By A.K. Agarwal

At the start of this Century, product and service features are no longer critical differentiators. So, if there is one factor that emerges as the millennial differentiator, it is service-delivery. The term service-delivery encompasses business in all its forms, cuts across industry-types, and is a concept that transcends countries and cultures, emerging as the primary decision-maker in purchase decisions.

Service delivery is a complex process. The first factor that influences it is knowledge. A knowledge of the customer is the primary element of a good service strategy. Every customer operates at her or his own comfort-level. This level depends not just on the physical product, but also on her or his perception of the product- or service-offering. Only by understanding the customer's unique needs, and tailoring the service-delivery mechanism to it, can companies hope to succeed this millennium.

The second factor is brand loyalty, which plays a crucial role in deciding the success or the failure of a business, especially in the service sector, where the writ of word-of-mouth rules. A business with a good service delivery mechanism should aim not just to create brand loyalty amongst its existing customers, but also to use them as ambassadors who can extol its virtues to others.

The third factor is the focus on the internal customer. This is essentially an organisational emphasis on the person delivering the service. The objective should be to develop the person's skills and add to her or his ability to carry through a superior service delivery. This is a critical factor since each service transaction has so much of the human factor determining its success. The fourth factor is communication. With hierarchies fading into the background, reporting lines regulating upward, downward and lateral communication are turning fainter by the day. All the same, the clarity of communication must not be lost at any cost. And it should be directed at people rather than positions.

The final factor that has an impact on the quality of service delivery is the organisation's value systems. Customers may prefer to buy the product- or service-offerings of companies which have values closest to their own. These could take the form of conformance to environmental standards. Or it could just be an intangible value, like Volvo's commitment to safety.

Before trying to benchmark any type of service delivery mechanism, it is necessary to understand the geographic parameters within which business operates. Today, it is imperative for even a business that does not operate outside the domestic boundaries of a country to think global. Its strategic intent may be local, but thanks to liberalisation, competition will come from transnational companies. The first step in improving the quality of service-delivery is to increase the speed of transaction. The speed of response, too, has to be greater than the industry-average.

Today, customers expect much more than they want. For instance, a customer wishing to invest in a small car would do so not just on the basis of the product-the car itself-but also on the basis of other factors like the after-sales service that the company is willing to offer. This phenomenon would mean that service, with all its soft benefits, would be fundamental to sales not only in the service sector but all other sectors as well.

Service-delivery is all set to emerge as a force, irrespective of what or how much a company is selling. The felt-need to develop a good service delivery mechanism in any industry is a shift in the mindsets of the people involved on both sides of a transaction. Companies will have to evolve their own unique service-delivery mechanism using the broad parameters indicated. A set recipe will not work in the 2000s when things change almost at the speed of light. In the company's scheme of things, what is service delivery's rightful place in the value chain? Ideally, service delivery should follow new product development. Only then will it be able to add value to the product or service in question right from the beginning.

It is imperative to understand that the success of quality service-delivery systems depends on several variables. The human factor is the most important. Equally important, however, is the actual quality of a product or service. No service delivery mechanism can succeed in building a base of loyal customers if the basic product or service does not match customer expectations. The speed of transactions and the response level may contribute substantially to its success. Setting quality service delivery standards that are valid over a diverse industry-mix, as also the global marketplace, complements a quality service delivery system.

Above all, the service delivery system needs to operate within the framework of the organisation's value systems. Ideally, the company needs to be vision-led, and willing to incorporate fluctuations in technology and market conditions into its strategy process.The millennium comes with the promise of growth. And the threat of extinction. Only service-oriented companies can succeed. Traditional differentiators may become clones; but quality service delivery will remain relevant even in this wired century. And therein lies the future.

Arun.K. Agarwal is the Principal of the Welcome Group Management Institute

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