Systems & SOPs

Service Industry in a Nut Shell

By December 21, 2019 December 21st, 2023 No Comments
electrical terminal in junction box | The Spark Group

Service industry is a complex industry because it combines intangible and tangible factors. The industry players need to balance both well in order to gain their market share.Below is the “Service System”, derived from “The 9P” introduced by Schelling (1989) Model Plus. The additional P was added by a scholar to become 10.

People + Procedure + Personalization + Promise + Performance ? Perception + Patronage + Price ? Profit + Pride

Business entities are built to gain profit and identity (pride). But, if you understand the formula above carefully, as a service provider, you need to solve 5 fundamental issues in order to get your customers’ buy-ins.

So, what are the 5 main essential components?

  1. People: Your customers
  2. Procedure: How do you serve or how to deliver what you say to your customer
  3. Personalization: You need to have something unique which can meet the demand, or you create the demands, be it a software or a hardware.
  4. Promise: What is your commitment to your customers? What do you want to deliver? Why would your customers need that? Why do your customers need you?
  5. Performance: Combine your workforce and the PROCEDURES that you created, you come out with your service performance. A high service performance will require tight PROCEDURE to implement more control or management in your SERVICE PROCESS, and this includes your tangible products (if you offer any). A low service performance doesn’t require much control on your SERVICE PROCESS or PROCEDURE because customers will understand.

Therefore, if you are a service provider and you want to generate more profit and gain bigger market share, the simplest way is to look into your SERVICE PROCESS or PROCEDURE, including your market positioning determined by your management team. Whatever it is, the question is: Are the both aligned? You wouldn’t be surprised that the service you claim for the price does not match to the PROCEDURE or the promises you made to your customers.

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