Business services are activities that benefit companies without supplying them with physical products. They help businesses save money, improve efficiency, meet safety requirements and ensure that work can continue even if employees are unavailable. In addition, they provide a wide range of benefits for companies, including improved productivity, increased customer satisfaction and better use of resources.
A wide range of industries provide business services, from technical services such as engineering and architecture to professional services like legal and employment services. Other examples of business services include information technology and telecommunications services, management services such as facility management, and software services that enhance the functionality of a company’s technological devices and systems.
The business services sector accounts for a significant percentage of GDP in many countries, and it is particularly important to developing economies where the service economy contributes more than half of their total GDP. In a globalized world, businesses are increasingly outsourcing their non-core operations to third parties. This trend is largely due to the fact that it allows them to focus on their core business, while obtaining the services they need from suppliers they trust.
However, companies must be careful when choosing service providers because they must evaluate whether the quality of those services is worth the price. The value of a service is often determined by its perceived benefit to the consumer, and consumers will not pay for a service that they do not see as useful. This is why it is essential for companies to understand what their customers value about their services and then build those characteristics into their offerings.
When evaluating a service, it is also critical to consider its impact on other people. A single person’s interaction with a service can have a ripple effect that affects multiple others in the same way, which is why it is essential for business leaders to consider not only how they will market and deliver their services, but how those services will be received by their target audiences.
The ability to create a successful service business requires a fundamental shift in how managers think about the design of their services. Unlike product designers, who typically focus on the features that buyers will find most attractive, service designers must instead understand how their services are experienced by those they serve. If they get this right, they can create a business that delivers the value that customers seek and is attractive to investors. If they do not, they will struggle to achieve profitability. This article outlines an approach for crafting a profitable service business based on four critical elements of service design. It was developed as a teaching module in my course at Harvard Business School, and it provides an excellent starting point for thinking about the core issues that distinguish service from product businesses.