Guest article from Jan Schumann, recipient of the 2019 SERVSIG Emerging Service Scholar Award
Being a service researcher is truly exciting these days as the field is developing at an incredible pace. When I started doing service research, studying for my Master’s degree about 20 years ago, I focused on ‘traditional’ services that frontline employees provide in direct contact with their customers. I got to know that services are different from products and learned about the characteristics that differentiate services from products, which made perfect sense in this context. When starting my Ph.D. studies some years later, I began working on a project on the impact of technology on services and realized how technology challenges some of the long-held beliefs on the characteristics of services, such as inseparability or perishability. At the same time, the Service-Dominant-Logic of Marketing changed my perspective on services even more fundamentally by outlining that instead of treating services as a special case, it makes more sense to consider products as special cases of service provision. What a change of mindset in just a couple of years! Observing such a rapid development of thought and being able to contribute to the debate with my own work was highly motivating and inspiring.
Technology infusion: challenges for firms, opportunities for researchers
Whereas the service sector has already been growing for years, digitization ramps up the proliferation and relevance of service even more. Nowadays some of the world’s most valuable firms are digital service providers with new business models that disrupted entire industries. Currently, many established product-manufacturers in B2B and B2C strive for profitable digital service business models. Thus, the playing field for service researchers is growing dramatically and many firms, that struggle with this endeavor, urgently need our work.
From goods to services through IoT
A challenge that I have observed repeatedly when interacting with firms is a deeply rooted product-centered mindset, which impedes their transformation into service providers. One example is that by means of the Internet-of-Things (IoT), firms have the opportunity to turn their products into service platforms by being able to offer individual components of their products and their functionalities on demand. Whereas this is potentially beneficial, in our research we see strong customer resistance. Firms still sell the product and then try to sell access to the restricted component later on. Customers, however, perceive this mix of ownership and access as a norm violation as they do not understand why they should pay for a component of their product, which they perceive they already possess. Obviously, firms need to reconsider their current approach of mixing ownership and access-based business models.
Smart Services in B2B sectors
Another example of firms’ challenges to benefit from new technology-enabled services are Smart Services in B2B. From our research, we learned that firms struggle to sell these services as stand-alone add-on services due to multifaceted barriers, both within the firm but also on the customer side, which appear on different levels of the service implementation. Overcoming all these obstacles is challenging. Moreover, in this case a major shift in the business model, such as moving from selling products with add-on services to selling performance, is likely needed to solve many of those problems and make it work.
These are just two examples of phenomena that inspired me over the last years. Of course, there are many more exciting new phenomena that are currently evolving, such as service robots, chat-bots etc., that will have a huge impact on industry practice. However, they all require carefully designed service processes and business models to gain customer acceptance and thus to be beneficial for firms.
The good news is that we as service researchers are well prepared to come up with solutions, since we have the experience, the theories, and the methods to address these complex issues. The work that service colleagues currently publish on these topics shows that we use these opportunities well. I am looking very forward to see more very interesting and relevant work in upcoming conferences and journal publications. We need it more than ever to help firms turn all these fascinating new technological opportunities into profitable business models.
Jan H. Schumann
Professor of Marketing and Innovation
University of Passau, Germany