A theoretical framework for a
successful product centred service
delivery
As the globalizing economy forces companies to cut their prices on products, many are introducing services into their market offerings. Many companies have introduced “performance contracting” wherein companies offer their customers a holistic service value instead of a product, for example flight miles instead of just the jet engine. There is substantial existing literature modelling firms’ transition from a goods orientation to a stronger service orientation. The cases included in this literature, however, are predominantly based on companies dealing with products of high value such as jet engines and tractors. With existing theory and an empirical case study, students at the Faculty of Engineering at Lund University have developed a framework for a successful service delivery targeted at companies offering a holistic service related to products of lower value.
The literature is unanimous in stating that there is a significant difference between delivering a service and delivering a product. Vargo & Lusch (2014) even argue that there is a whole different logic to selling services. This logic transcends the
conventional notion of the producer and consumer roles and relates to all actors involved in business networks as cooperating entities striving towards a common service goal. The logic describes all needs as being derived from service needs and that goods are only vehicles to serve these needs. However, the intangible nature of services as opposed to goods creates complications in conveying and delivering the value proposition effectively.
The following framework was developed by integrating existing theory on service delivery with an extensive singular case study. The case study explored a certain company’s delivery of a product centred holistic service and included interviews of employees from several different internal departments as well as a wide range of the company’s customers.
A framework with main and supporting activities in successfully delivering a holistic product centred service.
For a company to continuously work at improving the value added by its product centred services it is useful to organizationally separate the service from the goods departments. By creating a stronger service integrity, it is easier to measure,
evaluate and justify service related efforts and investments. A stronger service integrity can be reached by introducing incentives related to service efforts,
developing a service focused educational platform and by creating service specific feedback channels.
It can be harder to convey the benefits of a product centred holistic service because of its often more complex and extensive nature. With complex product centred services, customers are bound to think in terms of goods and fail to perceive the holistic benefits related to the service. To effectively convey the benefits of a service, companies need to more strongly consider the timely aspect of a service
communication and make sure to properly communicate the entire value of the service. What’s also important in the company-customer interaction is to set reasonable expectations from the start. A long-term service can fluctuate in the perceived value it generates and if this value ever falls short of the customers’ expectations then service dissatisfaction may arise.
A holistic service often affects the customer company at several different
departments. Without including all relevant actors, the complete value of the service may not be perceived. A helpful way of ensuring that the knowledge of the service is disseminated throughout the company is to set a customer employee as the main responsible for the service integration.
Long-term services require a maintenance of the customer’s knowledge of the service and its components. This can be done by continuously providing information on how the customer is and how it is not utilizing the service. Even in case of poor service utilization customers are reminded of the potential value that the service
offers. It is also crucial that the company efficiently handles personnel exchanges so as to not lose the channels and tools for the value utilization and communication of the service.
Lastly, supporting all preceding activities, implementing a strong sense of participation and engagement is highly recommended. This can be done by for example establishing an on-boarding program that lets the customer know exactly how the company offering the service is working behind the scenes to be able to provide the value that it promises.
