More and more companies offering professional services are entering the market. The main goal of such businesses is to serve customers’ needs. Managing a service business is no easy task.

But an industry surge of service-based businesses brings rapidly evolving and changing standards.

A lot of factors go into making a service business successful. Marketplace changes and other unforeseen circumstances can make it difficult to know how to manage a service business effectively.

For example, many management techniques and tools are geared toward product companies instead of service businesses. What are some effective ways to manage a service business?

How Do You Manage A Service Business?

A product business is simpler than a service business.

When a company offers a tangible product, the costs are largely tied to the design and construction of the physical products and the sale of such to the end consumer.

The customer base is more defined under that business model. A certain subset of customers will either desire or decline the product, and your sales team can generally pinpoint the tangible benefits of the item.

A service business, on the other hand, must focus on the customer experience. Delivering a service involves addressing customer needs in a creative and repeatable way.

Handling their human resources – employees – is another aspect that the leadership team of a service business must address. Service companies tend to be more employee-reliant.

Sales, account managers, field technicians, and company support personnel have the potential to interact with customers and will add to or detract from customer satisfaction.

Service Business

Essential Elements Of Managing A Service Business: 5 Solutions For Business Growth

Consider five key areas where service business management can work to improve organization growth. Following these tips can help a service business today succeed even in a competitive market.


1: Data Tracking

Service companies generate and collect data on every job and with every customer interaction. Data tracking provides the most value when it is used to orient company strategy.

Here are some effective software tools that service businesses can benefit from:

  • Relationship management software can help a service business understand the makeup of its customers and the industry in general. See potential leads, review service history, record customer interactions, and create quotes from one pane.
  • Reporting dashboards can reveal trends in spending and gross profit. It may show where money flows in the client acquisition process. Cash flow stats and bottlenecks that contractors face help to streamline the services you give your customers.

Service managers may find that their business can provide great service in some areas. But it’s probably only possible to be the best in some areas. Every organization must choose its focus.

Limited resources, costs, and other factors will force management to choose whether their forte will be customer service, convenience, price, or other factors.

Data tracking will help your service business understand what it does better than other businesses and improve it further.

Please don’t fall into the trap of thinking that your service company can excel at everything or it may end up not being outstanding at anything.

2: Customer Nurturing

A service company relies on its customers. You have more potential for repeat business, more online reviews, and friendly referrals when exceeding customer expectations.

Customer satisfaction is one of your greatest assets. Build relationships with clients every step of the way – from the very first contact to the follow-up after the sale.

Companies that develop good user experience methods may manage to gain a customer for life.

3: Accountable Marketing

Service business management must stay hyper-aware of its operational activities. Good managers understand what the break-even price is on booked jobs.

They should know their billable hour efficiency – the ratio of how many hours worked compared to the number of hours that can be billed.

Try to find ways to fund your business and keep costs down:

Set your prices at a level that is easy to swallow

Refrain from nickel-and-dime your customers for every aspect of your business, leading to frustration and a feeling that you are being overcharged for services.

For example, a store wouldn’t charge customers for evening and weekend visits. But they may need to charge more for certain services to cover the cost of additional employee hours.

Think creatively! This is a puzzle that begs to be solved. Often the most creative solutions are the best ones.

Invest in yourself

It can be painful to pay upfront to invest in your company. The uncertainty is real. But the payoff can be worth it. Many times, spending now can lead to cost savings later.

Take the future into account when considering where to invest. A risk-benefit analysis can show your team where long-term savings will be realized.

Customers as Employees

Think of ways to lower expenses by getting the customer involved. Some savings can be realized when the customer works for you instead of simply being a consumer.

Self-service options that allow the customer to take on some of the work in the process are attractive. This can lower costs that need to be added to your bottom line.

Get it right the first time, no matter what methods you choose to track your spending and savings.

Nothing will irritate customers more than having pricing change over time. This requires a lot of forethought and planning to limit changes as much as possible.

4: Cost Calculation

A service industry must be fully aware of business spending, how many calls are needed for job profitability, and identify key performance indicators.

They will have an easier time maintaining efficiency and reaching profit goals. But this calls for a heavily researched examination of every step in their business model and sales cycle.

A service business should employ tools for managing employees’ time and focus on the goal of process optimizations.

Things that influence company costs that should be reviewed regularly include:

  • Organizational objectives – What is your business’ long-term goal? Increase demand for your service by setting reasonable prices that beat competitors. Keep customers happy by focusing on the user experience.
  • Legal and regulatory issues – Outside costs, such as licensing, insurance, and industry mandates, may need to be factored into the cost of business.
  • Competition – Consider your competing companies’ policies regarding price. It is okay to have a higher price than a competitor as long as the value of your service is also higher.
  • Internal expenses – Costs like employee payroll and other budgetary limits must be observed and balanced.

5: Proactive Execution

Be proactive in managing your service business. Identify your strategy well ahead of time and work on forecasting potential obstacles.

Be aware of opportunities to develop a new process to offer additional services. Or find ways to add new value to existing services.

Think about some ways you can be proactive in the way you manage your service business:

Leverage the power of Technology

The proper use of Technology can help a business to have an edge.

Identify market disruptors – technologies that will highly affect the market, like voice search and IoT. Research how they can be integrated into your business offering or processes.

Make appropriate Technology available to your employees too.

Businesses can gain valuable efficiency when field reps can digitally sign contracts or management personnel can remain in communication even when away from the desk.

Choose the right Employees

Look for employees that make a good fit with your service business. The employees you hire need to be proactive too.

Search for people who are dependable and honest. They will add value to your company culture and set a good example for others with their focus on customers.

Interview new hires with the intent of highlighting these personality traits by including behavioral questions.

This can help you select well-rounded people who are competent at their job duties and a pleasure to work around.

Observe your Competition

Understanding other businesses and what makes them successful can provide valuable insights. Review their approach and identify weak points like gaps in their services.

Your business will often benefit by copying competitors’ tactics while avoiding their missteps. Learn from others’ mistakes!

Listen to your customers

Customers like to have their voices heard. When customers speak, listen! Seek their input and feedback, and be ready to adjust your processes to meet their needs.

Use focus groups and follow-up surveys to get customers talking. They might give you precious information on what motivates them to purchase services.

Ask questions like:

  • How was the service you received?
  • Why did you choose our business?
  • What challenges did you face in the process?
  • What is the most important thing to you when shopping for this service?

A service business can become highly successful when they take the time to implement the right Technology and tools. And they will benefit from having the right people on staff.

Pay attention to your competition and your customers to find ways to improve your management style and service offerings.

service businesses

Making Service Businesses Successful

Track your data well. Build relationships with customers and cater to their needs. Be responsible with your money and pay close attention to the costs of running your business. Be proactive.

You can exceed expectations and create happy customers when you follow these steps to managing a service business.