As the world’s major economies have matured, opened up trade, loosed on policies and they have become bombarded by service-focused businesses. But many of the management tools and techniques that service managers incorporated were designed to tackle the challenges of product companies. They are outdated. This is because every business must consider how it can build and protect a strong competitive position. To do this, the economics of the functioning business must be carefully analyzed. Service businesses often require different competitive strategies from those of product-oriented companies. Let’s examine two of them:
The challenge of service-business management begins with design, as in customizing it according to consumers needs. As with product companies, a service business can’t last long if the offering itself is fatally flawed. It must effectively meet the needs and desires of the target group of consumers. As per the design of the service, managers must undergo an important shift in perspective: Whereas product designers focus on the characteristics the consumers will value, service designers do better to focus on the experiences customers want to have. For example, customers may attribute convenience or friendly interaction to your service brand. They may compare your offering favorably with competitors’ because of extended hours, closer proximity, greater scope, or lower prices. Your management team must only focus on the attributes of service the business will compete on. Strategy is often defined as what a business chooses to discard. It is because the path to success is never through providing mediocre quality of service.
Secondly, create a win-win situation for each of the parties in the equation. Very clever management teams discover ways to enhance the customer experience even while being extremely cost-effective. Many of these innovations provide a super competitive advantage, as they are quickly recognized and durable. An example is the immediate-response service provided by a car insurance company called Grey Power Insurance. When a person insures with Grey, meets with an auto accident, the company immediately sends out a van to assist that person and to assess the incident on the spot—often arriving on the scene before the tow trucks or ambulances. Consumers love this level of responsiveness and give the company high points for service. Thus, such type of services are remembered because they provide comfort, good-pricing and cost effectiveness.
Thus, finally, people are severely price sensitive about car insurance and almost never select anything but the rock-bottom quote. The key to success of top-level service companies is their ability to provide value for money. Communication is key. It isn’t just always verbal. It should shine through in your service. Because customers can touch and see a great product, but benefiting from the product is ethereal! You have to communicate the benefits of your service, to your team as well as your consumers. Make sure your target market understands your vision and your values.