SBP 11c: What We Value Today

This principle occurs because customers do not inventory services (although they may inventory the result of the service). For repeat purchase services, customers usually present their inputs each time they need the service.

Recall from the Swaying the Customer-Judge Service Business Principle that need-filling and sacrifice define value, which forms the basis for customer purchases. Customers would prefer to have their needs filled with lower sacrifice, such as by quantity discounts. However, many services can only fill the need that occurs at the time of service delivery. This makes it difficult or impossible to take delivery of the service for future needs. Service providers who desire to attract customers based on their anticipated future needs should provide the opportunity for customers to purchase the service now and take delivery later when the need is present. One way to do this is through a service contract.

Copy machines is a great business to be in. Manufacturing copy machines may or may not be highly profitably, but fixing copy machines has got to be extremely lucrative. This is because of the way people often treat copy machines, and how the machine complexity brings a high probability of breakdown. Companies who own copy machines can count on needing periodic repairs in the future. How can copy machine repair companies get their customers to purchase repair service in advance. The common way they do this is by establishing service contracts. A service contract may cover all copier repairs over a certain number of months or for a certain number of copies. The companies can potentially save money when disaster strikes, and the copier repair companies can enjoy a lasting relationship of customer service.

Airlines realize that passengers typically do not take a flight until they have the need to fly. This allows them to offer price promotions during the slow times of year without significantly cannibalizing the sales during the busy times of the year. (Although some passengers who are flexible when they travel might shift the day of their flight somewhat to take advantage of a promotion.)

Some airlines sell coupon books for first-class upgrades. These upgrades are intended to be used over time, and are effectively an opportunity to defer delivery of the first-class flight.

With manufacturing, customers purchase and store the goods so they can be used to meet both present and future needs.

1. How does the customer know when he or she needs the service?
2. How difficult is it for the customer to anticipate future needs for the service?
3. Is there any advantage to having customers purchase the service for future needs?
4. What sacrifice does the customer make to have his or her needs filled?

Design a mechanism for allowing customers to purchase a service in anticipation of future needs. How would it be executed (such as with a service contract or a coupon book)? Would such an arrangement bring advantages to the service provider? What advantages would there be to the customer?