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Developing a Breakthrough Service Model for Profitable Growth

September 28, 2011 • Business Process, Finance & Economics, OPERATION, STRATEGY & MANAGEMENT

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By Philip G. Moscosoand Alejandro Lago

Stronger competition and more demanding customers require companies to deliver exceptional service and ultimately offer differentiated value propositions in an efficient way. To do so successfully, companies need to innovate and continuously improve their service models, but with a holistic view that ensures coherence between strategy and operations, as well as between the clients’ and employees’ needs.

 

The challenge of services

Delivering great service is critical for most companies, yet hard to achieve efficiently and takes time to pay-off. By service we mean the whole ‘experience’ through which we satisfy customers’ needs and create value for them (Moscoso et al., 2011). This experience includes not only the ‘product’ we offer but also the entire delivery process and experience, in which the customer is an active participant.

First of all, three service delivery factors should be highlighted: (1) delivery is made up of a combination of tangible elements (those that are ‘objective’ and ‘measurable’ by the customer) and other more intangible and subjective ones; (2) the customer participates in a direct and interactive way in the service ‘production’ process; and (3) the ‘production’ and consumption of the service almost always occur simultaneously or immediately in time and space1.

The characteristics of intangibility, interactivity and immediacy have important implications for service management (summarized in Table 1). They also make growing and managing service companies more complicated, and make it harder for service companies to leverage economies of scale than for companies that produce goods or equipments.



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