Products can’t recognise the individual
Historically, product orientation is a result of industrial methods. Industrialisation made the manufacturing of goods of a consistent quality cheaper and available to larger numbers of people. This has been hugely beneficial to business and society. It’s no longer enough to either meets the demands of today’s customers or the challenges we face in the modern world. Industrial thinking in sectors such as banking, telecoms and insurance leaves customers with no affinity to the brand. Healthcare and other public services fail to meet the social and personal needs of individuals.
Services enable a relationship with the individual
Services are important because they humanise and personalise interactions with customers. A service is provided to the individual whereas a product is mass-produced. We find that even with business customers the need for a product to be fit to the organisation is huge. If customers are asking for a better experience they are in fact asking for something that recognises them as individuals. Services are a way to respond to the needs of individual customers without compromising the efficiency of the organisation.
Customers demand personal recognition
Consumers often see few differences between products. They need a bank account, some home insurance or an energy supplier, often the choice is driven by price with customers learning to shop around with little reason to be loyal. The core product in these industries is hard to engineer to be different. Only services can meet individual needs in ways that create personal value for customers.
In financial services, energy, telecoms and healthcare sectors, households are encouraged and assisted in switching providers by intermediaries. Market aggregators and service intermediaries take advantage of any service gap, by offering product comparisons, simplifying decision-making process, giving clear recommendations and forcing providers to offer special deals. Providers who do not respond to the needs of customers will lose to competitors, or make price concessions in order to retain their customers.
B2B: Businesses want solutions not features
The statement that businesses want solutions not features is well understood in sales. Solutions are best delivered by services. Only a service can offer to ensure that outcomes are met and enable business customers to pay for value rather than assets. A B2B business that is not exploring services will get left behind. The product may be centre of attention but it is the service that seals the deal.
G2C: Governments need engaged citizens
Although government bodies provide public services they have followed industrial ideas. Services – from health to education, have traditionally been focused on ‘mass delivery of standardised one-size-fits-all’ processes. Current thinking aims to deliver for the individual – through a patient care plan or personalised learning – so are going in the right direction. The challenge is to define services that respond to the individual in ways that also reduce costs and maintain standards.
Quick wins make long term goals seem more achievable
Service thinking is at a stage where the idea is interesting but the commitment is not yet there. The challenge is that as a strategy it can seem to challenge the whole business and operational model and fall into the ‘too big’ category. Developing a ‘too big’ vision is important as it sets the direction of travel. But without an accompanying pipeline of achievable‘quick wins’ and smaller steps it will not be adopted. Those driving for a service future will need to prepare for a long game.
Take services seriously: invest
One study in the US showed that businesses in the telecoms sector – services – only invest one tenth of their development budget in services. The rest goes to product. Business is yet to take services really really seriously. Government agencies, whilst believing in personalisation fail to put real money where their mouths are. One business we know well has bought the service strategy 7 years ago and is beating its competition not only in customer satisfaction but also outperforms its market.