We’re All In The Service Business

Written by Joe Driscoll

November 16, 2009

It wasn’t too many years ago that all the major business journals were proclaiming that our once proud industrial based economy was in decline and that we would soon have a service based economy. Economic debate focused on the desirability and the consequences of an economy dependent on the service sector.

The debate missed a central point of business reality. As surely as all businesses, manufacturers as well as service providers, produce a product, all successful businesses view themselves as being in the service business. The resurgence of our manufacturing industries, the so-called product producing segment of our economy, has been lead by those marketing oriented manufacturing companies that view their products only from the perspective that it provides a service to their customers.

The truth of the matter is that the so called “services” rendered by the service sector of the economy are really products. The successful service business views itself as producing a product that satisfies the needs of its customers.

The primary meaning of the word “service” is “an act of assistance”, as in providing a useful product that meets a need. Used in the phrase “service economy”, the word refers to the performance of work for others. The performance of the work done in the “service sector” may or may not be of service. To differentiate between the act of assistance type SERVICE and the performance of a function type service, we will reference the former as capital SERVICE.

The success of your business will depend on your ability to provide products and services that fulfill needs. Every business, be it a manufacturer or a professional service firm, should view itself as being in the SERVICE business. People don’t buy a product like a computer because of what it can do, but rather what it can do for them. The services of an accountant are retained not because of their expertise, but rather for the anticipated benefit to the client.

It is vital for all business people, regardless of industry, to view their business as a customer satisfying organization rather than a goods producing institution. Most businesses started with a product or a service. If a need existed that was met by the production of that product or service, the business enjoyed initial success. As a result of these origins, most businesses become product oriented.

They failed to recognize that their initial success resulted from the need that existed and the SERVICE they provided. By continuing to focus on the product instead of the customer, a business will condemn itself to mediocrity, if not oblivion, over the long run. It matters little to the customer how the product is developed, produced, or delivered, so long as it gets the job done as defined by the customer’s needs.

Product development should not be the primary focus of a business. Focus on the customers, not the product. Recognition of the customer’s needs and developing the ability to satisfy those needs determines the future of the business. Research and development on products should be a by product of market research. There are no irreplaceable products. An unsatisfied need is a competitors opportunity.

The railroad industry is the classic business example of a product oriented business. Once the proudest of industries, the businesses that owned the railroads floundered as they focused on locomotives rather than on the changing transportation needs of their customers. If the railroads had been a customer oriented business, focused on supplying SERVICE to their existing customer base, the railroad companies would have remained dominant today.

Providers of professional services are equally susceptible as their manufacturing brethren in becoming focused on their product and not the needs of their customer. The professional must be not become fixed on the performance of their service at the expense of the customer’s SERVICE needs. The extraction of the wrong tooth, in however a painless procedure, is of little comfort to the patient!

A SERVICE oriented business has a marketing orientation. Every successful business must sell, but selling is different than marketing. Selling concentrates on moving product and generating revenue for the seller. Marketing focuses attention on the needs of the buyer with the objective of identifying those needs and developing strategies to satisfy them.

All the truly successful businesses, large and small, manufacturers, retailers, and service providers, are successful because they are providing SERVICE in economically favorable transactions. Because it’s your business, get into the SERVICE business.

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