Reshaping Services Industries

I'm participating in a technology roundtable for one of the services industries this week; it's a closed-door session with some pretty heated discussion. The economy is definitely hurting this segment and one of the recurrent themes is that personal (low volume) customers are going to be the growth engine, not business (high volume) users as companies cut back on their spending. Without disclosing industries or players, here are the themes I presented as ways to reshape the services experience for a broader range of current and potential customers:

1. Open up interfaces to what you do. It's a time-honored tradition to think of a business' data as its very own. But what if that data can create new ways to think about the service, new market segments, or new demand for the service? Web mashups are interesting if they have useful data sources to draw from; this doesn't mean that services companies should expose personal data but they can provide interfaces to widely useful, logistics, location, or inventory information. The New York Times has done exactly this with the Times APIs, a set of services that let you search Times content by keyword, context, or specific parameters like dates and by-lines. It doesn't create new newspapers; it creates new ways of using the news that hopefully driver readers back to the Times site for additional information or context. It's not sufficient just to think about consumers as the endpoints of a transaction. Which brings me to...

2. Determine the value of social networks. In the words of Tim O'Reilly, it's not the network radix, it's what gets shared. What experiences are valued, or not valued? What are people saying about you? What does a Twitter search on a hash tag or keyword associated with your service turn up? Simple example: the 3rd generation of my family's cousins have a group on Facebook; every time we think about having a reunion somewhere we end up discussing air fare, hotels, meeting rooms, babysitting, photo sharing and mass quantities of food (it is my family, after all). All of those services businesses could find a pre-aggregated demand pool if they'd build a "Book Your Family Gig" application in Facebook.

3. Create an inbound channel. More informally, this is "listen" but it's the corollary to using the social network to get a pulse on what people think of your service. What are the limits on elasticity, choice, price, and user generated content that demonstrates new uses or specific value add to your service? Far too much services marketing is outbound only; I'm awash in email promotions, coupons, special codes, and one-time offers. But very rarely am I asked what I'd pay for something, or what my trade-off points are. Even more direct: just watch Twitter for "brand name #fail" and see where the exceptions are happening. Reach out and address, listen indirectly, because that creates....

4. Pleasant inconsistency drives loyalty. Give -- don't offer -- me a better seat, better room, nicer car, or 9 holes on the course that I'm going to bludgeon with a golf club that I can't control (this is in fact how my golf badness started). The first time I experience something out of the ordinary flow, I'm likely to decide whether or not I'm willing to use it again, pay a premium for it, or arrange my brand loyalties so that I'll get the benefits of being a repeat customer. Obviously, bad inconsistency, or consistently bad experiences, drive loyalty to other players.

All of these conversations have to happen with input from multiple demographics: Millennials, Gen Y, Gen X, Boomers and now Gloomers, crossed with various degrees of online experience, social networking utility and trust. If you don't figure out how to meet the demands of the Millennials, you won't be in a position to sell, serve or employ them in 5-10 years when they are riding the economic recovery as the core of the spending and working public.


Your comment about the generations is right on. The usage patterns of each generation is so different and it must be accounted for by companies that want to ride the wave. I have been blogging about generation issues at and would love to hear your thoughts.

BTW, my brother has been with Sun for something like 12 years now.


Posted by Dave Sohigian on February 27, 2009 at 06:31 AM EST #

Hal, I agree - in an odd way. My husband and I are pastors, and the older members in the church where we serve do not yet understand that we have to accommodate the young adults and youth in the community - the future of the church. They do not understand the need for a little more contemporary music (not that we want to throw out the old, but we want to incorporate the new).

The preschool does not understand that they need to make some changes to accommodate the working parents in the community - they think they can continue to have 1/2 day sessions, 2 or 3 days a week, instead of providing daycare along with the preschool - even though they see the other successful preschools doing that, and "don't know" why the other ones are growing and they are shrinking.

Further - your comment on pleasant inconsistency is right on. My Hal has medical needs that require a refrigerator on travels - I won't name the motel chain that wheeled a fridge into our room - and two trips later when we booked with them, reserving a room with a fridge, they didn't have a room with a fridge in the range that we paid for (can we say el cheapo)- or one to wheel into a room - so they put us up in a suite for the same price. They have us as customers now, and will for a very long time.

Posted by Connie G on March 04, 2009 at 04:59 PM EST #

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Hal Stern's thoughts on software, services, cloud computing, security, privacy, and data management


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