STEPPING INTO A SERVICE MINDSET SERIES POST 2 OF 4
This four-part series offers a look at the rise of services and three tips for brands looking to understand some basics about the service revolution that is underway.
Being a "service business" is not about creating the right marketing pieces to convince customers to buy an existing, static offering. At the core of being a "service business" is a willingness to deliver an offering that truly serves the needs of others and a desire to continuously seek new ways of improving the offering. Doing this requires an intentional shift in mindset. If you are in the service business (or want to be), your first step is to think of your brand as a service.
““The way you think about your business changes when you frame it as a service. How you relate to your customers, how you construct your business, and the levers you can use to differentiate and create value can all change with a services focus.””
This is the first premise argued by Henry Chesbrough in his book Open Services Innovation. If you are in the services business (as 80 percent of US companies are), embrace it. Don’t get stuck in the trap of thinking about your service in the same way many manufacturing companies think about the goods they sell.
Academics explore this difference between goods and services in terms of goods dominant logic (GDL) and service dominant logic (SDL).
GOODS DOMINANT LOGIC
GDL is the logic inherited from the Industrial Revolution; it’s about making and selling a product better, faster and cheaper. The result is a one-way sale to the customer.
SERVICE DOMINANT LOGIC
SDL is about creating value with the customer. The result is that a sale – an exchange of money - doesn’t reflect what is truly exchanged between a company and a customer. Rather, the real exchange happens when a customer experiences what was offered. For example: When they use their cellular service to connect with others or their insurance to regain health after an accident. (Vargo and Lusch, 2008; Grönroos 2011; Ojasalo and Ojasalo 2014)
ANALOGY TIME
To explain in a different way, goods are tangible, physical and often static – think of a car part. Services are dynamic, change rapidly, easily influenced by people and rarely static or physical – think of the mechanic you use to install the part. (Bitner et al. 2008). From a goods perspective, you buy the part in order to make the car run again; money was exchanged, therefore the value was exchanged. From a service perspective, buying a part is useless unless it is installed in your car. That installation relies on human knowledge and service delivery. Value is likely realized when driving away in a car that runs again.
Think about an example in your company. What is the current mindset: Are you delivering a one-way sale or seeking to provide a deeper value in the lives of your customers? How might you view your company's offering differently?
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Sources:
Bitner, M., J.,Ostrom A.L. & Morgan F.N. 2008. Service Blueprinting: A Practical Technique for Service Innovation, California Management Review, Vol. 50, No. 3, 66-94.
Chesbrough, H. (2011). Open Services Innovation: Rethinking Your Business to Grow and Compete in a New Era. San Francisco, CA, USA: Jossey-Bass.
Grönroos, C. 2011. Value co-creation in service logic: A critical analysis. Marketing Theory 11 (3), 279–301.
Lusch, R.F. & Vargo,S.L. 2014. Service-Dominant Logic: Premises, Perspectives, Possibilities. New York, USA: Cambridge University Press.
Ojasalo, K. & Ojasalo, J. 2014. Adapting Business Model Thinking to Service Logic: An Empirical Study on Developing a Service Design Tool.