In High School you are told that businesses are involved in two major sectors – The Product Sector and The Service Sector.
If you are in the product sector then you are selling something tangible, such as a book, or a lawnmower or a photocopier. And if you are in the service industry then you are somehow assisting your customer in some non-tangible way. As a radio show, or the corner clerk, or a gardener might.
But there is a problem with this model, it’s not very accurate.
A newspaper is a product, right? But what if it’s delivered to your door? Well, then it’s a service, but you’re still receiving a product aren’t you? And If I shop at my local bookstore then I’m visiting a company that sells products right? But if I go order a coffee at the in-store coffee shop has the company suddenly turned into a service providing industry?
No, of course not. That’s just one part of the overall business structure.
And that’s the key.
There is no such thing as a product sector – All businesses are in the service sector. The service you provide is the means through which you will sell your products. The customer has to be provided with a certain standard of service before they will part with their cold hard cash. In some industries the customer will require a lot of information from the sales people, particularly if they are unfamiliar with the product they are buying, or perhaps they are seeking a rather niche and hard to find item. They will probably want to preview or test out their potential purchase. They will want to know about any warranties, guarantees or return policies. They might ask if there are any alternatives out there. Or they might ask about a product that you don’t have. And where to get it. They will want to know how they can purchase – credit card? Finance? Discount for cash? – All of these are services that need to be provided for.
Companies should forget about selling the customer something and focus on providing a good service. We can make up our own minds if we actually want to buy the damned thing.
And I’d like to do so over coffee please.