Running a hospitality business today can feel like pedalling a water bike against a strong headwind—lots of effort, not much progress. This struggle persists despite customers seemingly desperate for anything that makes their lives easier or more fun, preferably both. So, what’s causing this resistance?
The Three Mega Trends Creating Headwinds
1. Abundance
We live in a world of abundance, with an oversupply in virtually every market segment. Since the scarcity years following World War II, we’ve experienced a steady increase in offerings that far outstrips demand. While more customers seek great service, the increase in demand hasn’t kept pace with the explosion in supply.
What it means: We’re all part of a hyper-competitive environment. As businesses shout louder to attract attention, the noise drowns out everyone. The internet has made communication easier than ever, but being heard has never been more challenging.
The loyalty factor: In this environment, customer loyalty is pure gold. Loyal customers recommend us to their friends, possibly the only sustainable source of new business we have.
2. Service-Dominant Logic
The much-talked-about “coming of the service economy” is no longer approaching—it’s here. What makes this challenging for traditional service providers is the entry of new players who invent novel services and raise the bar, creating more refined offerings than the old economy ever dreamed of.
What it means: The kind of service you provided in the past probably won’t cut it in the future. Being in a hyper-competitive market only amplifies this challenge.
3. Lack of Engagement
The situation is further aggravated by widespread disengagement in the workforce. Year after year, Gallup surveys show that the vast majority of employees are not particularly engaged in their jobs.
What it means: While low engagement might be tolerable in some industries, it’s critical in service businesses. There’s a world of difference between being served by someone who merely has a job and someone who is truly engaged. This difference often translates directly to customer loyalty.
Facing the Headwind
Despite these challenges, some service businesses seem to have found the secret sauce—not only are they untroubled by the headwind, they’re thriving. How do they do it?
The answer lies in successfully implementing the principles of the Service Profit Chain—a framework that establishes clear connections between customers, loyalty, value creation, and employee engagement. While it’s not always easy to get started, once you do, you’ll experience a flywheel effect, slowly but surely building momentum until you become unstoppable.
Does this sound too good to be true? It’s not. There are numerous examples of extremely successful service businesses that have done exactly this.
By understanding and addressing these three major challenges—abundance, the shift to service-dominant logic, and the engagement crisis—you can transform your business and make the much sought after transformation from good to great.
When is the best time to start addressing these challenges and implementing the Service Profit Chain in your business?
It’s like the wisdom about retirement savings: the best time would have been 5 years ago, but the next best time is today. Every day that passes is a missed opportunity to start building that flywheel effect.