If you’re someone that’s offering some type of service as part of your business, then you’re in good company. 75% of the economy is made up of service-oriented goods, meaning that we rely on each other and the services we provide in practically every area of our lives. Since services make up the majority of the economy, it’s important to understand what services are, what service features define them and the implications of selling a service rather than a product.
If two people offer the same service on the same street, why would people pick one seller over another? What are people really buying? Which service characteristics are they looking for? With products, it’s quite easy to understand and quantify the exchange process. The most important part of a product is that it works and provides satisfaction, but if you’re offering a service, the way you’re providing it is everything. In this article, we’re going to discuss the critical components and features of a service while also discussing ways of delivering your service in such a way that people want to come back. We’re also going to discuss how services can be carried out so that you can increase the amount of people who seek your service out in the first place. Nothing is more important than understanding what you’re selling, attracting buyers, then, most importantly, retaining those buyers by providing a world-class result. If you can get all of these factors right, then you’ll never go hungry again.
Table of Contents
The Value of the Service Sector
There are many people out there who believe that the global market downturn in 2020 was a direct result of people buying less products. They came to the conclusion that because people were no longer going to malls, that they were buying less and causing the economy to slump, but this wasn’t the case at all. Sales of products online skyrocketed, and many businesses saw an enormous boost in revenue as a result[1]. The sad truth is that spending at shopping malls has been in decline for years, even before COVID shut everything down. With all of us having grown accustomed to shopping online and being thrust into the boredom of being stuck at home, people shopped online more than ever. They stocked up on dry and canned food and spent big on frivolous purchases they’d never have time for during pre-pandemic times.
The real reason for the downturn was the decline of customers in the largest part of the economy, the service sector. Services comprise of products that are experiential rather than physical. Your hairdresser, doctor, and Uber driver are all providing you with services. The DJ at your local club and your local movie theatre are included too. Often, a product is involved in the sale of a service. If you buy a coffee from a supermarket, this transaction was for a mere product. But if you have a coffee made for you at the first-class lounge of an airport, this is a service. The result is the same, but you paid a premium for the way you received it[2].
What’s Really a Service?
It can be really tough for people to understand the line between product and service, but this is easier when you evaluate where the priority is. What are people truly buying? If you go to Disney World, you may buy a lot of products, but is that what you went to Disney World to do? Probably not. You don’t take a cruise for the purpose of travel, just as you don’t browse Amazon because it’s fun to scroll. Companies often enhance the experience of buying a product, but if the purpose was the sale of that product, it can’t be considered a service. Let’s now go through some of the key service features.
Services are defined as intangible, meaning that it’s something that can’t be touched or physically interacted with. This is an excellent rule of thumb to use when really stuck on defining your product.
Services are mostly provided by either professionals or highly trained employees. An air hostess will go through extensive training before seeing the inside of a plane and will work for years before being promoted to first class. Doctors go to medical school, and hairdressers are licensed. If you’re providing an experience and a result that matters more than any products being advertised, and you’re a professional at what you do, then you’re providing a service.
Services contain what’s called inseparability, which means that the service cannot be separated from the provider. A hairdresser is essential for those who require hairdressing, the two cannot be separated. Is it possible for your service to be provided without you at the ready?
Once you understand what type of business you’re in, the next challenge is rising above everyone else that offers a comparable service. In other words, you have to deploy the key service features we talked about to achieve business success. This can be more difficult because a service can’t be displayed on a shelf. Apple can show you its new iPhone in a commercial, but a plumber can’t just show you a clean pipe and convince you that he’s worth paying for. There’s only one way to grow your service business steadily and reliably, and it’s to focus on the experience of the guest you’re providing the service for. This can be the most challenging part for many professionals, who are in their line of work because they love performing the type of service they provide, but unfortunately, this isn’t enough. There are genius musicians who never book gigs because they’re bad with people. There are also excellent animators who aren’t getting jobs because they can’t collaborate and make often decisions that differ from those made by the team.
Customer Experience Matters
More than companies who provide a product, your level of service across the different service features and dedication to those who buy your services will either make or break you. Someone can be bad at selling products but still become a millionaire if their product is so good it sells itself. But no one will let you cut their hair if your salon is dirty and you’re mean, no matter how wonderfully you cut. The way in which the service is delivered is absolutely everything, and it’s the reason certain companies are running the world and others have shut their doors.
Take Disney, for example. Decades of the highest levels of customer service has led to them buying up most of the entertainment industry, including 20th Century Fox, leading to them becoming among the most powerful companies in the world. This is the company that has long maintained strict training for its employees and an entire vocabulary that’s dedicated to improving the guest experience. They also have extensive customer service rules for their employees to follow.
Take a trip on a Disney cruise or visit a Disney Park and ask someone to direct you to a shop or a bathroom. When they do, take notice of the hand they use to point the way. Never will a Disney employee point with one finger because the company thinks it’s too rude. No matter where you are in the world, a Disney employee will always either gesture with two fingers or an open hand. Whether you’re at Tokyo Disneyland or the Disney Hotel in Hawaii, the standard is the same[3]. Disney understands that it doesn’t matter how incredible their parks and resorts are if their level of customer experience isn’t incredible. They know that how the customer feels while receiving the service will make all the difference when it comes to that person coming back and, crucially, whether they’ll recommend that service to their family and friends. If even Disney doesn’t believe they’re above the strictest standards of the guest experience for their business to continue to succeed, how would yours be any different?
Once your customer experience is unbeatable, you’ll be on your way to explosive and reliable growth, but the final important factor left is customer relationships. It’s not enough to provide a great service and a wonderful experience; you also have to connect with customers on a personal level. The reason for this is that it deals with the biggest problem for service businesses, uneven customer expectations.
Building Relationships
One customer may receive a haircut and think it’s the most beautiful cut in the world, whereas another may sue you because she received something she liked more from someone else and now thinks you’ve destroyed her signature look. How many high-budget, well-reviewed movies do you not like? Isn’t it weird that you and your friends can disagree so strongly on a movie that a studio liked so much they paid $200 million to make it? Personal taste is enormous, and it’s impossible to please everyone, even with great service and winning experience. But while it’s impossible to please everyone with these two things, you will always please those that love you.
The final key to reliable growth for your service-oriented business is to build a bond with customers. Make them feel heard and cared for, because if they come to love you, their opinion of your service will always be positive. You still need to provide a great service and an excellent experience, but once you’ve locked down their opinion, you can rely on their satisfaction and their endorsement every time[4].
Summary
Let’s review the key points about the features of services and how to deploy them for business success:
- First, determine whether you’re selling a product or a service. You can work it out by discovering the main reason that customers seek you out.
- If you’re selling a service, then it’s time to discover that the way you’re providing your service can actually matter more to customers than the service itself. Mega companies such as Disney are proving this every day. Make sure you get the key service characteristics right.
- Building strong customer relationships can ensure that a great service delivered well won’t be overlooked when people’s opinions override their good judgment.
So before you go out into the world of business, work out what type of business you’re in. Are you selling a product or service? Do you fully understand the key features of services? Then, if you’ve determined that you’re selling a service, ensure that it’s an incredible service that is provided alongside an amazing experience that builds a bond between you and the customers that strengthen over time. If you can provide all this and more, then success is all but assured.
[1] Berthene, April. Coronavirus Pandemic Adds $219 Billion to US eCommerce Sales in 2020-2021. Digital Commerce 360. 2022. https://www.digitalcommerce360.com/article/coronavirus-impact-online-retail/
[2] CFI Team, What Are Products and Services? Corporate Finance Institute. 2022. https://corporatefinanceinstitute.com/resources/knowledge/other/products-and-services/
[3] Yang, Lucy. You’ll Never See a Disney Employee Point with One Finger – Here’s Why. Business Insider. 2018. https://www.businessinsider.com/why-disney-employees-point-with-one-finger-2018-2
[4] Kappel, Mike. 6 Ways to Make Customers Fall in Love with Your Business. Forbes. 2018. https://www.forbes.com/sites/mikekappel/2018/03/15/6-ways-to-make-customers-fall-in-love-with-your-business/?sh=1a8481bb3c42
