Business Services
Business services are activities that benefit companies without delivering physical products. Companies rely on these services for marketing, production, safety, cost and convenience purposes. The industry encompasses a major portion of the commercial world and is evolving rapidly in response to a number of factors.
The success of a service business depends on the ability to deliver a value proposition that appeals to a targeted group of customers. This requires a different mindset and approach to management than product businesses. To make this shift successfully, managers must recognize four critical elements of service design: customer intimacy, operational agility, effective communication and employee engagement. The following article describes how these factors interrelate to create a high-performing, successful business.
A service business offers work in exchange for payment. It may operate in a number of industries and can either provide a business-to-business or a business-to-consumer (B2B or B2C) service. In addition to traditional services such as insurance or banking, a service business might also provide information, hospitality or consulting.
Service businesses typically use an operational model that includes a supply chain, which provides the materials and tools to carry out the service, and a value delivery network, which delivers the results of the work to the customer. In addition, service businesses often employ a front office staff and a back office staff, which are responsible for client communication and the administration of the company.
The value of a service business is derived from the experience that customers have with the service, rather than from the underlying product. This makes a strong differentiation between a service business and a commodity good, which has no experiential aspects and is usually perceived as just another piece of equipment. Despite this, many modern business theorists still see service and commodities goods on a continuum with pure service on one end and purely commodity goods on the other.
As such, a successful service business must offer a differentiated experience, which it can do by creating an emotional connection with the customer. The experience could be anything from friendliness of the staff to the comfort of the environment, such as extended hours or a convenient location. The goal is to create a unique offering that stands out in the market place, such as convenience, flexibility or low prices.
The business-to-business service sector accounts for more than 11% of the European economy and is expanding fast due to the rapid expansion of the internet, which has lowered the entry barriers to this type of company. The European Union has been promoting the development of this industry by removing legal barriers through the Internal Market legislation and policies such as the Services Directive. In the future, it is expected that this sector will become even more important to Europe’s competitiveness. However, there are a few issues that the EU needs to tackle in order to fully realise the potential of this sector. These include improving productivity, reducing red tape and addressing barriers to the provision of services across borders.