Tangible, intangible or digital – what is a service?

Traditionally, we companies have differentiated between products and services. The former are physical items that can be produced and used repeatedly. The latter are (service) performances, i.e. things that I can neither grasp nor possess and that can only be repeated to a limited extent.

The boundaries between products and services are becoming increasingly blurred.

Today, we have companies that produce physical things and offer services to expand their business model. Hilti, for example, manufactures machines for the construction industry. In addition, Hilti offers maintenance, optimization and consulting services for a monthly fee, providing additional value for customers.
The combination of physical product and service creates a product-service system.

We also see companies from different sectors developing such product-service systems together. One such system was created through a collaboration between IKEA and Sonos. The electronics company Sonos benefits from IKEA’s economy of scale. With Sonos, the furniture store IKEA is bringing a lack of expertise in consumer electronics into the company – an advantage for both. And as customers, we benefit from a coordinated customer experience that ranges from marketing to customer service support.

The boundary between traditional products and services is becoming increasingly blurred – also due to the possibility of expanding existing business models to include digital services. A good example of this is the development around Nike+. Nike had actually offered running enthusiasts an iPod training system consisting of an iPod extension, Nike running shoes with sensors and a fuel wearable. Nike also developed an app for smartphones, its own currency, NikeFuel, and positioned its own Nike Stores as meeting points for runners and starting points for running laps.

Nike’s product service system brilliantly demonstrates how digital products augmented Nike’s physical products and channels while creating a coordinated brand experience. Service design helps to improve the customer experience created.

Even complex systems need to be designed and improved.

Companies operate in structures with different components. People, objects (digital & physical) and processes combine to create a service experience that we experience as users. The IKEA experience is not just about assembling the furniture yourself; every component influences the IKEA system. Employees, website, terminals, restaurants, arrangement of display areas in the store. Internal processes also have an impact on the IKEA experience, such as the choice of food in the restaurant.
Service design always looks at the entire system and tries to design and organize the internal processes, resources and features to improve the experience of the system for stakeholders and end customers. A good example of this is the arrangement of aisles in a store. On the one hand, the arrangement must facilitate the sale of certain products without making the work of the employees more difficult. On the other hand, it must not be impossible for customers to find their way around. A component such as the arrangement of the aisles, for example at IKEA, influences the customer lifecycle and the company’s sales.

Service design jumps back and forth between user-system interactions at micro and macro level and identifies opportunities to improve the user experience and simplify processes. Service design uses qualitative, quantitative and experimental user research methods to get to know and understand the requirements of real service users and their context of use. The knowledge gained and requirements are combined in a service concept. This concept serves as the basis for service prototypes, user tests and the further development of a service.

Service design jumps back and forth between user-system interactions at micro and macro level and identifies opportunities to improve the user experience and simplify processes. Service design uses qualitative, quantitative and experimental user research methods to get to know and understand the requirements of real service users and their context of use. The knowledge gained and requirements are combined in a service concept. This concept serves as the basis for service prototypes, user tests and the further development of a service.

Service design helps to understand and improve the customer experience from the customer’s perspective

In addition to the development of new services, service design helps to simplify existing systems and their components for users. During user research, it uncovers gaps in the service experience and identifies opportunities to close them for users.a Airbnb masters this discipline for guests and hosts alike. For example, the 2-day delayed payment of Airbnb hosts. This tweak allows the company to react to last-minute cancelations without having to book money back and forth several times – saving the company internal transaction costs and users hassle and effort. The additional SMS notification when an in-app message is received is another example of how the company is improving the service experience for users with the help of low-threshold digital channels.

Through its approach, service design looks into digital and physical interactions between the user and the system. As a result, service design shapes the customer experience across physical and digital channels, reduces complexity and makes use more personal and convenient for customers.

Would you like to improve your existing product or service?
Or are you facing the challenge of developing a new digital product?
Let’s talk!

We are happy to support you with our decades of expertise in the development of digital products and services. A design workshop allows us to recognize potential together and get projects on track.
Incidentally, this also applies in times of home office and teleworking – thanks to a broad repertoire of virtual workshop solutions.
The first design workshop is free of charge and without obligation.

Further links:
Playful creativity with gamestorming and design thinking
Inception Design Thinking Workshop @ IBM
Run better Workshops by Shifting Your Mindset

Through its approach, service design looks into digital and physical interactions between the user and the system. As a result, service design shapes the customer experience across physical and digital channels, reduces complexity and makes use more personal and convenient for customers.

Would you like to improve your existing product or service?
Or are you facing the challenge of developing a new digital product?
Let’s talk!

We are happy to support you with our decades of expertise in the development of digital products and services. A design workshop allows us to recognize potential together and get projects on track.
Incidentally, this also applies in times of home office and teleworking – thanks to a broad repertoire of virtual workshop solutions.
The first design workshop is free of charge and without obligation.

Further links:
Playful creativity with gamestorming and design thinking
Inception Design Thinking Workshop @ IBM
Run better Workshops by Shifting Your Mindset