Service Logic That Solves Customer Problems

The process of developing a better service logic approach requires more than wishful thinking and running the same process over and over in hopes of doing something new. Organizations that focus on integrating their service concept throughout their operations will be rewarded through greater market relevance and customer support. It is helpful to encourage customers to be co-creators and then developing operations around their needs to ensure focus.

Integrated service frameworks relies on taking customers suggestions based on their problems, using their input to develop a salable solution, and then integrating the information throughout operations. The lens of understanding requires the company to think through customer problems and service solutions to successfully move to the next level.

Jobs-to-be-done (JTBD) offers insight into organizational needs to solve customers problems while service-dominant logic (SDL) focuses efforts on the customers needs. Using jobs-to-be-done with service-dominant logic in the viewing of firm marketing programs offers a much higher customer oriented outcome (Bettencourt, et. al. 2014). The design of the operations and marketing process should be based in solving problems.

This provides a much stronger framework for seeing how operational designs do not often coordinate well to a final product or solution. Customers don’t concern themselves with the internal mechanisms of the company but do become acutely aware when a service mistake costs them time, money, or a good time. Upset customers don’t often come back but they are often willing to share information to either the company or other customers.

Understanding customers and drawing them into finding solutions that help the organization to better align its offerings to solving marketing problems is better than shooting blindly at a market opening. The customer provides a gentle hand and will tell you what they are looking for and how to market to them. Organizations must only adjust their data gathering and strategic processes to the customer's needs.

Once the information and product is obtained from the customer it is beneficial to revisit the operations for improvement and better focus on customer needs. It is a feedback process that helps companies take in information, analyze that information, and then adjust operations to meet the market needs and improve sales. Living and breathing organizations that adjust to market problems will outlive their more stagnant cousins through greater market relevancy.

Bettencourt, L., et. al. (2014). A service lens on value creation: marketing’s role in achieving strategic advantage. California Management Review, 57 (1).

Moving Beyond Service-Dominant Logic to Include Change

Service related add-ons can raise the value of products while encouraging higher levels of customer satisfaction. A paper by Lusche & Spohrer discusses the service-dominant (S-D) logic as a science that encourages systems-level thinking and provides greater value propositions. The development of service related products alleviates many human-oriented problems in business and government entities.  Thinking about service requires moving beyond the obvious to incorporate difficult to account for complexity.

Improvement comes with a level of chaos as we learn that we are interconnected and influenced by a complex system of people, events, and actors. S-D logic helps us understand how the underlying principles that foster growth and creation are not readily apparent. They are part of the fabric of our environment but when taken together create the totality of our economic system.  

Innovation changes the environment in a way that can encourage higher levels of functioning and interaction between business and customers. Sometimes this innovation is complex and at other times it is small and adjustable. Change is the process of generating new solutions to existing processes and enhancing smooth business functioning through continuous adjustment. 

Current institutional logic works well when the market is simple and stable. Business and marketing management is focused heavily on analysis, planning and control but are not optimum when the environment changes. The process of strategizing is based upon fixed market assumptions that don’t regularly leave enough room for unexpected adjustments. 

It is important to consider the adjustments in business development as the business changes and adapts to its environment. When new products and services make their way onto the market they naturally create change among the economic actors who seek to maximize their earning potential. We can see this occur in the development of stronger and more reliable cell phones that incorporate apps to enhance their functionality. 

All service development should think about strategy beyond the here and now and leave enough flexibility within the strategic decision-making process to adjust to changes and new developments as they occur. This requires openness to new information that can help a strategy adjust as that new information becomes relevant. Providing for some level of contingency planning of most likely change scenarios can be beneficial. 

Lusch, R. & Spohrer, J. (2012). Evolving serve for a complex, resilient, and sustainable world. Journal of Marketing Management, 28 (13-14).

Focusing on Selling Experiences versus Products in the New Economy

Service dominated logic or S-D Logic may be a better viewpoint to train managers and teach college students about the nature of modern business. Considering how much society has changed over the past few decades the movement from tangible goods to service offerings creates a fundamental shift in the economic system. This fundamental shift should be incorporated into training and education so that decision-makers can master new economic conditions.

A total of 75% of all business revenue is currently service oriented while 80% of the GNP is service related (Ford & Bowen, 2008). That is a huge number! With this fundamental change from agricultural, products, and commodities to service oriented offerings it is necessary to train managers on the new S-D vantage point of seeing and perceiving their operations in a new light. Such an approach will help decision makers view organizations and problems from a perspective that actually reflects current economic activities.

The differences in technique are significant. According to Vargo and Lusch (2004), a shift from products to intangibles, specialized skills, knowledge and processes requires companies to focus more on marketing and integrate of operational processes. If an organization is selling experiences (i.e. service) then their approach to management would be completely different and decisions would focus closely on enhancing that perceived value.

The selling of experiences occurs whenever a company uses services as the stage and products as the prop (Pine & Gilmore, 1999). Where companies once showcased their products and earned revenue they are now making the majority of their revenue from the services attached to those products. There is a fundamental shift in thinking that focuses on the intangible but extremely important psychological experiences of services while less on the give market value of products.

Let us put this to an example. An organization sells an electric toothbrush and earns a few dollars of revenue. Under traditional economic models the sale is made when the transaction is completed. Yet in a service economy it is possible to sell the experience of being beautiful with white teeth. The selling of the toothbrush may be part of a beauty makeover service that transforms a person’s image and comes with teeth whitening, cosmetics, hair products and other related offerings. The products are secondary to the service.

Changing the perspective creates greater opportunities to maximize revenue generation streams. The economic approach adjusts to better reflect modern economic conditions. Operations become more of a support and enhancer to experiences than a logistical path of selling products. The very way people are trained, the type of systems used, and the marketing mix adjust to enhance the experiences and positive feelings of customers.

Tips:

-View experiences as service.

-Sell products that enhance that experience.

-Adjust management styles, organizational structure, and operations to enhance experiences of customers.

-Focus on the total customer experience.

-Raise the perceived value of products with service.

-Integrate operations into the marketing strategy.

Ford, R. & Bowen, D. (2008). A service-dominant logic for management education: its time. Academy of Management Learning and Education, 7 (2).

Pine, B. & Gilmore, J. (1999). The experience economy. Boston, MA: HBS Press.

Vargo, S.  & Lusch, R.(2004). Evolving to a new dominant logic for marketing. Journal of Marketing, 68 (1)