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The Service Profit Chain©

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     As I work with various clinics and help them to sort out their respective issues, one common scenario is the clinic that is chock full of angry, bitter, ungrateful employees despite the owner doing as much as he or she can think of to make them happy.  Increased pay.  Increased vacation time.  Higher employer insurance contributions.  Longer lunches.  Paid lunches.  One clinic even went so far as to purchase a paraffin wax hand dip and to hire a masseuse to provide monthly chair massages to the staff!  Somehow, the staff was still angry, bitter, ungrateful and not afraid to show it.  I showed that owner what they really wanted and after some hard work they became happy, productive, engaged employees even though we cut vacation benefits, insurance contributions, lunches and the masseuse!  What was this miracle ingredient that so many owners have failed to add to their clinic?

     In 1994 some very smart men from the Harvard Business School named Hessket, Sasser and Schlesinger began looking for a new way of viewing the service world in an attempt to quantifiably determine what the differences were between service organizations that were consistently profitable and more prosperous than their competitors.  Myriad books and lectures have been written and delivered that tried to describe a simple ‘how to’ achieve success in ‘your business.’  I’ll be honest; I’ve delivered some of them, but something was always missing.  There is always a piece of the puzzle that was needed to make the rest fit into place, but the pieces are different for each business.  Hessket, Sasser and Schlesinger were able to identify a way to find that missing piece for every business by creating a concept known as the Service Profit Chain (SPC); a Unified Field Theory of service-based organizations, if you will.

     Understanding the SPC allows a new perspective on your clinic by showing the interconnections between Internal and External, between Service Delivery and Perception of Value, between Employee Loyalty and Client Loyalty.  All of the factors in the chain flow in both directions; Service Value creates Client Satisfaction, while at the same time Client Satisfaction increases Service Value.  It can be an all-too-simple and thereby confusing concept, but let me show you:

     The SPC concept splits the relationship between company and client into four main parts: the Internal (centered on the employee), the Service Concept (centered on delivering results), the External (centered on the client) and Revenue/Profit (the end product of a successful business).  The key to making this work for you lies in understanding this model as it applies to YOUR clinic, identifying the puzzle pieces that are missing and creating them anew.

     INTERNAL:  No matter how hard we try to deny it, no matter how it feels to us, we are a service industry just as much as a restaurant or an airline; the fact that the service is high end medical care does not change its nature.  People do not come back to us because they are impressed the neatness of our sutures, our deft hand with a fecal loop or our diagnostic skills.  They return because they were made to feel comfortable, cared for and serviced.  They return knowing their pet will be in good hands because we and our staff were good with them.  The most important link in the chain and the one over which we can exert the most direct control is the Internal, which focuses on the Employee.  As veterinarians, we tend to think of our staff as ‘family’ and we overlook their foibles as we might overlook an in-law’s post-Thanksgiving flatulence; we don’t care for it much but what can we do about it?  They’re family!  This isn’t entirely accurate; our Employees are the tools with which we service our patients, they are the way we create loyalty and satisfaction, the way we create life-long clients.  When our staff is failing to create positive results with our clients or when they are creating obstacles to those results, it must be addressed immediately and powerfully. 

     Before we can begin trumpeting to the herd, however, we need to move one more step back and look at our Operating Strategy and our Service Delivery System; is it set up for success? 

Ask these questions about your own systems:

         Is it designed to allow the Employee to perform to their full capacity?

         Will it encourage staff growth and development? 

         Does the staff have the tools they need to carry out our mission? 

         Does the staff have latitude to make decisions that will improve the client experience? 

         Are we selecting the correct people for these roles and reinvesting in their development? 

         Are we consistently communicating with them and, in particular, are we listening to their feedback? 

     If you answered ‘no’ to any of these questions, look at improving the system first.  If the system is not functional, how can you hold staff members accountable for poor results?

     An important concept of the SPC study is the Satisfaction Mirror.  It shows that for every action on the client side, there is a correlated action on the employee side.  The simplest example of this takes place in a restaurant; a waiter delivers excellent service to a client, the client tips generously.  Both of them are pleased with the results.  If the waiter delivers poor service and receives a poor tip, the reverse occurs.  There is no service event that does not have mirrored effects for both the client and the employee; as clients increase repeat purchases, the employee becomes more familiar with the client’s needs and ways to meet them.  As the client becomes more satisfied in their experience, the employee becomes more satisfied in their work.  If this is so, then we see that we cannot focus on any of the links in the chain before addressing the INTERNAL condition, because the subsequent links in the chain, those dealing with the clients, are directly influenced by the first link.

     What this tells us is that if any facet of our business is suffering, the first place to look is our Operating Strategy and Service Delivery System.  A drop in sales may be poor work flow.  If the systems prevent the staff from processing clients in a timely fashion and the client finds themselves waiting overlong in the lobby, any external factor can be enough to move them out of your clinic.

     As you look to correcting any issues in your own operating strategy, you must begin studying your value to your clients.  It is critical that you remember that value is not merely equated with low price; in fact, price is only a single facet of value.  Different clients are willing to pay very different prices for similar goods and services if they find value in doing so.  Simply put, value is equal to the RESULTS produced for the client (the goods and services provided) plus the PROCESS QUALITY (the way in which the service is delivered) divided by the PRICE paid (your fees) and the ASSOCIATED COSTS to the client (this means transportation costs as well as time invested).  Visually:

To illustrate, we will use the restaurant example again:

     You can see that although the price is low, the other factors add up to a poor value for this client.  Another client living near to the restaurant may be willing to put up with bad service since there are no real associated costs with getting there; the value to that client is greater.  If the meal were exceptional, an hour drive and bad service may create enough value for the first client after all.  This demonstrates the most important point of all:

     Not all clients are equal.  It doesn’t always mean that you failed when an individual client is not satisfied with the results you provide. 

     Any decisions you make in your Operating Strategy and Service Delivery System will increase value for some and decrease it for others.  Remember that you cannot be all things to all people and then create systems that work for Your Clients.

     Happy, satisfied employees create happy, satisfied customers.  Employees are not satisfied by paraffin wax dips and shoulder massages; they are made happier by doing work that fulfills their human need to be useful and to be successful at whatever they are doing.  Poorly designed workplaces, ignored complaints and regulations that are not explained or followed through on can leave employees wondering why they bother to get up in the morning.  We give them a broken system that does not fulfill their needs and then wonder why they in turn are failing to fill our customer’s needs.

     As my client learned, the miracle ingredient that was missing from her clinic didn’t cost anything.  In fact, we decreased spending on compensation and benefits and still saw a dramatic improvement in morale.  What was needed was a clean, clear, structured Service Delivery System that allowed her employees to do what they had been trained to do, to achieve their own goals and to be successes in their workplace.  With a little planning, you can do the very same in your clinic.