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Jun 16, 2020

Service business models

Services are a key element of our economic system. Therefore Tommaso takes a closer look into successful cases which leveraged new business models for traditional companies.

By
Tommaso Martucci

Over the past decade, the global economy exponentially grew a level of awareness in the relationship between company-consumers. This clear view recognizes services as key elements of our economic system. The services definitely marked a point on the importance of people’s satisfaction, loyalty, and happiness, over the mere purchase.

Cross channel experience.

Services are provided through digital and physical products, as well as without any of the two. The potential of service is unlimited: mixing online and offline, visiting a store, delivery, phoning a customer center, online shopping, and more. The final experience is to make customers feel well wrapped and cradled, so the company activates an all-round approach. Indeed, an important element of service-centered businesses involves the redesign of the whole system, by the analysis of customers, partners, and vendors. And that’s possible by working on the business model.

A business model describes the parties involved and their activities that are necessary to bring an offer to the market. The approach of service design revolutionized many industries, thus it’s easy to recognize its capacity for those companies that grew together with the evolution of technology. To showcase the real potential of service design it’s important to point out those business cases which are commonly labeled as traditional and unchangeable. That’s where we see the real innovation happening through a radical transformation. For instance: the shopping, the insurance, and tobacco industries. Below some cases.

Case: Loop.

Considering the single-use plastic packaging as an end street, Loop sells everyday products in reusable and returnable packaging. Customers pay a deposit for the packaging to rent and Loop provides them for a pick up of those. The ecosystem takes into account how people interact with a refill system and with their products. The full range of services provided by Loop covers the whole story of shopping: browsing, selecting, purchasing, delivering, consuming, and reusing. The net of services created around the customers comes from the strategic and operational synergies between complementary fields: shopping, transportation, stores, online purchasing, etc. In this specific case, the flip side might be to use more transportation, heavier packages, and cleaning products for disinfecting. But the brand claims that the whole system generates a lower carbon footprint than single-use packaging. Variuos brands and retailers in France and the US are already hooked.

Case: Allianz

The German’s largest insurance company launched BonusDrive. An app that tracks your driving habits and values your profile’s level, then it adjusts the insurance fee according to your safety performance. It mainly targets young drivers, who are obviously the less experienced drivers, and for this reason, the ones who pay higher fees. With this system, the company rewards responsible drivers with a gamified system connected to their periodical fee. Finally, based on your records, it positively influences customers' behaviors and helps them to win money back on insurance. This approach enables the company to engage on a deeper and personal level with people, to enter their life and foster positive changes.

IMPORTANT: not suitable for people underage or non-smokers – Smoking is never healthy!

Case: IQOS.

Since the launch of filters the basic design and usage of cigarettes have not changed. What’s different now is people’s behavior and interests. Following the new trends if healthy lifestyle and innovative technologies, Philip Morris is reinventing itself through a new product. It replaces the burning of cigarettes with heating the tobacco up to 350 °C. And with this new way of consuming tobacco comes more business opportunities. As this is a more complicated product than a traditional cigarette, it requires more explanation. Thus, by taking advantage of this need, Philip Morris established a more direct and personal relationship with customers by opening retail stores next to the established loyalty programs. The focus was not just on the technology, but also on the consumption of tobacco as a ritual. The final combo, made of innovative products, services, and retail stores, initiates new behaviors in people and creates diverse business opportunities.

Apparently, some of the most traditional industries are the ones with higher potential. The reason is that they are part of the default cultural heritage of the global population, not just part of the economic system. By revisiting these industries is possible to have an extremely positive impact on people’s behavior. And consequentially, to create new business opportunities. Still, to redesign and rethink long-established businesses, it takes understanding the current people's interests while envisioning the evolution of the business.

Tommaso Martucci

Innovation & Design

Tommaso Martucci is an Innovation & Design Manager at INDEED. He is specialized in Service, Ux/Ui & Innovation, with a background in Product Design and Workplace Strategy. Milan, London, Shanghai, Belgrade or Shenzhen are just some locations, where he proved his design versatility. Feel free to join his reading list by following #timeforreading on – actually – every known social media channel.

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