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Evert Gummesson: Professor of Service Management and Marketing, School of Business, Stockholm University, Sweden
ACKNOWLEDGMENT: Also published in the book, Service Management: Basics, Concepts, Experiences, Manfred Bruhn and Heribert Meffert (Editors), Gabler Verlag, Wiesbaden, 1998 [copyright] Evert Gummesson.
Introduction
This article addresses service productivity and its connection to service quality and profitability. Compared to service quality, service productivity as well as the joint quality-productivity consequences for profitability have received little attention. It has become obvious that profitable service operations and the service quality and productivity concepts require new mindsets and deeper insights into the nature of services, relationships, and measurement. Here, profitability will be represented by relationship marketing (RM) which stresses loyalty, customer retention, and long-term relationships as keys to profitability. The article is particularly focused on the relationships between service providers and customers as these stand out in the service encounter and the service production process. The customers' role in creating both quality and productivity is crucial in services, whereas it is less salient in goods manufacturing.
RM puts emphasis not only on relationships and interaction between suppliers and customers, but also on relationships between suppliers and other parties. The modern corporation turns into a network of relationships in which all members of the network influence quality and productivity. This view is endorsed by new organization theory, particularly the notion of imaginary (or virtual) organizations. It is further supported by the new accounting practices of the balanced scorecard and the growing interest in intellectual capital. The article is focused on the micro level of service operations, and on what to measure rather than on how to measure.
The article draws on long-term, basic research[1]. The research currently provides more questions than answers - but if we cannot ask the germane questions, the answers do not matter.
Triplets, tribes and financial factors
The following proposition forms the vantage point for the article: "Quality, productivity and profitability are triplets; separating one from the other creates an unhappy family" (Gummesson, 1991, p. 6). The "triplets" all serve the purpose of making service operations efficient. This view is underscored by the criteria of the quality prizes that are now common on international, national, local, industry, and company levels. As an example, the first of the original goals of...