The service sector is a key part of the economy and provides jobs for a wide range of workers. These services include not only work like food preparation, cleaning and laundry, but also advice, consultation, information and other auxiliary activities that help businesses meet their goals. In economic theory, service is considered the third tier of the three-sector model.
Many of these businesses require insurance services to protect against the risks of accidents, illness and other financial issues. These include life, health and property insurance. Moreover, these companies may need to hire real estate and landscaping services to help them find and maintain workspace and improve their properties. Additionally, these organizations may require IT support and other technology services to handle technical problems with computers and networks.
A key challenge of service-business management is that unlike product companies, which design their products with the characteristics that will attract customers, service firms must build their offerings with the qualities that their target markets most value. For example, the quality of an architectural firm’s explanation of its clients’ needs can affect the efficiency of the design process and the overall quality of the facility. Similarly, a customer who dithers at a fast-food counter can make the wait for everyone behind him longer.
A successful service business must get four critical elements right to compete with the competition and win customer loyalty. In the course of teaching this subject to students at Harvard Business School, I have developed a framework for thinking about these elements and their implications for managerial practice.