Business services are a large segment of the commercial world that don’t involve the production of tangible goods. Companies rely heavily on these services, especially large, multinational firms that need to outsource many functions to remain competitive. In addition, this segment of the market is growing at a fast pace. It is essential to know how to calculate and evaluate service revenue figures and what factors influence them.
A firm that provides design services, such as a graphic arts agency that produces logos, signs, publications and web graphics for business customers is a business service. So are utility services provided by a power company that charges businesses based on their electricity consumption. So are real estate services that provide office and retail space for a business. And finally, there are transportation services that provide delivery of supplies and equipment to a business.
Like products, business services can be produced at a wide range of price points. They can also be produced at a variety of locations, depending on the requirements of the client. But unlike physical products, which can be stored for later sale, services are consumed at the same time that they are delivered. Therefore, it is important to create a service that meets customer demands and expectations at a price point that enables them to afford the service.
Because of this, managers of service businesses need to think differently from those of product-based businesses. Product designers focus on characteristics that buyers will value, such as convenience or friendly interaction, but service designers must think about the overall experience that the service delivers to its customers.
For example, a delivery service must be able to arrive at its customer’s location within a specific time frame and be ready to go when it arrives. In order to deliver this, the service provider must have adequate infrastructure and be able to communicate with its driver in a timely manner. This is a challenge that must be met, no matter how small or large the company is.
Another factor in the differentiation of business services is that most service-oriented businesses are slanted toward meeting the needs of either individual consumers or other firms/organizations. A pet grooming service is going to be primarily focused on serving individual consumers while a security firm will have its primary target as other companies/organizations.
Because of the varying requirements and potential for growth of business services, this industry represents significant opportunity. The European Commission created a High Level Group on Business ServicesEN*** to provide new impetus to policy development and stimulate growth in this important sector. This group’s first two flagship communications were An Integrated Industrial Policy for the Globalisation EraEN*** and A Single Market Act EN***.