Is there something unique about services?

In many of my past operating roles I have been responsible for driving growth in services businesses.  Across all of these experiences,  as the companies I worked for tried to scale, they have come across the challenge of customization.

Some months back, I came across a very interesting thought via the Harvard Business Review in an article by Frances Frei. Basically, she suggests that services are different from other business types in that quality and cost of what they deliver can be driven by customer behavior. Specifically, she states that customers can “wreak havoc” on quality and cost if they don’t behave as planned.

A compelling point. Frei notes how a slow customer might impact delivery times in a fast food line. Think about this in the context of a call center or business process environment. How do tech support handle times and first call closure rates get impacted when customers who finally speak to a representative are irritated due to the fact that they can’t find exactly the right option they are looking for on an IVR menu? How does this fit with the service and cost metrics that they are tasked with delivering?

Indeed, the large numbers of customer tastes and variables and their impact on the delivery of the product  is what makes service businesses particularly tricky.  Back to the fast food line- forcing an indecisive customer to order quickly (to improve the wait time for other customers) is not an experience that is likely to create high levels of satisfaction.  So for services, the challenge is how to effectively configure people and processes in a way that can accommodate not only  thousands of different preferences and tastes but a similarly large number of behaviors.

One area that Frei states  is important to actively think about is how customers can help you provide better service. An example here is self-service kiosks for airport check-in. Customers are asked to do more activities on their own (reducing variability of behaviors)  before they ever reach the airport, which then streamlines the processes and interactions that need to take place when they are actually on site.  Taking these tasks away from employees at the airport reduces the pain associated with the variability of things like when people decide to arrive, when they decide to check in, how many bags they wish to check, etc.  So in essence, each person can create a check in experience that fits with their needs and behaviors and so doing helps reduce the variability for everyone else.

The core insights that I am driving towards here are these: 1) technology and process innovation is a powerful lever for services business to create customization where it was previously too difficult to do so and 2) how we prepare our customers for the service transaction makes all the difference in how the eventual exchange will take place.  These are salient point that many service providers overlook and don’t account for when they think about structuring and improving their offerings.

If interested you can access the Frei article here: http://bitly.com/scULD.