Services have become invisible to customers in B2B and B2C

By Fernanda Arreola, Alfonso Castañeda

For customers in B2B and B2C environments, the true providers of the services they consume have become invisible. In this review, we gather the opinions of service providers and service managers in the airline, banking, telecommunications, beauty, education, retail, packaging and automotive sectors.

Our interviews and supportive research allow us to gather very important insights and to contextualize certain realities of the importance and value that is given to service in each sector. We finish by pointing to some key factors that may encourage leaders to recognize the value of services, in order to take service excellence back into their strategies for the future. 

 

Invisible Service Providers – A side effect of efficiency and technological progress?

In this article we define “service invisibility” as an evolving trend that, thanks mostly to technological advancements we now have, has significantly reduced the interaction with the people who provide or create the services we consume and buy.

Many years ago, it would have been impossible to do a bank transaction without queuing, filling a slip and interacting with a teller. Today, this process would be difficult to explain to an adolescent. Many sectors have been highly touched by such digital revolution. Banking, insurance, travelling, entertainment and telecommunications, have partially or fully automated many of the once humanly-driven operations, giving the illusion to customers that technology is their new service provider.

What is inside of this illusion is that, even when technology is the face to the customer, it is still humans that conceive and make the delivery of these services available. As an interviewee in the retailing sector signaled, companies went from people gathering data for consumption studies directly at the supermarkets, to analyzing huge piles of data captured through the use of loyalty and easy-shopping cards. In the banking sector, tellers were replaced by IT specialists that must make sure that sufficient computer power and cybersecurity are available to make online banking safe and possible. For telecommunications companies, humans have to create powerful automated call centers and chatbots in order to respond to never ending demands and requests from customers. 

Automation and technology have taken people out of our view and this has led to a very concrete situation: we are becoming less aware of the value of humans in service. This is not very obvious in our daily activities, with three exceptions to the rule: when we want to feel what we are acquiring is special (or luxurious), when we face a problem that seems too specific and when we want to ask for help or advice. 

 

The value of service in a B2B environment

As we explained, the real need or visibility of the people in services is, according to our research, only perceived when we suddenly believe that we have already paid for it, when we find ourselves in front of a specific issue, or when we need advice. However, these situations are lived differently in B2B or B2C, and we will try to illustrate the impact further below.

Automation and technology have taken people out of our view and this has led to a very concrete situation: we are becoming less aware of the value of humans in service.

First of all, let’s address businesses in a B2B environment. Traditionally the day-to-day service in these sectors are the responsibility of key account managers or established service officers. However, as we will explain, clients usually like an effective way of understanding the cost (and value) of such services. Our research shows that businesses can therefore three different approaches. First, specifying the value of such services and make clients to pay for them (such as in consulting or fiscal services). The second one is to include a “service pack” in all contracts. The third one is to leave the responsibility of the level of services at the discretion of service or key account managers. The last one is to provide no service at all. 

An example of the first comes from an interviewee in the telecommunications industry. As this manager explained, all contracts for the implementation of information technologies have a “hardware” component and a “service component”. The complexity of such arrangement is that although customers will understand the value of hardware, they will underestimate the value of the service or consulting for implementing new technological tools and therefore negotiate less consulting or service hours. Businesses may believe that their inhouse IT staff will have enough tools & knowledge to deploy the system, but in reality, they are making a very risky bet. The hardware they are buying will be useless or wrongly implemented if the expertise necessary for these highly sophisticated tools is not available within. And they will end up paying more in delays, lack of appropriate exploitation of the tool or failed deployment programs.  They also run the risk that the system is not aligned with the company requirements. IT people are not business people, so they know less about the required processes, interactions, daily challenges, customer needs, etc.

The second example is when companies offer a service pack. This for example is very normal in the automotive industry according to another interviewee. When a dealer buys a car from a manufacturer, a number of “service” or “contact” hours as well as a timeline for their use are defined within a contract. However, the inclusion of such pack is not visible to the dealer, and manufacturers mostly play on a natural “balancing” effect of those that require services against those who don’t require contact to drive sales. The problem of such “invisible offer” is that when things go wrong, the responsibility turns to the manufacturer and most importantly to the service teams, who must find solutions to the problems because regulations makes them responsible for eventual technical defaults. So, in cases of unanticipated issues, it is the manufacturer who pays for the additional service. 

Businesses may believe that their inhouse IT staff will have enough tools & knowledge to deploy the system, but in reality, they are making a very risky bet.

The third case is when the responsibility for service offering is delegated to the employee. This, as explained by a person working in beauty products, makes service dependent on the abilities of each key account manager. Therefore, customers or, in this case, distributors, will have a very difficult time understanding the value of the service agreement because it is very heterogenous. An example is one of our interviewees, she is very invested in finding solutions but she knows that a possible replacement after she leaves the position is unlikely to be as invested.

One more scenario is when companies don’t provide any service at all. Another manager in a technology company shares that her firm has made a clear statement to provide no service. They provide their users with sufficient online guidelines and information and a number of certified partners that could eventually help them if necessary. Their justification is that their tools are intuitive enough and therefore there is no need to provide additional support. Strategically, this is justified by the fact that little service or support allows their company to move faster and to continue to provide innovation, but some customers have a hard time accepting that “there is nobody to pick up the phone”.

 

Another reality in B2C?

In B2C the issues are similar, but what is different is the value of those services as perceived by customers, and their willingness to pay for it. As we mentioned earlier, one clear dimension is the belief of having bought a luxurious product. The problem here, as explained by a manager, is that many people in the beauty and retail sectors play with aggressive marketing techniques, pretending to sell a very unique product or service. However, these are not backed by differentiated service processes, which may lead to massive issues when the quality of the products is not achieved. An example of this is Estée Laundry, a collective Instagram account that spotlights unsubstantiated product claims. 

Interestingly enough, customers in B2C will highly appreciate automation of many day-to-day services (vending machines, payment services and others). Take the example of an interviewee working in Higher Education. Their recruitment and admission processes were inefficient and required heavy human intervention. By implementing an automated system, handling of documentation became easier and quality of data was increased. This has eventually allowed them to better organize the classes in terms of diversity & backgrounds. Overall, the user experience is extremely positive, and this level of automation has become a “must have” for high reputation institutions.

Another issue in B2C is what we can call “digital discrimination”. Elder people and kids are the great losers in the passing towards automation. Elder people because they are less literate in new technologies and they have more difficult adapting to change. And children because they are being deprived of necessary human interaction in many early stages of life (image doing only online education or thinking that we can put pause of any moment in life). 

An expert in the retail industry explained that they have data scientists trying to understand customer behavior on a permanent basis and to work on better placement and visibility strategies for grocery shopping. Banks and insurance companies rely on very complex algorithms to speed up decision making and reduce unnecessary costs for standard products.

As service managers, it is our responsibility to make sure these valuable resources become visible again.

But this obsession with artificial intelligence implies a risk of “losing touch”. A person seeking an insurance or a service plan needs someone who understand very particular needs (e.g. kids living abroad, family structures that are changing, new ways of conceiving money, reasons for the willingness to save) and this information is fundamental for them to design adapted products.  For some of the financial services, customers don’t want any human interaction (e.g. buying an insurance for a car, or to make a money transfer), and the importance of the people who delivering these services becomes evident when things don’t work.

We can however list a few simple and powerful ideas to improve the value perception and visibility of the services provided by any company:

  • Make your service offering explicit
  • Be honest about the strategic value of services
  • Make coherent compensation and role definitions that recognize the value of service
  • Be innovative for creating the business case and KPIs for good service
  • Highlight the importance of services inside your organization
  • Be proactive and not reactive, when it comes to service issues
  • Use real people to understand real people, data can be deceitful
  • Make sure that you engage with your customers in a different manner (real community management)
  • Empower the organization to sell & deliver services, and walk the talk

Technology has played a major role in the development of new and very innovative services, but this has made customers much less aware of the value of humans delivering them. As opposed to technical gadgets and apps, interaction with humans cannot be put in pause at any moment, and thankfully so. As service managers, it is our responsibility to make sure these valuable resources become visible again.

 

About the Authors

Dr. Fernanda Arreola is a Professor of Strategy & Entrepreneurship at École de Management Léonard de Vinci where she is head of the Business Research Group. Her research focuses on innovation and entrepreneurship with a specific interest on the governance of innovative business practices.

Alfonso Castañeda is the Customer Service Director at the COESIA Group, where he leads a transformation program to implement best-in-class processes, methods and tools for after sales service management, with a special focus on developing a customer-centric mindset.

 

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