In one line: Every product ends in a human exchange with a customer. Service strategy decides what that exchange promises, how it is delivered consistently, and whether service is run as a cost or as a source of profit.
Core idea
Services behave differently from products, and that changes how they are designed and managed:
- Intangible: customers may not notice a service, or may value it differently than the company intends, so good service has to be made visible.
- Perishable: an empty hour of a technician’s time can’t be stored, so capacity planning replaces inventory.
- Variable: each interaction depends on the person delivering it.
- Simultaneous: a service is produced and consumed in the same moment, often in front of the customer.
A company meets its customers at three main points. Marketing and sales set expectations. Then the product or service is delivered. Finally, support, warranty and repair sustain the relationship. A basic strategic choice is whether service is a cost center to be minimized or a profit center to be grown.
How it works
Find where quality breaks down. The service-quality gap model of Parasuraman, Zeithaml and Berry [1] traces disappointment to four gaps inside the company:
- Managers misunderstand what customers expect.
- Standards and specifications don’t reflect what managers do understand.
- Actual delivery falls short of the standards.
- Communication promises more than delivery provides.
Together these produce the gap the customer feels, between the service they expected and the one they perceived.
Build a system, not just good intentions. Paul Hemp’s week on a luxury hotel’s room-service staff [2] shows a system behind the polish:
- a short credo and service standards, reviewed with staff every day
- staff empowered to fix a guest’s problem on the spot, without asking permission
- a database that records guest preferences, so needs are anticipated
- employees treated with the same respect they are expected to show guests
Experiment like an R&D lab. Stefan Thomke describes a bank that turned a set of working branches into a laboratory [3]. It ran formal experiments with real customers, such as testing whether screens in the waiting area reduced how long the wait felt. It screened about 200 ideas into 40 experiments and recommended half of those for wider rollout. Control branches and “washout” periods guarded against people behaving differently simply because they were being watched.
In practice
The course assignment is to interview someone in customer or field service. Good questions to ask:
- Where does service report, and is it measured as a cost or a profit?
- How is service quality measured?
- How are warranties and service contracts priced?
- What makes a good field representative?
For engineers, the biggest lever is design for serviceability. A product designed so that a lightly trained technician can diagnose and fix it, guided by instructions on the product itself, changes the economics of the whole service operation.
Questions to ask yourself
- Which of the four gaps is widest in my organization’s service today?
- Is our service treated as a cost to cut or a business to grow, and does that fit our strategy?
- What could we test with real customers, safely, instead of debating it?
Connections
- Bundling service with the product: Products and Services.
- Hearing the customer: Voice of the Customer, Identifying Customer Needs. Testing rigorously: Design of Experiments.
- What delivers consistency: Culture and Climate. The interview skill: Informational Interviews.
- Capabilities exercised: Interpersonal Skills, Responsibility and Urgency to Deliver, Inquiry, Trust and Loyalty.
Sources
- Hemp (2002) My Week as a Room-Service Waiter at the Ritz [2]
- Thomke (2003) R&D Comes to Services [3]
- Parasuraman, Zeithaml and Berry, the service-quality gap model [1]