Linking service to profit: the business case for service excellence

Abstract

Adds to the stream of research concerned with understanding the relationship between good service and profit. Takes a broader perspective than recent studies and asks does the financial performance of those organisations with a reputation for service excellence differ markedly from those with a poor reputation? Focuses on three questions: “Does size matter?”; “Are the better organisations more productive?”; and “Are the better organisations more profitable?” The findings, based on a large and wide‐ranging empirical study undertaken in the UK, found that, whether measured in terms of total assets, turnover or number of employees, both large and small organisations are capable of being both excellent and poor. In terms of productivity the findings suggest that provision of better service is staff intensive but yields significantly greater profit per employee. The better service providers have significantly better return on equity and return on total assets than the poorer ones.