Where the Customer is King: Part 2 – Service Strategies Simply Implemented

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As already explained in the first part, innovative and customer-centered services and service-based offers are the key to a company’s success – because they come with the biggest potentials for turnover and results. But what are the strategies that can help companies grow in the service business?

Operational excellence – further development of existing service offers

What does operational excellence mean? It means that a company is continuously improving its existing services to augment added value for the customer and to protect itself effectively against imitation by competitors.

What companies are implementing operational excellence in an exemplary way? A joint project allowed BMW, Siemens and E.ON to realize long-distance mobility for electric cars. This feature is extremely important for general acceptance of electric cars. Within the frame of the project, fast loading stations with direct current were set up along A 9 for the route Munich-Leipzig-Berlin. The stations can load electric cars to 80% of their capacity within 30 minutes. After numerous test phases, the system is now up and fully functional since middle of June 2014.

Market-oriented service innovations

What are market-oriented service innovations? New or bordering market segments are opened up with the leverage of already established services. Companies pursuing this strategy – as a result – have the possibility to address new customers with existing offers.

What companies are implementing market-oriented service innovations in an exemplary way? One example is the now recognized concept of car sharing. Earlier, people bought cars, today they lease them. This is attractive for the seller just as much as for the user. In the large megacities, more and more people no longer buy their own cars, because with good public transportation at hand, they want to avoid traffic chaos, the lack of parking space and high follow-up costs. Through car sharing, service providers like Car2Go, DriveNow & Co. also reach customers who, so far, actually did not belong to their customer base. And each car rent that is paid simultaneously is a paid test ride for the service provider.

New-business approach

What does new-business approach mean? New services and service offers also mean new customers. If a company opens up new market segments with the help of innovative services, this is a classical new-business strategy. Entering new markets, however, bears enormous risks for the pioneer company. Yet simultaneously, decisive competitive advantage is gained, because the strategy leads to a headstart ahead of the competitors, so that the innovative concept allows the company to start to explore and understand their customers’ needs, motivation and behavior long before competitors do, enabling the innovator to establish long-term customer relationships and loyalty.

What companies are implementing this approach in an exemplary way? Apple‘s online platform “iTunes” is a good example. At the time of its release, iTunes was one of the first apps of its kind, integrating the smartphone with media offers – music, movies, books, and everything also as a cloud service that is usable on all connected terminals.

Customer-centered service innovations

What does customer-centered service innovation mean? Customer satisfaction is a company’s highest priority. Companies can increase their customers’ satisfaction by developing new offers for existing customers, creating genuine added value. Added value is generated for the customers, if companies release them of or support them in their processes. Organizations who are committed to adding value for their customers not only improve their image, they also enhance customer loyalty and get a better understanding of their clients.

What companies are implementing customer-centered service innovations in an exemplary way? With “Daimler Mobility Services GmbH”, Daimler set up a subsidiary that bundles a multitude of mobility offers, inter alia an interest in the American company “Gotta Park”. Gotta Park allows customers to make reservations for a parking place in three simple steps.

I invite you to also read part 3 of my series: Next week, I will discuss a very good Master thesis by MBS student Yekatherina Khorunzhaya, treating “Mobility offers in Germany”.

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About Prof. Dr. Hans H. Jung 50 Articles
Hans H. Jung has been holding the professorship for Marketing at Munich Business School since 2012. After his graduation, he worked several years as a manager and consultant for premium car manufacturers in Germany and abroad. Since 2011, he has been working for the management consulting agency UNITY AG as Senior Manager.