Business services are activities that help a business to conduct its trade. This includes banking, transportation, warehousing, insurance and communication services. Business services can also be categorized as shared or specialized. Shared services are those that benefit all of the company’s departments while specialized services are those that require a high level of expertise or equipment.
Companies often outsource business services in order to focus their internal resources on tasks that contribute more directly to revenue generation. External business service providers can also be more cost-effective than hiring an in-house employee to perform the same function. Additionally, a skilled business service provider can handle tasks that may be beyond the scope of a company’s internal capabilities, such as creating video content for marketing purposes or performing a complex test to ensure that a new product meets certain standards.
A service-based business can be profitable and rewarding for entrepreneurs with the right set of skills, resources and dedication. Successful service businesses are able to meet the needs and desires of attractive groups of customers, which are often defined by demographic characteristics such as age, income, location or gender. In order to be successful, a service business must offer a compelling proposition that distinguishes it from its competitors in terms of the quality of the experience delivered. This must include a unique value proposition that can only be achieved by offering a differentiated product with the appropriate levels of functionality and quality.
In addition to the need to effectively deliver a unique value proposition, a service business must be able to attract and retain customers. This requires a sophisticated approach to customer management that recognizes the different roles customers play in the service ecosystem. The experience that a customer has with your brand depends on how he or she interacts with the service, and how that interaction is perceived by other participants in the service chain. For example, the behavior of a single customer can impact the entire service experience of other consumers, such as when a person dithers at a fast food counter, and slows down the queue behind him or her.
The success or failure of a service business ultimately hinges on four things: a sound economic strategy; a clear focus on meeting customer needs and expectations; a deep understanding of the service’s value proposition and differentiation; and a highly trained and motivated workforce. While many of the same principles that govern product businesses apply to service businesses, the tools that managers use in service-based business operations are still evolving. However, a new framework has emerged that offers the potential to guide service-based businesses toward success and profitability. This framework is described below: