With Service business gaining popularity every day and changing the way business is done, more and more entrepreneurs are starting service-oriented businesses. Be it cloud storage, entertainment channels like Netflix, Prime, Hotstar etc, multi-service platforms like UrbanClap, now known as Urban Company which offers almost all services you could possibly need or even food and grocery delivery apps (Zomato, Big Basket), Service Business has made its way into every industry.
A decade ago, Service Business was limited to services like consultations, tuitions, banking services, financial services (agent, brokers and consultants), after-sale services, real estate, event management, etc. But with the advancement in technology and skills of new entrepreneurs over time, it has expanded tremendously.
However, the nature of service business and its operations, compared to manufacturing or other kinds of businesses is very different. For example, in a manufacturing business, the manufacturer or any employee of the company, does not have any relationship or direct contact with its customer (except customer care and salespeople). However, in most service businesses, communication and maintaining a direct relationship with the customer is very important.
Dimensions of Service
In order to successfully establish and grow a service-oriented business, it is necessary to understand its dimensions and analyse where your business lies in terms of the three dimensions- Service Package, Service Customisation and Customer contact.
a) Service Package (Nature)
Service Package refers to the nature of the service and the value it adds. This tells us which part of the operation/service requires more attention. For example, if a service is dependent on tangible activities like in the case of food/grocery delivery apps, more attention is paid to spend money on tangible assets. However, if the service is dependent on intangible activities like salon beauty services, training and retention of skilled employees and development of firm’s knowledge assets is more important.
b) Service Customization
Service Customization refers to the level of customization or standardization of the service. This gives us an insight into the kind of human resources required and the nature of operations to be followed. For example, if the service is more or less standardised like in the case of plumbing, employees/workers with more narrow skills can be hired and a standardised step by step approach can be followed.
However, if the service is customised according to the needs and demands of every customer like in case of a bakery that makes customised cakes, the operation becomes less predictable and more variable so the company needs highly skilled employees/workers. Such organisations compete on the degree of customisation offered instead of cost.
c) Customer Contact
Customer contact refers to the degree of contact the employees have with the customer which depends on the nature of the service. The degree of customer contact is divided into- Front-room and Back-room operations.
Front-room operations refer to the part of the service where the customer interfaces directly with the service organisation. Back-room operations refer to the part of the service where there’s no contact with the customer.
For example, getting a Netflix/Prime subscription is a back-room oriented service. So, the company does not need employees with people skills since there is no direct contact or communication involved in the service. On the other hand, any service available on Urban Company requires direct contact (front-room) with the customer and hence, the employees hired should know how to be pleasant and cater to the needs of the customer.
With the help of these dimensions of service business, one must analyse the position of their service business and make its human resources and operations related decisions accordingly.