Every business has a service proposition, whether it is stated or not. Even stated service propositions fall second to implied or assumed service propositions. Regardless of how official or elegantly stated, the customer’s view, as well as that of members of the provider, are what drive transactions and customer satisfaction.
Service proposition is not a complicated concept. It is the whole package that a customer believes is being purchased from a supplier. It includes product quality, lead time, after-sale service, ease of doing business and about anything else that gets lumped into the supplier-to-buyer side of the deal. In short, it is what the customer expects to get in a transaction. While generally used to describe the characteristics of the transaction, it also includes expectations about product quality and how defects are remedied.
It is up to the supplier to define service proposition. It may be defined and documented, but may develop over time as a cultural phenomenon. Often, it is defined and documented but then morphs over time to meet changing needs in the market or changing internal needs. In any case, understanding and documenting service proposition is critical to keeping customers happy, managing capacity and controlling operating expenses.
The individual components of a company’s service proposition are usually important at some point in the company’s history. Constant review will determine if those components are still necessary or desired, or if those components no longer serve a purpose. While some components do not change operating expense (e.g., customer service using a pleasant voice even under stress, shipping on-time by managing capacity, making order status readily available through a customer portal), some components can be extremely expensive in direct operating expense or by limiting capacity.
When reviewing components of a service proposition for adequacy, we need to look at several factors:
· Is this component an ante-item? Is it required to play in this market? Does anyone else offer it?
· Is this a competitive advantage? Does the increase in sales offset the cost of providing?
· Is this something the customer is willing to pay for? Does the premium offset the cost?
· Does adding this component increase our risk of failure?
· Can we do a better job than our competitors? What is the risk if everyone starts to offer?
· Does this component help support our story?
Of course, there are many other factors we want to look at. But in short, does offering a service provide some benefit that is beyond the cost of doing so? That could be increased market share, reduced cost, better pricing or part of an overall strategy to build a brand.
Regardless of what we decide our service proposition is, we need to ensure it is communicated to our customers and our employees. Customers may not know the value they are already getting or may expect something that you are not prepared to deliver. Employees cannot be held accountable for failing a service proposition of which they are unaware.
There is not as much mystery to service proposition as is commonly believed. To master, you need to know your strengths and how you plan to monetize them, know what you are willing to promise as part of your overall package of goods and services, clearly communicate your offering to both your customers and your team, and live up to the promises you made.