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In the five-year period from 1992-1997
management changed the profitability of
Sears by accomplishing the following:
•trained the workforce to understand the
business;
held town-hall meetings to explain
competitive reality to employees;
built commitment to a new vision:
“To become a compelling place to work,
shop, and invest”;
•created a measurement and reward
system to support the vision; and
substantially improved customer satis-
faction and net margins (3.3% vs. 1.2%
previously). (Rucci, Kirn and Quinn
1998: 97)
Though it is often difficult, there is a
need to continually measure customer
satisfaction, loyalty, and value along with
the causal relationships among employees,
customers and profits in order to provide
for continued corporate profitability. This
analysis is fundamental to understanding
the revenue and cost components of cus-
tomer profitability as well as the drivers of
profits and success in organizations.
12
MANAGEMENT
STRATEGY
MEASUREMENT
Exhibit 6 – The Initial Sears Model: From Objectives to Measures
Source: Rucci, Kirn and Quinn 1998: 89.
A compelling place
to invest
A compelling place
to shop
ObjectiveMeasure
•Environment for personal
growth and development
Support for ideas and
innovation
Empowered and involved
teams and individuals
•Great merchandise at
great values
Excellent customer
service from the best
people
Fun place to shop
Customer loyalty
•Revenue growth
Superior operating
income growth
Efficient asset
management
•Productivity gains
•Personal growth and
development
Empowered teams
Customer needs met
Customer satisfaction
Customer retention
•Revenue growth
Sales per square foot
•Inventory turnover
Operating income margin
Return on assets
A compelling place
to work
A compelling place
to invest
A compelling place
to shop
A compelling place
to work
Exhibit 7 – The Revised Sears Model:The Employee-Customer Profit Chain
Source: Rucci, Kirn and Quinn 1998: 91.
Attitude
about the job
Attitude
about the
company
Employee
behavior
Merchandise
value
Service
helpfulness
Customer
recommendations
Customer
impression
Employee
retention
Customer
retention
Return on assets
Operating margin
Revenue growth
5 unit increase in
employee attitude
1.3 unit increase
in customer impression
0.5% increase
in revenue growth
DRIVES
DRIVES
Customer Profitability Analysis Template Page 4
source: cimaglobal.com
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