Service has struggled for a long time, to justify its role in business; regarded as a necessary evil and not considered as a source of excellent performance and profitability. It is necessary for this perception to change significantly as the economy and companies begin to grow after what has proved to be the most traumatic business climate for a generation. The service aspect of businesses is now proving to be an exciting area of opportunity for revenue and profitability growth.
Research undertaken earlier this year into service operations within businesses, demonstrates the profitability very clearly, with:
• Annual growth rates of 20-40%
• Gross margins of 50% or more
• Net margins of 25% or more
• Annual increases in profitability through productivity improvements of 10% or more
• Sales increases of 20% or more of total company revenue through development of staff as trusted advisors
Improved performances have not happened by accident but have been achieved by pursuing one of two most successful strategies: examination shows these are based around delivering a strong service-based business brand and a people-driven service provision, providing high calibre staff at all customer interface points.
These two successful strategies are referred to in our research as “Brand-Driven Service Strategy” and “People-Driven Service Strategy”. Both of these service strategies were emerging in the mid “noughties”, but are proving to be even more successful in the current market paradigm, whereas strategies commonly deployed in the “mid noughties”, that can be characterised as “Features-Driven” and “Price-Driven” are now delivering significantly lower revenue growth and margin prospects.
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