Business services are a category of services that businesses purchase in order to function and operate. Business-to-business (B2B) service providers are a critical part of every economy and provide companies with an endless array of non-financial business needs including advertising, marketing, consultation, logistics and shipping, waste handling, staffing services and administration services to name just a few. Businesses can also outsource their noncore activities to a service provider in order to focus on their core business and increase overall efficiency.
Many people view Business services as a subset of Economic services, which are defined as the physical delivery of goods and commodities. However, the definition of Business services is much broader than this and encompasses all types of work that does not involve creating a tangible good. This includes consulting, training and other similar tasks that do not produce a product but are essential for the successful operation of a company.
A business that provides a service has to create value for customers in an intangible way. This is not as easy to do as producing a product and is often more costly. Creating value in a service environment involves meeting or exceeding customer expectations. This can be difficult, especially in an ever-changing world where customer demands change rapidly and customer expectations are often highly subjective. A company that has an excellent service culture will be able to attract and retain customers by providing them with the value they expect.
The creation of value in a service environment can be complicated by the fact that there is often a direct link between the performance of a service and the satisfaction of customers. This makes service quality a very important factor in the success of a business. A company that is not delivering excellent service will struggle to compete with those who are.
Another factor in the complexity of delivering a Business service is that production and consumption of the service are usually simultaneous. This means that the service cannot be stored for later use as is the case with physical products. This requires that the service is provided immediately and that any changes made to it will need to be implemented right away.
The main challenge in running a profitable service business lies in the design of the business model. Managers must think differently from those who manage product companies and design their service around the characteristics that will appeal most to a large group of customers. Specifically, they need to design their service around convenience and friendly interaction. This approach contrasts with traditional product design where the focus is on ameliorating the features that differentiate a product from other products. This can be a tough task for many managers.