Adding Value with Service

Last Updated May 2, 2007 7:24 PM EDT

Service is a business concept that is often overlooked. Implemented properly, though, it can be a key differentiator between your business and the competition. Meeting a customer's requirements in the most appropriate and efficient way greatly enhances the perceived value of your product. It also has the potential to increase the profitability of your relationship.

It's possible to extend the reach of an existing product by selling it in conjunction—or "bundling" it—with a service offering. In this way, companies can add value to an existing product, and potentially increase customer loyalty at the same time. Today's business environment favors the concept of outsourcing various activities once regarded as in-house responsibilities. This creates a propitious climate for offering new services with existing products.

What You Need to KnowWhat is the importance of service when my product is already a market leader?

Services can add further value to a product, providing incremental income and increasing customer loyalty. Services provide an opportunity to work with a customer long after the initial sale, and to develop a stronger relationship with them.

Don't the free installation and maintenance already offered with my products add value?

Yes. However, some customers may expect this. Other customers may not, and still others may not value that service. Many companies have recognized the importance of particular services to certain customers, and have changed their service strategy accordingly. While offering free service to everyone is one available tactic, another approach is to upgrade the services, increase the range of services offered, and charge customers for certain premium services. While some current customers may initially object to being charged for something that they had perceived as free, usually these customers come to recognize the value of a service that more closely meets their needs.

How can I offer services without the necessary skills or resources to deliver them?

Consider building your own service team through recruitment and training. Or alternatively, work in partnership with a specialist organization that can deliver services on your behalf.

Why should customers with their own in-house service teams want to use my services?

Many companies have internal service departments. They can be expensive to maintain, however, and are sometimes lacking in essential skills, such as training in the latest software. If you can offer superior expertise and demonstrate the potential savings and benefits of outsourcing service to your company, you can persuade them to switch.

What to DoUse Service as a Differentiator

Service is a key differentiator in many market sectors. In many companies, however, the role of the service department should be more than simply maintenance and problem solving. For example, a company supplying industrial dishwashers to the restaurant trade must respond immediately to breakdowns—replacing the machine if necessary, rather than simply scheduling a repair visit. To take full advantage of the service opportunity, it is important to explain the benefits of effective service to customers, and present your service operations as convenient, cost-effective, and strategically important.

Determine Key Service Attributes

There are several key attributes which customers may seek in a premium service offer. These include:

  • a single contact point, which simplifies contact and service administration;
  • direct access to technical specialists, offering immediate response to serious problems or inquiries wherever the customer is located;
  • adherence to an industry quality standard, such as ISO 9000, which supplies reassurance that service standards are high;
  • 24x7 support availability, which assures customers it will be available when customers need it, and minimizes the potential for interruption to their business;
  • a choice of service levels aligning to customers' needs;
  • evidence of investment in support services and infrastructure, which implies a long-term commitment to the customer.

Determine which service attributes are most important to your customer base and structure various service packages, or levels of service, around these key attributes.

Provide a Single Contact Point

Customers appreciate a simple, straightforward interface to their supplier when service resources are required. Whether customers have a technical query, a maintenance request, a product inquiry, or require advice, guidance, or information, they should have a single point of contact for direct access to all the support resources. Ideally, specialists will be immediately available to deal with their requests. If an inquiry cannot be answered immediately, ensure that a qualified person gets back to the customer promptly.

Offer Direct Access to Technical Specialists

Depending upon the product, direct access to technical specialists can be a highly valued service offering. Some customers are willing to pay large premiums for the ability to immediately contact experienced specialists with technical inquiries. Instead of calling the technical help desk, these customers might be given direct access to a highly skilled person with extensive technical support and field experience. This type of premium support service may require establishing support staff in a variety of accessible locations to enable timely and efficient support visits.

Provide High Quality Support

When customers have a service request, they should be able to contact a central service point. Some companies use the concept of a service coordinator, who ensures that the right specialist help is available and that customers get the fastest, most effective response to their requests. In some cases, a service coordinator can dispatch or deal with requests directly, but if not, they might assign an engineer to visit the customer site within an agreed timeframe. All service processes should be assessed to ISO 9000 industry standards. Provide and document an "escalation procedure," employed when customers have serious issues, to escalate the issue to a more senior team member if the initial service representative cannot resolve it. This is designed to ensure prompt resolution of problems and to minimize customer frustration and complaints.

Design Flexible Service Offerings

It is important to provide customers with a choice of flexible service options, to suit individual operational needs and to increase loyalty. When customers prefer to maintain their own in-house support department, your role can be to support that team—for example, offer an efficient spares delivery service, or manage spare parts or replacement items for the support team. Consider offering to enhance the skills of a customer's in-house team with training, advice and guidance, technical support, and/or access to specialists. In some cases, it may be profitable to offer consulting on a fee basis, utilizing your specialist knowledge to assist your customers.

Invest in a Strong Service Infrastructure

High quality service often requires a significant investment in a robust service infrastructure. Elements of this infrastructure may include the right premises, an efficient service communications infrastructure, and a sophisticated service management system to enable further enhancement of response and performance. It is good practice to appoint one senior staff member or executive with specific responsibility for customer service. Consider developing a dedicated support Web site.

Create Added Value

Extending or improving your customer service offering can add value and help to differentiate your products from the competition. By analyzing the products and services in your range—and those of your competitors—you can identify opportunities to add relevant value and improve a customer's perception of your business. Examples of added-value services from different industries demonstrate the wide array of possibilities. For example, various business service offerings might free customer staff to do more important tasks, or help managers perform their jobs better. Training, for instance, can ensure that employees make more effective use of the products the company buys. Complementary service offerings can make a consumer product more attractive—for example, film processing might be offered with a camera. A convenience service offering might be added to a basic service to enhance it—for example, insurance companies could provide a helpline or list of approved repairers to assist customers after an accident.

Bundle Products and Services

To add value to products and increase customer loyalty, "bundles," or packages, of products and services should be assembled to reflect customer needs. There are different approaches to designing an attractive service package, however. One strategy is to "add in" relevant or desired services, such as a cellular service that includes a personal toll-free number, or special travel packages which include flights, hotel, a rental car and/or travel guides. An alternative "leaving out" strategy removes service elements which may be unneeded or undesirable to some customers. For example, quick car-care businesses such as oil-change centers which exclude non-essential services, or a real estate brokerage that offers fewer services at lower, fixed fees. An added value approach to service creates more value in the existing product with the addition of a service; a classic example of this approach is the home delivery of food or videos. Yet another strategy for creating an attractive service-based package is to change the standard distribution channel. For instance, the electronic delivery of technical drawings and specifications reflects this approach, as does the sale of organically-grown farm products direct to consumers, bypassing retailers.

What to AvoidYou Limit the Offering to Basic Services

Basic services such as installation, maintenance, and upgrades are available from many different service organizations. They do not differentiate a company, nor do they typically add significant value. Higher-value services, requiring skill, knowledge, or experience, are the keys to success.

You Fail to Deliver Quality Service

Customers expect a quality service, which requires an investment in people and infrastructure. Ideally, services should conform to recognized industry standards. When a company fails to deliver the right standard of service, customer relationships are damaged.

You Overlook Service Opportunities

Customers may require a wide array of services during the time they own a product. These requirements might include advice, consulting, and design before the sale; installation and training upon adoption; then maintenance, upgrading, and other services after the sale. Each of these areas represents an opportunity to earn incremental income and build the relationship with the customer.

Where to Learn MoreBooks:

Lovelock, Christopher, and Jochen Wirtz. Services Marketing: People, Technology, Strategy. 6th ed. Upper Saddle River, NJ: FT Prentice Hall, 2007.

Gronroos, Christian. Service Management and Marketing: A Customer Relationship Management Approach. 2nd ed. New York: Wiley, 2000.