Business services are a class of activities that assist business operations but do not produce or deliver tangible goods. Examples include marketing, consultation, human resources, information technology, and logistics (including shipping, procurement and administration). All of these are considered to be a form of support for the overall function of a company.
Companies often outsource these types of services because they can provide a more cost-effective solution than hiring in-house staff. Moreover, these service providers may have specialized expertise and experience that is not available in-house. Additionally, external services are often more flexible and can be scaled up or down depending on the company’s production needs.
However, businesses must also understand that the success of a service business hinges on four critical elements. It is important that managers get these elements right or else the business will fail.
The first element is designing the service. This means that the company must make it clear what its customers will value about the service and how it is different from competitors’ offerings. For example, a company might focus on offering convenience or friendly interaction with its customers. The company might also highlight the value of its service by comparing it to competitors’ extended hours, closer proximity, or lower prices. Moreover, a company might offer its service free of charge or at a discount to encourage customer adoption. The second element is delivering the service. This includes providing the service to customers in a timely manner. The company must be able to meet the demands of its customers or risk losing them. For example, if a company’s customer service representatives are slow to respond to queries, the customer will likely seek out alternatives.