The business services sector of the economy is a vital and diverse segment that accounts for 11% of EU GDP. It consists of activities that support businesses but do not produce a tangible product, such as information technology (IT) services and various miscellaneous help that a company might need. The success of a service-based business is based on four things: a well-defined offering that addresses the needs and desires of an attractive group of customers; effective customer relationships; efficient, friendly staff; and flexible operations.
In hard economic times, consumers typically cut back on services they deem unnecessary. They may decide to drive less, to take public transit or shop at cheaper stores. Moreover, a bad experience with a service can make them wary of similar offerings. To avoid a negative reputation, companies that provide business services need to focus on making their offerings better and more valuable.
To do that, they need to understand what differentiates their brand from competitors’ and why it is important to customers. For example, the quality of an IT department’s services can affect how employees use and perceive a firm’s overall IT infrastructure. A well-performing IT service aligns IT assets with the needs of the company’s employees and customers to improve communication.
Other examples of business services include interpretation and translation, employee assistance programs, technical support, training and development, janitorial services, and workspace management. Whether they are used in an office, hospital or factory, these services enable employees to perform their jobs effectively and efficiently.
Business services can be categorized as business-to-business or business-to-consumer. Business-to-business services involve transactions between trade organizations, such as a car manufacturer performing a B2B transaction with a wholesaler to get the tires and rubber hoses that it needs to build vehicles.
A common misunderstanding is that a service can only be provided by people or firms. However, a service can also be provided by inanimate objects. The difference between a physical good and a service is that goods can be stored for future consumption, but services cannot.
Services can be delivered either in person or remotely. They are often consumed at the point of delivery. For instance, a customer who dithers at the fast-food counter makes the service less quick for everyone behind him.
A key challenge for managers is that they must manage services differently than products, because the former can’t be stored or sold at a later date. This requires a new set of tools that includes more advanced techniques like customer relationship management and value chain analysis. These new tools can help firms manage the increasingly complex and interconnected nature of business services. In addition, they can allow for the creation of hybrid service-product offerings that combine physical and virtual elements. For example, a service that involves a physical visit to a store might be enhanced with virtual components such as online shopping and social networking. This type of hybrid offering can increase customer satisfaction and create competitive advantages for the firm.