The structure of a service
Characteristics of a service
A service can be described in countless ways, but it always comes down to the following:
- In a service, something is provided by a provider and used by a customer/user. The customer returns resources to the provider, which results in a resource exchange and the co-creation of values on both the customer's and the provider's side.
- There is a facility in the service that allows the customer to do something that he cannot - or can less - do without it.
- Users are supported in using the provider’s facility.
- The service has a certain degree of continuity: it is not a one-off transaction in which only goods are transferred.
- A service does not have to be 'used' (consumed) continuously. A service is therefore made available for use. There is only value delivered with a service when the user is using something, so when there is interaction. A provider cannot deliver a service value 'on its own'.
A compact definition of service is as follows: A service is a supported facility.
Composition of a service
Composition of a service:
- facility: the 'something' that is made available to a customer in the course of service delivery and that is supported by the provider in its use by that customer
- support: the assistance that a customer receives from the provider when using the facility
A service involves a customer who is interacting with that facility (the 'use' by the user). The facility is made available ('provided') and supported by the provider.
The facility
The facility can take any form, including government, health care, catering, legal, security, communication, HRM, finance, IT, and housing facilities. Whether these are called primary or secondary is a matter of perspective: the primary service of a provider is secondary for the customer of that provider, whatever te nature of the facilities involved.
The facility does not have to be visible to the customer in all its parts: there is an interface between the customer and the part of the facility that is visible to the customer.
A facility is always a mix of goods and actions:
- Goods may be tangible and intangible, visible and invisible. E.g., in passenger transport of the type of 'railways', a tangible good is the train that brings you from A to B, and an intangible good is the travel app that shows you at what times these trains depart and arrive. In telephony services, the mobile phone in your hand is visible, but the network that enables the phone calls is invisible.
- Actions may involve anything that is done by people, e.g. the actions of a masseur in a massaging service, the actions of a consultant in a consulting service, the actions of a babysitter in a babysitting service. These actions normally are visible, but intangible.
Goods
The goods component of a facility can often be specified in a high degree of detail, and very detailed arrangements can be made about its functioning (performance). The action component of a facility can often only be made less specific, partly because people (the performers of actions) vary so much. Goods can be consumables and non-consumables. Consumable goods are goods that need to be periodically replaced because they get used up or depleted after a certain amount of time or usage. Examples of consumable goods include:
- Groceries (food, drinks)
- Toiletries (toothpaste, shampoo)
- Office supplies (pens, paper, printer ink)
- Household items (trash bags, cleaning supplies)
- Car maintenance items (engine oil)
On the other hand, non-consumable goods are goods that do not need to be replaced periodically. They are typically higher in cost compared to consumable goods but are often of higher quality and have a longer lifespan. Once you have included a non-consumable good in the service, it is understood that it won't have to be replaced anytime soon. Examples of non-consumable goods include:
- Electronics (computers, smartphones)
- Furniture (tables, chairs)
- Appliances (refrigerators, washing machines)
While the terms consumable and non-consumable might seem like they refer to things that can and can't be eaten, respectively, they actually have nothing to do with the consumption of food. The key point here is that more goods are consumable beyond just foodstuffs, and not everything that is consumable is edible.
The support
The support involves the response to support requests submitted by the customer (user). These support requests trigger the reactive processes of the service provider.
USM specifies four reactive processes that cover all interactions with the customer (user). The composition of the support is aligned to the nature of the demand:
- wish
- request for change
- incident
- service request
From the perspective of the provider, the four reactive processes can be combined to no more than five USM workflows. These workflows (value streams, customer journeys) then cover all interactions with the customer (user).
Evaluation of service
It is up to the customer to assess to what extent the service delivers added value.
The customer evaluates the service in terms of:
- functionality: what a service can do, or what a user can do with it
- functioning: how well the facility performs its functionality
The first, and most important, feature of a facility is the answer to the question of functionality: what can the customer do with this facility? What possibilities does this facility offer the customer? What added value does the customer get when he uses the facility? The functionality of a facility can vary enormously and is determined by the nature of the discipline involved, the goods or actions deployed, and the agreements between customer and provider.
Once we know what the functionality of the service is, we can ask ourselves how well the service performs this functionality. This is the functioning of the service. The functioning of a service is mostly expressed in a similar set of non-functional aspects, including availability (during the agreed opening times), speed, capacity, safety. This list of quality characteristics can be extended endlessly, dependent on the nature of the service, e.g. in terms of confidentiality, scalability, adaptability, portability, reliability, maintainability, linkability, resilience, traceability, or customer friendliness.
As the service can be evaluated in terms of functionality and functioning, this must also apply to its components: the facility and the support:
- The functionality of the facility specifies what a facility can do, or what a user can do with it.
This functionality varies enormously: a catering service provides functionality that is very different from a legal consulting service. - The functioning of the facility specifies how well the facility performs its functionality.
This functioning has a much more limited degree of variation: capacity, speed, and reliability are very common characteristics. - The functionality of the support specifies what kind of support the user gets.
How can the user contact the provider to get support? By in-person, phone, e-mail, text messages? Is there a service desk? What type of support can the user get? How are the support calls handled? The functioning of support is largely the same for all types of service. - The functioning of the support specifies how well the support is delivered.
How well is the support organization available during agreed opening times? What is the initial response time of a support call? How fast is a service recovered from a failure? How fast is a request for change handled? How well is the caller informed about progress of the call handling?
The evaluations form the basis of the service agreement as well as of service report.
The relationship between goods, products, and services
A service is a supported facility, in any line of business. The service provider produces the service, so a service is the product of the service provider: the provider makes the facility available to the customer and supports its use.
In the 1980's (when people followed Porter's perspective on economy), companies focused on the delivery of goods. Service was seen as 'after-sales support' (check Porter's value chain model). The major turnover of a company was in the sales of these goods. In the 21st century, economy has turned into a service economy: we've learned that the turnover is mainly determined by the support phase of a good's lifecycle; >80% of turnover (or cost) is made after the initial delivery of the facility (the good).
Although a service is the product of a service provider, the term product is often interpreted as only the goods component of a facility. In the service-dominant logic of the 21st century, this is an outdated interpretation.
If a company only sells 'pure goods', without any actions involved in the facility, and without any support, then - by definition - it is not a service. In the Netherlands this is prohibited by law: every citizen has the right to revoke a purchase within 2 weeks of the purchase date. Many suppliers allow a much longer period, because they understand the concept of customer relationship as the foundation for their turnover. In practice, it's almost impossible to come up with an example of a pure good - without any form of continuity involved.
As soon as there is any continuity involved in the relationship between buyer and seller (e.g. a warranty), it is no longer a pure good and it has turned into a service. The agreement that specifies this continuity is the service agreement. The run time of that service agreement determines the duration of the service relationship.
