Business services are intangible activities that provide benefits to companies without supplying physical products. They are a significant part of most developed economies and new technologies have expanded their reach from domestic to global markets.
An intangible product is one that cannot be produced or stored for future use, such as food or air. Instead, it can only be consumed or experienced in the present. It can be a service such as teaching by teachers or doctor’s treatment to patients, or an experience such as a mental health counselor’s advice or therapy.
Because services are intangible, they require the involvement of clients. This means that a customer’s input can affect how quickly and efficiently the service is delivered or the quality of the final product.
Because there is no physical form for a service, the demands and expectations of different customers must be met by the service provider each time it is delivered. This requires modifications to the original product based on each client’s needs and preferences.
Because they are not in a physical form, the demand and supply for services are very close to each other, unlike with physical goods. For example, if a company launches a business consultation program, it can be sold immediately.
There are four essential elements to consider when crafting a profitable service business: (a) the needs of the customer; (b) the needs of other key stakeholders; (c) the design of the service; and (d) the delivery of the service. These four elements must work together for a service to be successful, and managers must get them working well or else risk pulling the business apart.