Notes from service as a trategy

Many businesses are service oriented. When service is considered, there are a number of important aspects.

The first thing is obviously defining the attributes of the service offering. One thing to keep in mind is that to be excellent in something, the business may need to be prepared to be bad in something. There is no all-good businesses. The business to focus on assigning resources to attributes that they care for.

For example, one case study done by Harvard Business school scholars Frances X. Fei and Corey Hajim is related to the Commerce Bank. Commerce Bank explicitly claims that they have the lowest deposit rate, but this is exactly the attribute that allows them to spend more money on service so that 24/7 banking can be offered. They also have very limited product set (four checking accounts types as compared to tens of options from other banks), but this is exactly the attribute that allows them to hire less-educated employees that have a very good attitude and are friendly to the customers all the time. As a matter of the fact, one of the hiring criteria is to see whether the employee has an innate smile (it is tough to pretend smile all day long).

In order to have good service offering, three aspects of the business needs to be taken care of: funding, employee, and customer.

Funding mechanism: Some of the innovative ideas include customer pays in a palatable way. Present operation as value added services (For example, the true incentive for Progressive to have a van at the accident location shortly after the accident is to bust fraud which is a huge overhead for insurance. However, this is presented as prompt response to the customers.) Customer performs the work.

Employee management: Employees can be divided into four quadrants (high/low aptitude x high/low attitude). Obviously, the high apptitude/high attitude folks cost almost twice as the other two quadrants. Can you find a way to best make use of the high aptitude/low attitude or high attitude/low aptitude? One important thing is to design a system so that typical employees have a reasonable chance of success.

Customer management: Customer satisfaction is usually based on perceptions. So need to take care of the customers in the following areas: "End" is more important than "Start"; Make winning last/losing fast (people prefer to win $5 twice instead of winning $10 one shot; on the other hand, they prefer to lose $10 instead of losing $5 twice); Give choice to customer on non-important features so that they feel important.