Value Addition to the Service Product

There are two groups of services:

1) Core Services: The service product can be thought of as a core service combined with supplementary services. The core service seeks to address some specific needs of the consumer.

Examples can be transportation from one place to another, treatment of a particular ailment, professional services regarding a problem, repairing or servicing any equipment, etc. The core service seeks to address two critical questions:

  1. What is the customer really interested in buying?
  2. What is the business that is our core competence?

For example, let us look at the overnight stay in a hotel. The core product, in this case, is the room that has been rented. This can lead to an appropriate service level, like how long the service needs to be provided, what kind of assistance the customers need to be provided, what services should be assisted and which should be self-service type – making a bed, coffee maker, laundry, etc.

2) Supplementary Services: The supplementary services augment the core product of the company by adding value and appeal and increasing its application. They are provided as a tool to differentiate the core product from other competing services.

It increases the value of the service for the customer, and it also allows the company to charge a premium for the extra services that are being provided. The applicability of core services is enhanced with the help of supplementary services.

They have a wide range of options like the information provided, documentation facilities, advice or help, problem resolution for the consumers, etc.

Value Addition through Supplementary Services: Flower of Service Supplementary services can be of two types. The services that help to facilitate the customers can either be in the form of service delivery or assistance in how to use the product.

When a company adds supplementary services, then it engages in value addition. Supplementary services can be divided into the following eight clusters:

Facilitating Services Enhancing Services
Information Consultation
Order taking Hospitality
Billing Safekeeping
Payment Exceptions

The figure given below shows the eight types of supplementary services in the form of a flower’s petals surrounding its center. This is also called the flower of service. The direction of the petals is clockwise, and this represents the order in which these are likely to be given to the customers.

However, the sequence may vary as, in some cases, the fulfillment of payment is done before the delivery of services rather than after- Despite a perfect core, when a service is badly designed, then it is similar to a flower whose petals are discolored. In a well-designed service, on the other hand, the petals are fresh and well-formed.

Flower of Service

It is not essential that these eight elements be a part of every core service that is offered. The nature and mix of supplementary services are dependent on the nature of the core product that is being offered.

The critical thing to bear in mind is that the supplementary services should add value to the core product and also make it user-friendly. It has been seen that people processing industries have a greater percentage of supplementary services.

Also, high contact services have a higher mix of supplementary services than low contact services. Nearly all the supporting services can be classified in the eight clusters that have been shown in the figure given below. These broad service delivery and service aimed at assisting the use of the product.

1) Facilitating Services: The facilitating services ensure that the core services are delivered smoothly in a timely and appropriate manner. Many times the users or customers take these services as a given and expect that these should be offered along with the core service that is being bought.

For example, the after-sales demonstration of a washing machine or technical support in the form of call center support or voice messaging service. The types of facilitating services that are provided are as follows:

  1. Information: Before making a product purchase decision, the customer normally requires information about the product to evaluate and make a purchase decision. Organizations also provide information to customers to convince them or educate them about the features of the product/service they are offering. Many times providing the information is due to a statutory requirement, like giving information related to warnings (in case of cigarettes, tobacco, etc.) warranty, sale, changes made if product, reminders, etc.
  2. Order Taking: The first step in the transaction is taking orders. Many organizations, like banks, small financing institutions, insurance companies, etc., require that the customers fill in a form before the transaction is executed. For example, filling a deposit form is necessary for banks before depositing the money in the account. Organizations can make order entry or make advance reservations.
  3. Billing: Billing is an important activity both for customers and the company. The customers expect that the bill should be fair, accurate, and simple in terms of readability and understandability. The companies can also provide periodic statements of customer’s accounts like weekly or monthly, or the customers can also generate their own bill on the company’s portal. Self-generated bills enact greater transparency in the process.
  4. Payment: Once the billing is completed, the next step is payment. These include activities like cash management, cheque handling, online transfers and payment, credit systems, etc. The payment mechanism should be easy and convenient for customers.

2) Enhancing Services: Enhancing services are generally not expected by customers but rather is means of delighting them. The service providers can thus charge a premium or expect customer loyalty in return.

For example, voice messages services from any part of the world via the internet and facility to download and save this media. The enhancing aspect leads to service levels being redefined, and the, in turn, determine the kind of premium that can be charged by the company. The premium is directly linked to the value addition that is done through the service enhancement feature.

The service features that are offered by a company lose its differentiation over the course of time. This is because of the continuous modifications or novelty added by the competitors in the market. This also leads to a redefinition of enhancing features, which may become core features or facilitate or support features.

For example, toll-free features are now very much part of the core service because of the customer’s expectations. Similarly, many features are also mandated by the regulatory bodies, and these become a part of the product’s core features. Some examples are as follows:

  1. Consultation: A consultation process requires an interaction with the customers to understand their requirements and come up with a customized solution. This also helps the customer introspect and come up with solutions that are most suitable to their situation oh their own.
  2. Hospitality: In hospitality services, the importance is provided to both new customers as well as existing ones. The employees are trained to understand their guests and delight them with their services. The courtesy is a part of the service design for both face to face as well as telephonic interactions.
  3. Safekeeping (Looking after the Customer’s Possessions): Many times, the customers also seek help in safeguarding their precious belongings. For example, when tourists visit for sightseeing. The provision for safekeeping is vast and extends to a variety of situations like cloakrooms, baggage care, the care of valuables and possessions, the safe care of infants, and these days even the care of pets. The provision for safekeeping is vast and extends to a variety of situations like cloakrooms, baggage care, the care of valuables and possessions, and these days even the care of infants and pets.

3) Exceptions: There are also many exceptional supplementary services that lie outside the scope of normal service design. The wise manager develops a sixth sense to anticipate such situations and equip the service design to handle such requests.

This also helps the employees as they are not taken by surprise when such exceptional requests are made and have the expertise to handle them adequately.

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