The key difference between a production-based company and a service-based company is tangibility. With a tangible product, a company is able to manufacture the product and deliver it to any part of the globe where the product will endure the journey within the expected quality parameters acceptable to its consumers. Whereas in the instance of a service-based company this is not always possible, and customer satisfaction is based on more qualitative experiential factors which can vary for each individual customer.
Therefore, it is safe to say that the criteria to consider when selecting a location to establish themselves, a service-based company has a very different set of factors - in addition to those outlined in the Product-Based Companies article – also to consider based on the type of services that make up their business model. Since service-based products are judged and measured on the interactive experience that customers have with the service, facilities, and staff of the company, depending on the kind of service category, the extent of the interaction between the customers and either the services, facilities, or staff or their combinations, the company have to consider many variables and find a healthy balance to be successful.
A call center, for example, is a service provider, but as we have all experienced thanks to the invisible but ever-present touch of technology they can be even on another continent and achieve a very high degree of success. Whereas a hotel or restaurant on the other hand is an immersive experience that excites many of a person’s senses and the combined feeling of this would be the deciding factor in the quality of the experience in the mind of the customer.
Depending on the type of service, factors such as time taken to gain access (ie: time taken to travel, waiting, speed of delivery, etc), quality of the interaction between company staff and customer, speed of solution, accommodation of specific customer requirements, would all impact the quality of the end-product which in this case is the experience. Furthermore, service-based companies have a far greater challenge in maintaining service quality standards as in most instances it will be humans interacting with other humans, and no matter how much training and pre-preparation may be done, emotion, culture, personal ethics & biases, etc will always play a part in any interaction. Therefore, the ability to source and access high-quality human resources is key.
Another emerging challenge for service providers, which has been thrust into the limelight during this prevailing pandemic is how to optimize a service experience remotely. This is the situation that has shed light on a situation which the entire world was unprepared for but has been forced to rapidly adapt to, and has presented its own set of challenges and learnings about location, accessibility, methods of interaction, etc.
In a service-based company customer service and customer feedback play a hugely important role in the development, evolution, and success of the business. Since as we all know good news spreads slowly but dissatisfaction spreads like wildfire. So, connectivity between the frontline and the policymakers is key, and this must be managed both physically and remotely and the business location also plays a role in the speed and efficiency with which improvements to meeting changing customer expectations can be rolled-out and implemented.
While this article only covers the importance and difference of a business location between product or service businesses, we hope that it is informative and provides ample food for thought.
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