The success or failure of a service company depends on whether it does four things right or wrong – and whether it balances them effectively. Here are some questions that will refine managers` thinking across all dimensions and help companies assess how their service models are integrated. Large service companies are almost always very smart in choosing their customers. We saw this in Progressive`s very informed decision about who we want to do business with. Commerce Bank knew since its inception in 1973 that it had to make its own claim in the market. « The world, » said its founder Vernon Hill, « didn`t need another bank `me too.` I had no capital, no brand name and I had to look for a way to differentiate myself from other players. Shouldice Hospital, a Canadian specialist in hernia surgery, is very selective about its clientele. Not only does it serve patients suffering from a certain type of disease, but it also has the luxury of operating on healthy people. He flew over the crème de la crème of the market. Consider the service of buying a ticket to a marketing conference. The conference provides a service by offering educational sessions and discussions on various marketing topics, but your ticket purchase does not mean that you own a part of the conference or the venue where it takes place. You can only use your ticket to enter the conference room and attend the event.
The process of delivering goods from seller to buyer may include manufacturing, warehousing, marketing and logistics, and due to this process, there is general uniformity between goods. The exception may be in a much smaller operation where a company manufactures small batches of a product or customizes items to unique specifications. Commerce Bank competes with extended opening hours and friendly service, not with low prices or a variety of products. He knows he doesn`t need Straight-A students to master his limited range of products, so hire him for hiring and training for service. For example, it uses simple recruitment criteria, such as « Is this person smiling at rest? » And it encourages employees to recruit people they consider excellent customer service in other industries. Many of the management tools and techniques used in service companies are designed to meet the challenges of product companies. While they are valuable to service managers, they are not enough to succeed. In this article, Frei of Harvard Business School explains why and urges companies to add new ones. After years of intensive research and analysis, he offers an approach to designing a profitable service business based on four critical elements: offer design, employee management, customer management and the financing mechanism. To what extent do your core business extensions fit into your existing service model? There is more variability in services than in goods.
In many cases, with the exception of small businesses and small series, the goods that a company produces are identical. Imagine a company mass-producing notebooks. It is likely that this company has a specific operation, including quality control, to ensure that it manufactures the same line of notebooks every time to meet customer expectations and the specifications they have for their products. This leads to the uniformity of a product. Goods are items, items, products, or goods that businesses sell, and in return, consumers buy those goods to fulfill a want or need. These are tangible objects with physical attributes that you can touch, feel, and see – such as color, size, shape, and weight. Just like a product that comes on the market, a service must be designed convincingly and management must employ a workforce capable of producing it at an attractive price. In addition, service companies must manage their customers, who not only use the service, but can also be an integral part of its production: since the involvement of customers as producers can have a devastating impact on costs, companies must also develop creative ways to finance their distinctive offers, such as offering a self-service alternative or expenses with operational savings.
balance. For example, an ATM provides a service to bank customers who need to deposit or withdraw money or check their account balance. The ATM provides a service to customers, but the customer must interact with the machine to get what they need. The customer ultimately makes the decision about what they need and how to interact with the machine to get it. Any service provider, regardless of its duration of existence, may benefit from a review of its business operations using the framework set out in this Article. Aligning the four elements of service design more closely can be an ongoing process of small optimizations and experiences in transition, inspired by the questions in the « Service Design Diagnostics » sidebar. A management team planning to launch a new service will find the framework particularly useful. It characterizes decisions that need to be made early and in tandem so that they do not collide on the road. And at the highest level, it emphasizes two very important principles of service design. First, there is no such thing as a good idea per se; There is only one good idea in the context of a particular service model. internal service providers) that enable a company to achieve economies of scale and experience in its service models.
The effectiveness of using shared services to benefit individual service models can determine the success of a multi-targeted business. (See the exhibition « Do targeted competitors bite on your flanks? ») An equally common failure is the misguided desire to be everything to everyone. In today`s service economy, it is almost impossible to design a service model that covers a wide range of customers and remains competitive through them. Instead, companies should focus their service models on more focused excellence by making certain things specific to specific people. The architecture of shared services is evident in multi-targeted companies across all industries – from Yum Brands, a collection of five fast food companies, to Omnicom, which is made up of hundreds of companies in the interactive marketing space, to GE, which seems to have no limits on the markets it can enter. Each company has created different service models for different customer business segments and measures the overall value of the models by assessing how well they benefit each other. What determines whether a company has built the right portfolio of service models? It boils down to a critical test: Is each of the company`s different service models better off than the others? If the answer is no, it indicates that performance is about to decline or that the company may want to part with certain service models. .