Perched atop the corporate agenda: Smarter Services

For many years, the importance of ‘services’ has been increasing in the global economy. Take, for example, the US economy: services accounts for roughly 68% of US GDP and, according to a June 2014 private payroll report conducted by ADP, the US witnessed 230,000 jobs added in service-providing businesses, significantly (4.5 times greater) out-hiring the goods-producing sector, which added 51,000 jobs.

This rise in importance is primarily the result of the impact of commoditisation, particularly in manufacturing-related industries. Manufacturers have relied on post-sale service given the impact commoditisation has had on product margins.

Commoditisation is the movement of a market from differentiated to undifferentiated price competition. In the book The Experience Economy, co-authors B Joseph Pine II and James H Gilmore claim that only those organisations that stage experiences will differentiate and avoid commoditisation. They claim that “an experience occurs when a company intentionally uses services as the stage, and goods as props, to engage individual customers in a way that creates a memorable event”.

Yet with all the recognition of the importance of service on profit and market differentiation, organisations still struggle to transform from a cost to a profit centre. In a recent quarterly service trends survey, The Service Council polled its community on whether their organisation was operating as a profit or cost centre. The results: 62% - yes, profit centre, 29% - no, cost centre, 7% - in transition to profit centre and 2% - don’t know.

Treating your services organisation as simply a lever to generate profits, however, is a losing strategy. Your services organisation is an opportunity to generate loyal customers thus improving long-term market share and happy customers. However, staging experiences that accomplish this oftentimes is not in line with being operationally efficient and cost effective.

What are Smarter Services?

Smarter Services, a philosophy termed by The Service Council, is defined as “a company-wide recognition of the role and importance of service as it impacts customer centricity, customer satisfaction, customer loyalty, customer retention and the overall customer experience. It represents the healthy balance that links issue resolution, service profitability and happy customers; and delivers a consistent and effective customer experience across all channels at every phase of the customer journey.”

Smarter Services advocates that these three major forces (customer satisfaction, service cost, service profit) are not adversarial; however, they will require an organisational and cultural shift, without service being relegated to simply line of business service executives but rather to everyone that touches the customer and regardless of where the customer is at in the journey.

Establishing a culture which embraces Smarter Services requires a transformational leadership team. Alarmingly, in a recent benchmark study conducted by The Service Council titled Going Global in Service, we asked does your organisation have a dedicated head of global service strategy with 21% reporting “no”.

Over the course of the next several months, we are eager to share with you results from our ongoing Smarter Services research series as we explore the latest field service and mobility trends including the following topical areas: talent management: hiring, training and knowledge management, mobile maturity framework, equipping the next wave of field service agents, technical support best practices, cost optimisation for service businesses and big data for customer results.

About The Service Council

The Service Council is an exclusive community of Services Executives representing global, industry-leading, service-centric businesses. The mission of The Service Council is to provide a platform for innovation sharing, shaping and sharpening; where uncommon service-centric businesses can emulate the strategies deployed by Global Service Leaders.

The Service Council presents its annual Smarter Services Executive Symposium in March. The symposium provides an invaluable opportunity to meet and network with services, customer experience and customer management executives in an environment conducive to advancing executive relationships