:

  • Efficiency – improve operational efficiency and reduce risk.
  • Experience – enhance every aspect of the customer’s experience.
  • Expansion – generate new services-based revenue streams.

As noted in our prior blog, the drive for efficiency has been well documented and the data reinforces that it is the most broadly adopted.

The second area, experience, generated a great deal of discussion and it became clear that this is where much of the energy in the market is focused. Experience encompasses all aspects of the customers’ journey: understanding each as an individual, marketing more effectively, setting and attaining appropriate service levels, providing support proactively, and anticipating future needs. It was evident that for a number of respondents this was the path to revenue growth both in terms of wallet share and market share.

Which leads to the third objective, expansion. A number of technology companies are aggressively pursuing the opportunity to be suppliers of technology, infrastructure, and consulting for analytics. However, a relative few organizations are also leveraging analytics to turn the data they own/access along with their expertise to generate new services revenue streams.

The executive panel was comprised of companies who fell into both of these categories: Siemens, IBM, DuPont Pioneer and Intel.


A broad set of inhibitors were cited by the survey respondents and we subsequently discussed during the panel. The challenges fell into three major categories, with some unexpected challenges emerging:


  • Data

There were two distinct sets of issues identified here. The first regarded the capture, integration, and filtering of data from a rapidly growing array of sources.
The second set of issues centered on data security/privacy/rights/integrity – and the potential financial and brand risks of getting it wrong.

  • Resources & Infrastructure

Not surprisingly, skills in data science and analytics were frequently cited. Not only acquiring a skill set that is not traditionally found in many companies, but also nurturing and retaining those critical resources in a highly competitive market.
The infrastructure necessary to support new analytical workloads and the growing volume of data was something that many respondents cited as a ‘hidden’ cost—or at least one which was not always factored in up front.

  • Business Model

The most frequently cited issues were associated with establishing a clear and compelling business model—particularly in regards to establishing new services revenue streams. The age-old challenge of competing priorities was compounded by the lack of effective means for calculating the ROI for the customer and the concerns over financial risk cited above. As one panelist pointed out, we are entering an age where data is the new currency—and yet there is no accepted methodology for measuring ‘return on data’.

Summary – Ideas to Consider

The executive panel shared their insights and made some compelling suggestions for companies considering leveraging big data and analytics to drive top line growth. Ideas that were discussed in the interactive session with the symposium attendees included:

  • Integrating internal & multiple external data sources combined with your expertise for more value
  • Identifying new markets and buyers for the services offerings based on data + analytics + expertise
  • Developing a ‘skunk works’ first-of-a-kind team to launch and experiment—avoiding the culture trap
  • Bringing on new skills and augment with university and industry programs
  • Considering building a partner eco-system to fill gaps in your infrastructure and skills
  • Establishing credible means for measuring the ROI for both the customer and the business

The Service Profit Chain: Reloaded

By: Joe Wheeler

Just over 20 years since its first publication, the Service Profit Chain still appears in the presentations of leading companies at conferences around the world. Perhaps no other management model has survived the test of time and scrutiny by both business and academic leaders. Why? Well, perhaps the premise is difficult to argue with: Create a “Cycle of Success” that:

    • ensures high levels of employee satisfaction and engagement, which
    • generates greater retention and productivity, which
    • creates more value for customers, which
    • increases satisfaction, loyalty and financial results.

Service Profit Chain

The Service Profit Chain enables an organization to take a holistic view of their business, make cause-and-effect relationships explicit, and keep score of things that matter to all three stakeholders: Employees, Customers, and Shareholders. Our research with companies we describe as Service Profit Chain Leaders reveals three major reasons why it has stood the test of time:

  • It explains how the business actually works: Companies that take the time to identify and measure the unique elements in their operating model, that connect the links in the chain, simply have a better understanding of what creates superior value for all stakeholders. They have more than a theory of the business, they have an adaptable management system that facilitates “double-loop” learning. In fact, at their best, Service Profit Chain Leaders are able to predict future performance, based on leading indicators defined by the Service Profit Chain, and take corrective action.
  • Culture as competitive advantage: In his recent book, The Culture Cycle, SPCI co-founder James Heskett presents empirical evidence of the degree to which a superior culture influences the profitability of one marketing services organization. It’s worth reading, but visit any Service Profit Chain Leader to see how the power of a culture focused on the company’s common purpose and core values definitely confers a competitive advantage. This is at the core of Service Profit Chain thinking. As Lanham Napier, the former CEO of Rackpace Hosting, one of the world’s leading cloud providers told us: “Our culture and the awesome people we have are the things I am most proud of…I would say it’s impossible for our competitors to copy. They’d have to start over and build it from scratch.”
  • Leadership’s change model: Running an organization is hard work. Technology has helped reduce barriers to entry across many industries. Finding and retaining top talent is as competitive as finding and retaining target customers. The Service Profit Chain provides leadership with a clear roadmap to strategic success. Harvard Business School Professor Michael Beer’s formula for effective change tells us:

Successful Change = D (Dissatisfaction with the Status Quo) x M (Model) x P (Process) > C (Cost)

For countless organizations around the world, the Service Profit Chain has been the “M” in Professor Beer’s insightful equation.

In 2008, we wrote The Ownership Quotient, as a follow-up to the original book. We were struck by the degree to which Service Profit Chain Leaders like Wegmans Food Markets, SAS and others had created even higher levels of advocacy and ownership with both employees and customers. From co-creating new product and service ideas with customers to applying digital and data science technologies to anticipate and predict customer needs, these companies had pushed the boundaries of what we could only imagine back in the mid-nineties.

Now, in 2015, we would suggest three ideas should be taken to heart by managers charged with leading their companies’ efforts to enhance customer or employee experience with new technologies:

  1. Make sure you understand the “defining element” of your customer experience: We learned this lesson back in 2002 when Shaun Smith and I wrote Managing the Customer Experience, but it is just as relevant today. The Defining Element of the experience refers to that Moment of Truth, when much of the value you deliver comes to life in a tangible way. For Krispy Kreme doughnuts it is that moment when you see the doughnut being made, and the anticipation of your first mouthwatering bite overwhelms your senses. Another company that really understands this is IKEA, the Swedish furniture manufacturer. Although their products can be purchased through different channels, they have apparently figured out that if you are going to stand half a chance of defending your argument for the love seat over the sectional, the discussion is most effective while in the store, standing in front of that particular item. They understand the “defining element” of the IKEA experience and don’t dilute it with distractions that move them away from something they aren’t.
  2. Apply technology that adds significantly more value than cost: Building on the first recommendation, be careful not to be seduced by all that glitters. The world is full of incredible technologies to enhance the customer experience. The Brazilian retailer C&A has special clothes hangers that show how many Likes each look has collected from the social media community. Hangers with a digital display are instantly updated according to the number of Likes of the product on Facebook. The counters built into each hanger, which are networked, update in real time to reflect the input of C&A’s Facebook fans voting with their virtual thumbs on photos of each clothing item. C&A calls the system “Fashion Like.” For a target customer base that skew high on social media activity and peer group opinions, the incremental cost for Fashion Like may far outweigh what is achieved in incremental sales and brand loyalty. But this is not always the case. One retail customer in the technology business actually removed touchscreen panels piloted in several stores and replaced them with simple round tables with bar stools. Why? They found that in this case, the technology added more friction to the experience and proved a barrier to creating long term, trust based relationships. On the other hand, a toy retailer we worked with redesigned their customer experience with touchscreen technology that interconnected the whole shopping experience. Both retailers realized substantial increases in customer satisfaction, average ticket and transaction volumes: One with tables and chairs and one with powerful digital displays and interfaces. There is no one right answer, there is just the Brand Promise you have committed to deliver and the most consistent, intentional and differentiated way you have designed for your customers to experience it.
  3. Be in the “relationship” rather than the “transaction” business: I’ll admit, it is tempting when you see the cost effectiveness of introducing more digital transactions in your business. For large organizations managing millions of transactions, even a few basis points of channel migration can represent significant cost savings. Service Profit Chain Leaders understand, however, they aren’t in the transaction business – they are in the relationship business. Their goal is to build lifetime value for their target customers and earn their loyalty by delivering an experience that creates significant advocacy. As a result, they drive down the cost of marketing and put those dollars to better use for real value creation. Robert Stephens, the founder of Geek Squad has said: “Advertising is the tax you pay for being unremarkable[1].”

Don’t be unremarkable. Leave that to your competitors. The Service Profit Chain represents a set of core principles that has helped countless firms achieve sustainable results. “Reloaded” with the capabilities of new technologies, the combination provides a clear path for sustainable innovation and growth.


Join the Center for Services Leadership at Compete Through Services Symposium on November 6th, 2015, to hear Joe Wheeler, The Service Profit Chain Institute, speak on Decoding the Next Generation Digital Experience.

[1] Inc. Magazine, “Ask Robert Stephens,” October 1, 2008


joewheelerphoto_0Joe Wheeler is the Executive Director of The Service Profit Chain Institute, a Boston-based consulting firm dedicated to helping companies achieve better performance by improving the linkage between employees, customers and profits. The Service Profit Chain Institute was founded by Mr. Wheeler and Professors James Heskett and W. Earl Sasser of the Harvard Business School, to partner with companies to bring the concepts associated with The Service Profit Chain® to life in their own organizations. In 2008 Joe co-authored a new book: The Ownership Quotient, Putting the Service Profit Chain to Work for Unbeatable Competitive Advantage (HBS Press Dec 2008) with Professors’ Heskett and Sasser.

Prior to launching The Service Profit Chain Institute, Mr. Wheeler was the Managing Director of Customer Experience for FleetBoston Financial which became Bank of America where he was responsible for Quality and Productivity for both Premier Banking and Small Business Divisions. Prior to this, he was an Executive Vice President with The Forum Corporation where he managed the firm’s Customer Experience Consulting Practice and co-authored a best-selling book on the subject, Managing the Customer Experience – Turning Customers into Advocates (FT Prentice-Hall 2002). In his previous position he was responsible for global marketing and product development. Mr. Wheeler’s consulting experience includes implementation of Customer Experience, Service Management and Innovation initiatives for many organizations including Kraft, Irving Oil Ltd, Override, Fairmont Hotels and Resorts, Manulife Financial, Export Development Corporation, Sigma Kalon, Sun Life of Canada, Canadian Imperial Bank of Commerce, Scotiabank, Royal Caribbean, The Steak n Shake Company, PayPal, and CA (formerly Computer Associates).

Mr. Wheeler completed his Masters in Business Administration at the Edinburgh Business School and studied Arts and Science at the University of Toronto and Queen’s University in Kingston.

Study finds anger can overwhelm happiness during holidays

A new study found that feelings of anger can overcome feelings of joy during the holiday season for those who seek shopping help through customer service.


“ASU’s 2015 Customer Rage Survey found about 54 percent of people will have an issue with a product or service they receive”

Holiday spirit turns to rage when customers need service

TEMPE, Ariz., Dec. 3, 2015 /PRNewswire-USNewswire/ — As we purchase, wrap and give presents this season, few…


What can your business do to help cut down on customer dissatisfaction this holiday season?