Operations process for service vs product businesses

Last week we talked about an operations process – namely, what it was. As you may have guessed, the operations process of product and service businesses differ in a few important ways.

Operations process for service vs product businesses

In last week’s post, we looked at the operations process for a flower shop. The owner Lauren’s main “output” is flowers, a product. But what if your business is, for example, a consulting business – a service?

Inconsistency of output

The first major difference is that services have the possibility of inconsistency of output with a service. We’ve all had a bad haircut – perhaps the stylist didn’t have much experience, knowledge or skill, was just having a bad day, or truly wasn’t cut out (sorry) for this line of work. The result? A hood, scarf, paper bag until your hair grows back – a bad customer experience. It’s very challenging in a service business to make sure that each and every customer experience is the same. All the more reason to carefully and thoroughly train your staff and hold them accountable for producing the standard of excellence in service delivery that you’ve set for your business.

Service intangibility

Another difference between product and service operation processes is that customers can’t see, touch, feel, evaluate, or experience the service prior to it being produced. This is known as service intangibility. With a product, you can pick it up, roll it around, evaluate it, decide if you like it before you buy it. You can’t check out that new ‘do, however, until it’s too late. Thanks to website technology, new hairstyle websites allow you to upload a photo of yourself and drag and drop different hairstyles onto your head in the photograph – a “try before you buy” approach. This reduces the intangibility of services, and helps service businesses achieve the right customer experience.

The problem of inventory

Unlike product companies, service businesses don’t carry inventory. You can’t put a haircut on a shelf and hope it will finally sell tomorrow. Service businesses must learn to level out demand during off-peak hours to maximize the efficiency of their operations. For example, if a hair salon noticed that very few customers came in for a haircut between 9:00am and 11:00am, the shop could offer “early bird” discounts or senior’s discounts to encourage those who might be more available to travel to the salon at that time of day.

Inseparability of services

In a product business, the manufacture of the product was likely performed somewhere else, by someone else. With a service business, the service provider is the business. The hairstylist who performs haircuts really is the business. It won’t matter much to you, walking out with a paper bag over your head after a bad haircut, that the receptionist was friendly, that the coffee was good, or that there was lots of parking. The impact of incompetent or rude service providers is felt directly by the customer. You may not get a second chance with customer experience.

If you’re planning to run a service business, you’ll need to bear these differences in mind. As you review your customer experience and operations process models, think about how will you handle intangibility, inconsistency, lack of inventory, and inseparability of services. Think about how you will handle these differences, while ensuring that your customer experience is the best it can be.

Our word of advice – always put yourself in your customer’s shoes. Will it make sense to the customer? What would the customer think? WWTCT?

 

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Entrepreneurial inspiration – Anita Roddick and The Body Shop

If you’re Canadian, you’ve likely heard of The Body Shop. You probably know it for its line of innovative and forward-thinking beauty products and its socially-conscious campaigns. While The Body Shop of today may not seem an obvious choice for small business inspiration, what if we told you that founder Anita Roddick started with little more than a great idea and a need to support her family?

Roddick was born in Littlehampton, England, as the third of four children. She grew up working in the café her parents owned, developing a strong work ethic and learning about the inner workings of a business at the same time. This set the stage for her entrepreneurial spark. As for her sense of empathy and goodwill towards others, she credited the discovery of a book about the Holocaust, at the age of 10, with this shift in her thinking.

Roddick was trained as a teacher and studied in a kibbutz in Israel. Afterwards, she took to traveling the world and worked in many different countries. When she returned home to England, she met Gordon, her future husband. Together they explored entrepreneurship, returning to Roddick’s roots by opening a restaurant and then a hotel. Soon enough, they began to feel the pressure of small business ownership.

It was during this time that Roddick had her A-ha! Moment – why couldn’t skincare products be packaged in refillable containers and marketed without making women feel horrible about themselves? And, more importantly for Roddick, how could this make money for her family?

Roddick opened the first Body Shop in 1976 in Brighton with just 15 products and using her hotel as collateral. Ten months later, The Body Shop was so successful that a second location had been opened.

The success of The Body Shop was due largely to Roddick’s own principles and experiences. Her travels around the world taught her about the kinds of products women in pre-industrial communities used to clean and care for their bodies. Her childhood, during World War II, taught her the value of reusing and reducing waste. The Body Shop was green before it was popular to be green – and customers responded. In 1984, The Body Shop went public and continued to spread across England and, soon, around the world.

Believing that “businesses have the power to do good,” Roddick lent The Body Shop’s support to a number of social and environmental issues. The Body Shop was one of the first businesses to prohibit animal testing and promote fair trade. When the company became a subsidiary of the L’Oréal Group, Roddick continued to monitor their work closely, making sure that operations were being run in line with her and her company’s core values.

In 2003, Roddick was made Dame Commander of the Order of the British Empire. She passed away four years later at the age of 64.

Anita Roddick started The Body Shop with no training or experience, which we obviously don’t recommend. However, her unique vision and passion helped her to create a business that proved commercial success doesn’t have to come at the cost of personal values – something we’re sure many small business owners can aspire and relate to.

 

 

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