SERVICES IN THE MODERN ECONOMY

PART ONE • UNDERSTANDING SERVICES
SERVICES IN THE MODERN ECONOMY
As consumers, we use services every day. Turning on a light, watching TV, talking on
the telephone, riding a bus, visiting the dentist, mailing a letter, getting a haircut,
refueling a car, writing a check, or sending clothes to the cleaners are all examples of
service consumption at the individual level. The institution at which you are studying
is itself a complex service organization. In addition to educational services,
today's college facilities usually include libraries and cafeterias, counseling, a bookstore,
placement offices, copy services, telecommunications, and even a bank. If you
are enrolled at a residential university, campus services are also likely to include dormitories,
health care, indoor and outdoor athletic facilities, a theater, and perhaps a
post office.
Customers are not always happy with the quality and value of the services they
receive. People complain about late deliveries, rude or incompetent personnel,
inconvenient service hours, poor performance, and needlessly complicated procedures.
They grumble about the difficulty of finding sales clerks to help them in
retail stores, express frustration about mistakes on their credit card bills or bank statements,
shake their heads over the complexity of new self-service equipment, mutter
about poor value, and sigh as they are forced to wait in line almost everywhere
they go.
Suppliers of services often seem to have a very different set of concerns than the
consumer. Many suppliers complain about how difficult it is to make a profit, how
hard it is to find skilled and motivated employees, or how difficult it has become to
please customers. Some firms seem to believe that the surest route to financial success
lies in cutting costs and eliminating "unnecessary" frills. A few even give the
impression that they could run a much more efficient operation if it weren't for
all the stupid customers who keep making unreasonable demands and messing
things up!
Fortunately, in almost every industry there are service suppliers who know how to
please their customers while also running a productive, profitable operation staffed by
pleasant and competent employees. By studying organizations such as Charles Schwab,
Intrawest, Aggreko, Southwest Airlines, eBay, and the many others featured in this book,
we can draw important insights about the most effective ways to manage the different
types of services found in today's economy.
service: an act or
performance that creates
benefits for customers by
bringing about a desired
change in—or on behalf
of—the recipient.
benefit: an advantage or
gain that customers obtain
from performance of a
service or use of a physical
good.