Interesting Service Characteristics

(Originally published in November 2014)

As stated in an earlier post, a service is defined by the Oxford dictionary as “the action of helping or doing work for someone.”

By breaking this definition down, we see a service is comprised of three things: an intangible good (the outcome of the action), a provider, and a recipient.

Exploring this definition more deeply, we uncover some interesting implications, and how these implications simultaneously present both challenges and opportunities to everyone involved. Oddly, while simple to understand and obvious in retrospect, the first time someone thinks critically about services in this way will often lead to unexpectedly surprising insights.

 While a definitive list of characteristics is elusive due to the nature and diversity of services, more than half a century of academic standardization attempts have frequently produced lists with recurring qualities. That being said, don’t take the framework presented below as canon, and be aware that these recurring characteristics are:

  • Not mutually exclusive from each other — aspects of one characteristic may overlap or be affected by aspects of another.
  • Not hard-and-fast rules, but rather each characteristic exists on a spectrum, with every service having its own unique mix.

Five Characteristics and Implications

1. Intangibility — Services are actions, and actions are immaterial.

Services can’t be stored, shipped, or returned. You can’t hold a haircut or taste an international flight. You can, however, interact with the tangible aspects and evidence of a service (called tangible touchpoints). For example, your plane ticket is evidence of your purchase and proof of your permission to board the plane. Additionally, these tangible touchpoints can be designed to represent or promote a service’s qualities (e.g., what would it say about your upcoming flight if your plane ticket was printed like a formal dinner invitation and faintly smelled like a high-end cologne?)

Airplane popsicle

You can’t taste an international flight — but you could try…

Unlike shopping for a car, where you can compare MPG, horsepower, appearance, and a slew of other features, a service’s intangibility makes it harder for customers to gauge a service’s quality and compare competing service options. Similarly, the intangibility of their offerings often leads providers to overlook opportunities for differentiation and improvement.

2. Inseparability — Services require both a provider and a recipient.

Without a hairdresser in the salon and a client in the barber chair, there can be no haircut.
In many services, especially technologically based ones (e.g., Software-as-a-Service, Netflix, airline check-in kiosks, retail self-checkout, etc.), it may appear that a self-service exists without a provider, but this is only because the service provider has previously developed, allocated, or otherwise set up the necessary systems and resources. In these cases, the provider’s role is now primarily in the business of providing system maintenance, upkeep, and customer support.

While inseparability is a key characteristic of services, the larger implications and impacts of this will be highlighted in points 4 & 5 below.

3. Perishability — Services are transient and have a finite existence.

Similar to any perishable, consumable good (like an apple or a glass of milk), there are two ways in which services “perish” — either  through use or disuse. In usage, services ceases to exist after they’ve been performed. For example, once a haircut has been performed it can’t be undone, returned by the customer, or ever exactly replicated by the provider.

In disuse, services perish and opportunities are lost as a result of their intangibility. Unlike a car manufacturer who can build and store thousands of cars for later distribution and sale, the potential value of empty seats on a flight, to both the airline and any interested travelers, is lost once the plane is taxiing down the runway.

However, while an unused service can’t be stocked and inventoried, in some cases, the value can be salvaged by reassigning the service’s previously allocated resources (similar to the concept of “Idle Production Capacity”). For example, if a salon’s client misses their reserved appointment, then the hairdresser can’t give that haircut (that service opportunity has “perished”), but he can reassign the resources, processes, and systems (e.g., his attention, skills, barber chair, and friendly conversation) from the original customer to another service consumer (i.e. a walk-in customer).

4. Involvement and Co-production — Services are often customized to and by the recipient.

In automobiles, every car produced on a production line is the same, independent of the end customer, and the customer isn’t required to do anything aside from making a purchase decision. By contrast, the experience and outcome of a hair salon visit is directly affected by the patron’s participation. Almost everything the hair stylist does is tailored to or affected by the customer, from the patron’s initial hair style to their desired hair style to their relationship with the hairdresser, and all the small decisions that must be discussed and mutually agreed upon throughout the process.

Not only is the provider’s action frequently customized to the recipient, but in many cases (i.e., self-checkouts, Build-A-Bear, AirBnB, etc.), the recipient’s active participation is required to produce the service. In these cases, not only is the quality and effectiveness of the service directly contingent on the recipient’s ability to understand and perform the required tasks, but the experience of contribution can actually increase their received (or at least perceived) value.

The "IKEA Effect"

When a customer’s perception of value increases as a result 
of their participation, this is known as the “IKEA Effect”

5. Variability — Service experiences can never be perfectly replicated.

Since every human is unique, the service processes and experiences produced by humans will also be unique. In addition to this human variable, there are many other systematic, environmental, and chronological factors that providers can’t control.

For instance, there were approximately three billion air passengers worldwide during 2013. Even if the same passenger took two of the same trip — say an afternoon flight on Virgin America from NYC to LAX — there are so many variables (e.g., the weather, the pilot and flight attendant crew, the fellow passengers, the customer’s reason for flying and mood on the day of the flight, etc.) that the initial service experience can never be duplicated perfectly. This means there were three billion unique airline experiences in 2013.

It would be foolish for any airline carrier not to consider, expect, and prepare for such a wide range of variability, and similarly, every service provider should understanding and design according to their respective variables.

Impacts on Perceptions

From the consumer’s perspective:

Since services are intangible and perishable, they’re usually “sold exclusively on the basis of benefits they offer.”1 However, “from the service consumer’s point of view, these characteristics make it difficult, or even impossible, to evaluate or compare services prior to experiencing”2 it themselves. This often leaves consumers “feeling like they have to make a purchasing decision without adequate information.”3 Interestingly, while comparing services based solely on price is always an option, a recent poll found that over 80 percent of consumers would gladly pay more in return for better experiences.4

A useful sign

Intangibility leaves many consumers feeling like they have to
make purchase decisions without adequate information

In order to bridge this gap, after finding a provider of their desired service, consumers will often look for proof (e.g., brand resonance, guarantees, tangible touchpoint quality, social reviews, etc.) that indicate the abilities of the provider and the safety of a purchase decision. However, once consumers find a service that consistently provides great experiences around their desired benefits, they quickly become loyal brand advocates.

From the provider’s perspective:

“A service is a commitment to solving a problem.” 
— Panthea Lee

Properly designing, implementing, and marketing services is no easy task. Correctly predicting which experiences will resonate with users requires a deep understanding of their needs, motivations, beliefs, and desires. As for marketing, once your services are aligned with users, you only need to get their foot in the door, and the experience will take it from there.

On the back-end, providers also have to work out the business models, internal teams, processes, and partnerships that will run and support their service offerings. Rather than the precisely determined processes of large-scale manufacturing, services must incorporate flexibility to account for human factors and other variability. While this human element makes the mass generation and delivery of services tricky, quality human resource management and customer interactions can turn this human factor into a key success factor. For instance, accountants, attorneys, doctors, and financial advisers often build and maintain multi-decade relationships with their clients, and these happy customers frequently refer friends and family.

An interesting benefit of services is that providers aren’t tied down to the higher costs and other investments associated with product production, transportation, and stockpiling of inventory. This freedom from tangibility allows service providers to be much more flexible and reactive to changes in users’ needs and desires.

From the design perspective:

While these characteristics and their implications could be viewed as challenging from the perspective of traditional business and design methodologies, Service Designers see them as exciting opportunities to create even better experiences.

One challenge for Service Designers comes from the fact that this process goes much deeper than traditional development, and often requires the buy-in and close-knit collaboration with many business silos and external stakeholder groups. When done well, however, the breadth and depth of this process allows us to affect positive, lasting changes in business cultures and human experiences.

 4. Why Customer ‘Satisfaction’ is No Longer Good Enough. Oracle Press Release. 2012

3 thoughts on “Interesting Service Characteristics

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    1. Intriguing, and thanks for sharing. Are you able to summarize the theory for me and other readers who pass through here?

      I see the line: “With services, the customer provides significant inputs into the production process. With manufacturing, groups of customers may contribute ideas to the design of the product, however, individual customers’ only part in the actual process is to select and consume the output. Nearly all other managerial themes unique to services are founded in this distinction.”

      The aspect of this quote that I struggle to agree with is the “significant inputs into the production…” By this logic, would -for instance- a monthly lawn-care service not count as a service?

      1. I recently re-visited this theory, and I may understand it a little better now. In my example of “monthly lawn care”, the customer’s contribution to the service could be: “requesting the service and providing their yard.”

        I will continue trying out this framing as I think more about services

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