All my life I have been a consumer of services – from education services, to phone services, to training services, to IT services, to hospitality services, to tourism services, to luxury services, to healthcare services, to beauty care services, to cleaning services, to security services, to home maintenance services, to postal services, to courier services, to financial services, to transportation services, to dining services, to lifestyle services, to automobile services, to customized personalized services, to plumbing services, to information services, to research services…etc. etc. etc.
And as a part of my professional life, I have also been a provider of many types of services – IT services, consulting services, training services, advisory services, maintenance services, support services, technology services, marketing services, writing services, blogging services, etc. etc. etc.
Having seen and experienced both worlds, I many times wonder about the following questions:
• What is the Services BUSINESS really about?
• What are you paying for when you consume a service?
• What do others pay for when they consume a service you provide?
As I step back to unravel the answers to these questions, I discovered understood and amassed the following key takeaways:
1) The SERVICES BUSINESS is about selling TIME
In any service transaction, there are typically two key entities. The service provider or the one who provides the service and the service consumer or the one who consumes the service. In most instances the service consumer typically pays for the service, though not always. For e.g: If you visit to a spa for a treatment on beauty care.. Though you are the consumer, it is possible that you’re family / friend / spouse / children pay for the services you consume and enjoy!
So what is that you pay for when you consume a service?
Fundamentally when you pay for a service, you are paying for someone else’s time.
Let us take a few examples to explain better:
Example (a): Take the of research services.
When you pay for a research paper, what exactly are you paying for? If you pause and reflect, you are really paying for the data, insights, methodology, analysis and conclusion that went in to create the research paper.
So who really created the research paper? The researcher
And what did the researcher really put in to create the research paper? His / her time
Example (b): Take the case of IT related services.
When you pay a company for IT related services, what exactly are you paying for? If you pause and reflect, you are really paying for the IT systems or solutions that are being developed, supported and maintained?
So who really does these IT related activities? The employees of the IT Company
And what do the employees really put in? Their time
Example (c): Take the case of consulting services. For e.g.: Financial advisory services, Legal services, Medical services
When you pay for any of these services, what exactly are you paying for? If you pause and reflect, you are really paying for the advice and knowledge being shared with you for your specific question / problem?
So who really provides these services? A financial advisor / A lawyer / A medical practitioner
And what do they really put in? Their time
2) The price of a Service is based on the PERCEIVED VALUE in the eyes of the Service Consumer
The most interesting discovery was the fact that the price you pay for any service you consume is dependent entirely on the PERCIEVED VALUE of the service in the eyes of the Service Consumer!
And the beauty of VALUE is that it is personal, subjective and subject to change any moment. But in essence it is a function of knowledge, skill and attitude of the service provider. So this presents ample opportunities for a service provider to enhance / elevate his / her own positioning in the eyes of the service consumer! What is critical to note is the fact that while it takes focused time and effort to create a perceived value in the eyes and mind of a service consumer, it is equally difficult to change a pre-existing perception. And hence, it is worthwhile to invest conscious time and effort to effectively manage these perceptions in the consumer marketplace.
3) The THREE possible ways to earn more revenues from services are
(i) Increase the number of hours
(ii) Increase the hourly rate
(iii) Increase (i) and (ii) above
The simple math for the Services revenue equation is below:
Services Revenue = (Number of Hours) X (Rate / Hour)
So if you want to increase the Services revenues you can generate – one option is to work more number of hours. Again, there is a limit to how much you can humanly stretch because there are only 24 hours in a day! And there is a limit to how many days of your life that you can actually stretch
And hence the next best option is to increase the Hourly Rate for your services. And the fact is that the rate is dependent on the perceived value of the serviced from the service consumer’s point of view.
So to really differentiate yourself in the long run in the services business, it is imperative that you invest in enhancing and elevating your own value as perceived by the service consumer. And this is really a function of two variables – The value you actually bring to the table and the perception in the eyes of the service consumer! Many of us spend a lot of time in creating and building our own value through self-study. Unfortunately, we don’t spend a proportionate amount of time and effort on self-promotion! That is the key to management of others perceptions of you..
The Service Business is really about SELLING TIME
And since everyone has time, everyone has the opportunity and potential to be a Service Provider!
Pause and Reflect –
What services are you providing today?
What services do you want to provide tomorrow?