The service-profit chain

The service-profit chain is used primarily in service-sector firms, such as retailers, restaurants, hotels and airlines. It describes the key causal links between employee service levels, satisfied customers and firm profitability, and it shows how important it is to have engaged employees working for you.

When to use it

  • To identify the drivers of your profitability in a service environment.
  • To diagnose problems with customer retention and loyalty.
  • To diagnose problems with employee morale.


The service-profit chain was developed in the 1990s by a group of Harvard Business School faculty: James Heskett, Thomas Jones, Gary Loveman, Earl Sasser and Leonard Schlesinger. While the term ‘service-profit chain’ ...

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