How Quality Can Dictate Price in the Service Industry

In the service industry, one business basically provides the same service as another business. Take the valet business for example, they all take your vehicle and move it to a central location until you return, when the valet retrieves your vehicle and brings it back for you. This is the basic process for all valet services. So what can set one company apart from another? Simply stated, it is quality. It is the extras that they put into the service that separates one company from their competition.

Every service industry must understand what they can do for their customer that is above and beyond the basic service. This becomes even more important when you want to sell your service not simply based on the service you offer but also by the extras. These extras give you the opportunity to sell your service at a higher price. These extras to the service truly cost nothing on a day to day basis but add value to your customer. Yes, there is the potential for extra expenses in training the staff to complete these added touches to the service but generally they are limited and more than pay for themselves over time. However, these extras cannot be something that is simply talked about, they must be present everyday in the service. Not only will your current customers be looking for this higher level of service, your service can and will act as a form of advertising your service. This is truly how you dictate your price in the service industry. Offer added value to the basic service, provide those added values and let potential customers see the service in action.

In order to get to a point where you have control over pricing there are a few things you need to do. First, understand what your basic service is. This may seem like a simple thing but it is essential in determining what your extras are and what you can sell as extras. Second, what does your competition offer in terms of added value to their services? This is true in a business whether it be service, manufacturing or retail, you must know your competition. Third, really spend time determining what value added aspects you can provide in order to differentiate your company. Keep in mind that with the ever changing world of technology, this may be every changing as well.

In the global market of today and with competition being at such high levels, you have to find ways to take your service business to a level that sets it apart. As stated in the beginning, anyone can offer the basics, it is the extras that will help your business thrive and grow.

Global Trends For the Financial Service Industry

As the economic crisis continues to unfold, the financial service industry faces serious challenges. The crisis is rooted in continuous imbalances, including long periods of low interest rates, rapidly rising asset prices, and massive credit and savings imbalances. The 2007 and 2008 Reports from the World Economic Forum predicted these changes as continuous risk to the market.

Earlier decades of exceptional growth and capitalism at its best have now caused the market to adapt to tighter credit, growing government intervention, slowing pace of globalization, and no economic growth. With increasing regulations in the United States and decreasing availability of credit, the industry faces a significant risk of stunted growth. The global recession is also affecting the financial sector because of capital markets and decreased aggregate demand, according to Max von Bismarck, Director and Head of Investor Industries.

This article will provide leaders, employees and investors in the financial service industry with five unique and timely trends to keep in the forefront of their growth strategies for the next five years. These five key trends will shape the post financial crisis in a holistic and systematic manner.

FIVE KEY TRENDS

GLOBAL BANKING. According to the World Bank, although many banks such as American Express, Citibank and JPMorgan Chase conduct business in multiple countries, they are relatively regional in the United States. In order to grow, the financial industry will have to infiltrate emerging markets. For companies that have a more aggressive growth strategy, the spread to emerging markets such as Africa and Asia presents unparalleled opportunities for profit and increased market share.

IT PLATFORM SHARING. Network World confirms that financial service firms’ business strategies must be altered for the new dynamics and intricacies of today’s market. Immediate access to information and integration along product lines and geography are a must for future success. With the need to supply information to a global market, firms must decrease cost. One cost effective initiative is the use of platform sharing; like cell phone companies that collaborate with local companies in order to decrease cost and increase access, financial firms can do the same.

E-BANKING. A special report from The Economist sees that with 3.5 billion people with cell phones and an expected 10-20% year over year growth, personal and business banking transactions are conducted through cell phones more and more. Thus, E-banking capability is quickly becoming an increasing requirement in order to compete in the marketplace. E-banking capabilities provide companies with essential flexibility and differentiation in the market through Internet-based service applications.

MOBILE MONEY. The increase of mobile phone usage in emerging markets makes mobile money a safe, low cost initiative for the financial sector. It is an easier way to transfer money to family and friends, money is sent, and payments and withdrawals can be made without ever going to a physical bank or payment center. M-Pesa, an early developer of mobile money, concluded that mobile money “has enormous social and economic benefits.”

SELF-SERVICE. Self-service and the customer should be a primary focus for firms in this new financial service world, according to IBM. AppViewXS is a self-service portal firms can purchase, so customers can check the status of their account and gain instant access to available services. Customer questions and concerns are addressed more quickly, states an IBM representative. This technology automates many processes; the result is that staff workload is reduced while representatives operate faster and more efficiently.

Financial service firms need to have sustainable, steady expansion in the emerging markets in order to grow in the future. Deloitte and Touche Research reports that financial service firms have not positioned themselves to capitalize on more geographically dispersed opportunities. More than 93 percent of the executives interviewed for this report acknowledged that their firms “are not operating in a globally integrated fashion.”

The same report states that financial firms need to invest away from veteran or mature markets and toward emerging markets because “by 2025, veteran markets will be rivaled by other markets with faster growing economies and increasingly sophisticated financial product appetites.” USA based firms can look toward Japanese and African markets for expansion opportunities. Kennedy Consulting analysts believe that the market will rebound from the global financial crisis in 2011, but there will not be any return to the robust levels prior to 2007 until much later in the decade; hopefully, the five key trends in this report will help the leaders, employees and investors in the financial service industry to look toward a robust sound future.

In addition to growth strategies, in the 2002 Journal of Business and Industrial Marketing, Henson and Wilson discuss the extreme changes that have occurred in the financial service industry and how many firms are trying to develop and execute successful strategies based on innovative technology and customers. Aside from the regular ups and downs of the financial world, technology and innovation will always prevail as the win-win for the financial service industry. Because online banking has become the norm for most customers, technology will be very important in these firms’ strategies.

With the customer at the center of most trends in financial service firms, creating new values for their current and potential clients beyond current expectations will be a top priority. The need for convenience mixed with technology makes mobile money a great initiative in the emerging as well as the developed markets. Many firms have speed pay, the ability to pay without swiping the card, as part of their credit card services. An embedded chip in the credit card enables payments to be made by putting the card close to the payment processor. Mobile money will be an expansion of payment and money transfers without the need for a card, the need to go to a physical bank, or to use Internet banking. Payments, transfers, deposits and withdrawals can be made with a cell phone.

The World Bank concurs that innovative technology and an increase in e-business strategies will lead to much lower costs and greater competition in financial services. Internet and related technologies, the World Bank affirms, are more than just new delivery channels; they are an inexpensive, different, and very effective way to provide the same services. Since financial service firms must grow organically, build customer loyalty, and accommodate the customers’ expanding needs for services and convenience, partnerships with new technology businesses will allow them to lower their expenses and be competitive.

Established firms such as Amex, Citibank, and others can partner with groups such as the wired tech savvy Google Alumni who are not averse to risk and who own fledgling technology businesses that are reshaping the industry with a new wave of innovative products, write Spencer Ante and Kimberly Weisul of Business Week. Mobile Money Ventures is one such fledgling company that is a provider on the forefront of alternative financial service products. Small companies such as these are able to provide well-known financial firms the wherewithal to open in emerging markets where there is a need for cooperation with other firms in order to attain then obtain the local customer base.

Today’s competition is fueled not just by profitable customers, but also by the firms that are the most efficient and cost effective. Procedural and cultural clash will result from expanding into unknown markets as seen by the history of Citibank in Asia Minor. But in the long run, tighter regulations, new technology and improved business processes will cause expanding in emerging markets not only to change the demographics of the clients (both geographically and core clients), but also to better the global economy and the future of the financial services industry. Keeping the previous trends at the forefront of managers’ strategic plans, financial firms will rebound bigger and better than ever.

The Service Industry Entrepreneur Employee

My definition of a Service Industry Entrepreneur Employee is very simple: “An individual who, rather than working as an employee, takes ownership of their work, just as much as an individual who owns and runs a business.” Why is having such an individual on your team important? Well, if you feel like you are “doing all the work around here”, you need to keep reading.

Have you ever been frustrated by an employee who could perform better? But they aren’t. Perhaps they could become your best employee, best server, best bartender, best cook. But they aren’t. They could be a manager someday, and a great one, but they aren’t ready to make the jump? You see more in them than they see in themselves. Sound familiar? I’ve been in that same situation. So, why aren’t they? Because they don’t believe they can. They do not have an entrepreneurial mindset. There are various reasons for this. As managers, we can eliminate some and replace them with entrepreneurial empowerment.

Many people, employees, mid-level managers, and even top executives could accomplish something more, something great. But they don’t. Why? Because they are too attached to being comfortable. They’re comfortable where they are, and performing how they are performing. They are so attached to their current job level that it becomes a part of their identity, and it’s not always a good one: “I’m just a cook”, “I just wait tables”, “I’m only an assistant manager, not the real boss”. These employees allow themselves to be defined by their job, their income, their status in the workplace. And it hurts them. They’re comfortable doing what they are doing and it might be easy for them to do their job, but they’re not happy. And they work for you. Congratulations. Over 73% of your younger employees, when asked about their strengths and weaknesses, will focus on their weaknesses. This is higher than any previous employee group surveyed. (Time, September 28, 2012, “Note to Gen Y Workers”, Jane and Marcus Buckingham)

Odds are that if you are reading this, you are “the boss”, the manager, the person with the accountability and the responsibility for the performance of these types of people. And society reinforces the perception these employees have of themselves at almost every turn. Here is a simple example. What’s the most common question that people ask when they strike up a conversation with someone they’ve just met: “So, what do you do?” I have managed tens of thousands of employees and worked one on one with hundreds of managers. And I still sometimes find myself asking that question too. Oops. Worse yet, I have heard guests and customers ask my employees “So, what else do you do?”, like their current job is not good enough. Wow. Now there’s a self-esteem booster for your full time, key employees. I’ve seen the faces of some of them as they walk away from the table or guest after hearing that. Have you ever slowed down enough in your busy day Mr. or Ms. Manager to notice, or to care?

So, how do you help employees with this emotional aspect of the business? You don’t help fix it for them. They help themselves. You allow them the freedom to have, what I once heard coined, the “Entrepreneurial Mindset”. This is the freedom to think and act like an owner in their workplace. Most employees in the service industry never have this freedom. Ever.

Hospitality employees are usually younger, the “generation y”, the “millenials”, the “teacup employees”. They are thought of as delicate and pampered and easily shattered. They always “got the trophy for finishing the soccer season”, not for winning the championship. You and I have probably heard the same stories and the same analogies. The topic has been beaten to death in management-oriented writing. I cannot claim to be anywhere near an expert on the topic. But I do know one thing: people like to feel good about themselves. And I have worked with many younger employees. They’ve told me many things. The most recurring item is also the most emotional: they want what they do to mean something, and they want to feel important. That trophy, which was the same as every other kid’s, didn’t make them feel good. The “helicopter parents” who hovered over their every move, and told them how good they were for taking that test, “C-” score and all, didn’t make them feel good. How do I know? I talk with them.

I once heard one of my best employees, Steve, answered that guest question “what else do you do” with “Oh, I’m just a waiter.” I winced as I walked past. I hoped the guests didn’t notice. My coaching piece with Steve later was as simple as it was true. I said “Steve, seriously ‘Just a waiter’? In my restaurant, each server brings in over $31,000 a year in revenue. You are a full time employee, and a valued one, your contribution is probably about double that figure. This is a multi-million dollar restaurant. And you help make it run every single day.” Steve was important to my business.

So, yes. Your employees certainly mean something to somebody. They are certainly important to somebody: you. Do you tell them how important they are? Do you say “Thanks” to each employee for one small thing every day, hopefully some behavior you are trying to encourage? Be honest with yourself, and no crossing your fingers under the desk.

Let’s examine a common service industry scenario and apply the entrepreneurial mindset to it: the “problem table”. Don’t pretend that you never get them. We all do. So, pretend Steve works for you. He is 21 years old. He comes to you with a long list of complaints from one of his tables: “The food came out cold, the bartender made their drinks wrong, they say it is too cold in here, and they’re really mad”. Then Steve stops. He stops speaking. He also stops thinking, and moving. So, what do you do? Oh: you fix it. You get tell the cooks to get fresh hot food working. You turn the air conditioner warmer. You tell the bartender to remake those drinks. Then you get right out there to the dining room and visit that table and grovel for a while. What exactly does Steve do? He does what he was trained to do by almost every restaurant I know of: tell the manager. This is followed by doing absolutely nothing, except perhaps to complain about the table to his coworkers. At what point does Steve have freedom to act? Is he allowed to fix these problems himself? Do you let him? Do you trust him? And if that answer is no by the way, why do you let him continue to be the face of your business to the public?

Okay. I do admit that, yes, someone else other than Steve has to fix the A/C issue. But Steve’s freedom to act on everything else is up to you. Is the culture in your workplace “I got it”? “I” meaning you in this example. Or, is it “What have you done to fix things so far, Steve?” Do you let him ring up the new food first to expedite time, and to offer the guests some soup or a salad “on me” so they do not sit hungry and unhappy at an empty table? Can Steve ring in another round of drinks without checking with you first? If not, why not? If it’s a theft issue, remember what I just said: Steve “rings up” everything. He just doesn’t “ask” the bartender or cook for it. There is an accounting control there. You must remove it from the bill later, before it’s presented. Financial risk: minimized. Steve: empowered. He is in control, like an owner of his table and all that happens with it. Steve is then an entrepreneur in a most basic description of the word: “Entrepreneurs take initiative, accept risk of failure and have an internal focus of control”-Albert Shapero, 1975. Steve has been trained and allowed to take care of the guest first, then inform the manager, and worry about the rest later. So when Steve goes back to the table he doesn’t say “I’m sorry. A manager will be over shortly.” Instead, Steve says “I’m sorry. This is what I’ve done to make things right for you… “

Answer these simple questions. In which situation does Steve feel important, needed and successful? In which case is Steve given the ability and flexibility to use an entrepreneurial mindset? More importantly, in which situation would you like to be that guest?

You might be saying “But that wouldn’t work in my restaurant.” Really? Why not? Truths are timeless. Here is one you have probably already heard: You’re either growing or dying. It’s true of people. It’s true of plants. Managers need to allow people to grow. Yet, you can’t nurture people to grow, develop, and become better if you do not have a system and culture in place that permits it. You’re either growing or dying. There is no staying the same. People who say “I want things to stay as they are” just don’t get it. They’re too comfortable. The only time people are comfortable is when they are not doing anything new.

Give your employees the freedom to act beyond the boundaries of “normal”. Allow them to be uncomfortable with the “new normal”. And they will grow. Will Steve be uncomfortable taking ownership of “problem tables”? Yes. Will he feel empowered after a few successes at it? Definitely. And if he fails, will you support him, coach him, and retrain if necessary, or will you just say “You tried really hard, Steve. Nice job.” Then give him the same trophy as all the other kids got at the end of soccer season?

There are many of you reading this that will be saying this is too simple to work, or it can’t be done, or blah, blah, blah… ” Apparently, you might just be too comfortable with the status quo yourself. People are always comfortable setting repeats, not records. You have to take a leap of faith.

Managers manage in the moment. Leaders develop, learn, teach, and grow for long term impact. They take risks. I challenge you to find it in yourself to be that leader, to get out of your comfort zone. Become an agent of change, and improvement, for your employees. Become an entrepreneur yourself. “Entrepreneurs are innovators who use a process of shattering the status quo… “-Joseph Schumpeter, 1934. Truths are timeless: If you don’t exhibit leadership and do it, your employees won’t exhibit leadership and do it. Then, someone else, perhaps your boss, might just be looking at you someday, thinking “This business needs to grow and to perform at a higher level. And that manager is just too attached to being comfortable to try anything new. He could be such an impactful leader, but he’s not. I see more in him than he sees in himself.”

Let that not be you.

Preventing Accidents in the Food Service Industry

The food service industry is one that uses varying techniques from the most careful, handmade produce to the heaviest of factory machinery. With such different production techniques, it is important that food service workplaces comply with health and safety regulations in order to reduce the number of accidents that employees are likely to have whilst at work. In the UK, the food service industry alone loses almost £2 million every year on accidents in the workplace caused by slips, trips and falls, injuries which cost businesses as a whole over £800 million every year. This is a massive amount to have to spend on accident s that can be easily avoided.

The issue has been recognised by the Health and Safety Executive (HSE) which has recently launched a hard-hitting campaign named Shattered Lives. It aims to raise awareness of the human and financial suffering that these minor accidents can cause and gives guidance and help on how to prevent injuries from falls at work.

The programme has been supported by small and national businesses who want to reduce the amount of money they spend on employee’s injuries each year. Practical and low-cost improvements to the workplace are suggested so that the number of preventable slips trips and falls decrease. The food service industry is just one sector backing this campaign in the hope that employees will be safer at work. Although slips, trips and falls may sound minor, the consequences for those injured can be devastating. That is particularly the reason why the campaign has been names ‘Shattered Lives’. Having to stay of work for weeks, needing medical help, losing your earnings, all of these factors can devastate the lives of ordinary people. But it is ordinary people that these incidents are most likely to happen to.

The food service industry is taking action against preventable accidents in the workplace and this will have a quality effect on their produce.