Business services, also called intangible services or non-manufactured products, are activities that support a company’s operations but don’t produce a physical product. A wide range of industries offer business services. These include management consulting, information technology, training and human resources.
Business service providers help other businesses to operate more efficiently, save costs and increase productivity. They can also provide professional advice or perform specialized tasks, such as designing websites or updating software applications. These companies typically charge a flat fee or an hourly rate for their work.
Unlike physical goods, no one can stock up on services because they are available only when needed. In addition, service consumers can make choices about the characteristics of a service such as its convenience or quality of interaction with employees. Because of these distinctions, business service firms must be able to deliver high quality and value for money.
The most common business services are those provided to other businesses, known as business-to-business (B2B) services. These can take the form of consultancy, training, IT support or even providing temporary workers. The other main type of business service is business-to-consumer, or B2C, which involves consumer-oriented tasks. These can range from providing a cleaning or waste management service to delivering medical or legal advice.
Many B2B services involve supplying materials that are used to produce a finished product, such as wholesalers supplying car manufacturing companies with tires and rubber hoses. A less visible type of B2B service is the support provided to companies by staffing agencies. These firms provide employees with a wide range of skills and experience, such as training or project management, which can be critical to the success of a firm.
Other business services focus on improving employee productivity by enabling them to complete important functions themselves rather than through manual labor. For example, an HR manager may hire a consultant to train workers on new computer programs or to improve their communication skills. Similarly, a IT department may hire consultants to enhance the security of a company’s computer systems or to install a new anti-virus program.
Like product businesses, most service firms can’t survive long unless they successfully meet the needs and desires of their customers. However, in contrast to product design, a successful service model requires a more subtle approach to the question of how a firm should design its services. In fact, some managers may find themselves struggling to understand how traditional techniques involving customer segmentation and value creation can be applied to the development of a service business. This article presents a framework for thinking about those differences and their implications for business-services strategy.
