Every Business is a Service Business

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Making a Product Business a Service Business

Every business now needs to think of itself as a service business. However, this is easier said than done. How does one go about transforming a traditional product focused business into a service driven business, or ensuring that the organization retains a service edge over the competition? To do this, one must start with a clearly defined service quality strategy.
 

In the face of increasing competition, there is a tendency among sales people to over promise - to promise features, functionalities, or levels of service that they know that their product or their company will not be able to deliver, in order to shut out the competition and close the sale. This is often a critical, costly error. A disappointed customer is often a lost customer. By raising expectations to close one sale, the sales person has put in jeopardy many potential future sales. More than strategies and systems, people are of critical importance in service.

They make all the difference in the customer experience. All of us have our own personal horror stories of poor service: the rude serviceman, the indifferent desk clerk, the inefficient repairman….. in almost all these cases, the starring roles are played by service employees.

To ensure that the firm has good staff, all aspects of the human resources function require considerable thought and attention – including hiring, compensation, performance management and training. Front-line people in the organization, who are likely to have the most contact with customers, must also be suitably empowered, so that they can provide timely and relevant service. Lip service to customer service or good human resources practices is not enough – unless this is accompanied by meaningful actions, employees will see through the charades being enacted by the top management.

The Internet has changed the service aspects of business as much as it has changed other aspects. From e-mail to expert systems and customer accessible databases, the applications which use the Internet to improve the customer experience are innumerable. An organization which wants to focus on customer service will make use of all the technological tools available, to attain its objectives. A few words of caution though: Technology in itself is never enough to provide good, or even adequate levels of customer service. In almost all service interactions, customers look for the human touch.

Service and support are now increasingly globalized and standardized. Globalization has led to the trend of standardization, resulting in uniformity of service delivery to customers around the world. This uniformity is seen not only in the delivery of the service, but also in its pricing. This has also enabled many organizations to cut costs, making use of economies of scale. Thus, businesses have to transform themselves into global service businesses, if they are to survive.

If globalization and standardization appear to be threats to many firms, in equal measure, they provide opportunities to others. Service is a knowledge and people intensive process. Globalization has shaken up manufacturing in high wage countries, with most of the activities associated with it moving to low wage, low cost countries. It is now the turn of service to move to locations which provide cost and other advantages. This provides great opportunities for growth and expansion to companies in many developing countries, especially the ones with good quality, educated manpower. The current debates on businesses outsourcing many of their non-core process to firms in developing countries such as India are just harbingers of greater changes to come.

How easy (or difficult) is it going to be, to transform a traditional business into a service business? In fact, the question is probably irrelevant in many cases. For most product organizations, if they do not start thinking and behaving as service organizations, it is unlikely that they will be still around a few years from now. At least, as customers, let us hope this will be the case.