What is the operations process of a service business?

The operations process of product and service businesses differ in a few important ways. The main “output” of a product-based business is tangible, something customers can touch or hold and take home with them. But what if your proposed business is a service, such as consulting? What is your operations process in that case?

The Four Is of Service Businesses

1. Inconsistency

Services have the possibility of inconsistency of output. In other words, the service we get may differ from visit to visit. 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 over your head 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, due to the inconsistency of output. 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.

2. 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, and 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 and apps 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 service intangibility and helps service businesses achieve the right customer experience.

3. Inventory

Unlike product companies, service businesses don’t carry inventory. You can’t put a haircut on a shelf if no one buys it today and hope it will 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.

4. Inseparability

A fourth way that service businesses differ from product businesses in the operations process is through the inseparability of the service from the service provider. In a product business, the manufacturing of the product was likely performed somewhere else, by someone else. With a service business, the service provider is the business. For example, 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 hot, or that there was lots of parking. The impact incompetent or rude service provides 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 will need to bear these differences in mind. As you review your customer experience and operations process models, think about how you will 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?

Want to learn more? Check out our small business training for Canadians!

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