The growth of the service sector is probably one of the most striking features of modern commercial life. It is now estimated that over 60 per cent of the UK workforce is employed in services. Far more small firms are involved in services than in manufacture. The generally greater ease of entry and widening opportunities here will probably mean that the numbers in services will grow faster than in manufacture. It is arguable that the special strengths of small firms, particularly the intimate involvement of top management in all aspects of the firm’s operation, are a great advantage in the service sector.
Despite this growth and the opportunities here, many attitudes to services are marked by a peculiar ambivalence. The impression is sometimes given that service companies are not as important nor as acceptable as manufacturers. Government support schemes frequently ignore services. Interest in the special needs of the service sector is negligible. This can be seen in the way the marketing of services is neglected and ill understood.
People are far more important in service marketing than in manufacturing. Individually they play a far more important role in designing and determining the nature of the offering itself. This is partly because services are generally designed around the needs of a specific customer, often on the spot, by the supplier. The travel agent will help the customer to choose his holiday on the basis of his understanding of the buyer’s needs, comments and financial resources. He will need to consider all these factors.
The difficulties of the service firm are made even greater in this situation by the intangible nature of their offering. The holiday is not a fixed commodity capable of being measured and judged on objective grounds. The motor trade suffers particularly from this. There can be an enormous gulf of understanding between the supplier, the garage and the customer on as basic a level as the meeting of the ‘service’ to the car being repaired. Faults or breakdowns totally unrelated to the original problem occurring some time after repair are put down to poor garage service.
Overcoming these problems is critical to ensuring good, repeat business. It is essential to recognise the importance of handling customers carefully, of probing to establish their real opposed to their stated requirements and of explaining differences of understanding. Here the manager should recognise that the extent of access to staff is generally far greater in services than in manufacture. In many garages the mechanic is spoken to by clients as often as the receptionist.
The degree of contact with customers is a significant difference between most service firms and manufacturers. A small tobacconist has far more frequent direct personal contact with individual smokers than the giant Imperial Group. This can lead to negative, even hostile, attitudes towards the public or specific sectors. In some recent research among 12 to 16 year old children the scale of hostility they felt retailers had towards them was remarkable. A service firm cannot afford the luxury of these sentiments if he wants repeat custom. His actions determine his offering. There is not the compensation of other aspects of the product.
At the same time sectors of service industry do fail fully to capitalise on their opportunities. A classic example of this is the tendency of retail salesmen to spend all their time selling the product and virtually no time selling their own firm. The top manager should make it clear to his staff that their job is to promote their own company at least as much as their supplier.
This involvement of people creates massive problems of standardisation, and partly explains the high failure rate among rapidly growing service firms. Once the owner’s direct control is lost, quality can slump. Before this occurs, the basic appeal and offering has to be identified and isolated. The manager is responsible for closely monitoring and responding to customer needs. Within this framework routes to standardisation can be sought. Individuality and flexibility have a role, but within the framework of objectives and controls set out by managers. Franchising has emerged as one of the best ways of maintaining quality in growth oriented services.
The perishable character of most services places a special onus on management accurately to forecast and sustain an even level of demand. Hotel rooms left vacant and unoccupied tables in restaurants are complete waste. Despite that, many small service companies make little systematic effort to estimate forthcoming demand. Even less effort is put into differential prices and advertising, modifying the offering to even out peaks and troughs in demand.
The close direct personal contact between the small service firm and its client provides an invaluable opportunity for systematic information gathering. This might simply involve giving customers a reply paid questionnaire card or getting all those involved in customer contact to review and explore customer action. A determination to use the firm’s intimacy with the customer characterises the market oriented service firm.
The adoption of this approach will do much to influence the service firm’s prosperity. The opportunities exist in services. We can reasonably expect the growth of the last 20 years to continue. Three things will dominate the development of services: the use of marketing, people and productivity. The last of these is particularly important. Seeking out innovative ways of resolving productivity problems in established services and using this to open them up to new markets has been the foundation of growth from Butlins to McDonalds. Ultimately, however, the small firm with its closeness of personal control has enormous advantages in an area whose marketing is so dependent on people.
