Business services are activities that benefit companies without supplying physical products, and they typically cover a broad range of aspects of the commercial world. Large firms often rely on these services for marketing, production, safety, cost and convenience purposes.

The service industry is a major component of the economy, covering 11% of EU GDP and employing over 10 million people across Europe. While the industry faces relatively low average productivity, persisting legal barriers and challenges of cross-border expansion, EU internal market legislation and policy actions aim at boosting growth potential for this sector.

To build a profitable service business, managers need to get four key elements of service design pulling together or risk pulling the whole thing apart. The core of the approach is the “service model,” a way of thinking about service that recognizes that service businesses are very different from product businesses in many important ways.

One critical point is that the value of a service is intangible and cannot be expressed as physical goods, unlike products. That’s why it’s so difficult for service-oriented businesses to describe themselves and their work in the same way that product-oriented firms do.

Another significant difference is that, in a service environment, the customer is a partner, not just a passive consumer. The customer’s experiences and input can affect both the quality of the service and the operational efficiency of the business.

Typical service-oriented businesses include architecture and engineering, information technology (IT), healthcare, hospitality, retail, manufacturing, transportation, professional services, and telecommunications. They produce goods and services for a variety of customers, ranging from large corporations to small start-ups.

Some service-oriented businesses are purely specialized, such as architectural services or software development. Others are multidisciplinary, such as insurance and legal services.

There are also numerous services that are marketed toward customers, such as travel agencies, resorts and resort-related services, adult education courses, guide services, golf clubs, health clubs, and pet grooming. These service-oriented industries have experienced increasing demand due to a number of factors, including increased affluence and leisure time for some segments of the population.

As a result, these industries are constantly looking for new ways to grow and adapt. They are increasingly utilizing digitalization to meet the needs of their clients, and they are investing in a wide variety of technological solutions that can help them stay competitive and adapt to the changing dynamics of the marketplace.

A third point to note is that a service business has no physical product or tangible asset to sell, but instead delivers a process or experience that benefits the customer. That’s why a service business can deliver better results than a product business that manufactures tangible products.

To be a good service-oriented business, a company must understand and implement the four critical elements of the service model: that the service is intangible; it must be designed to maximize value; it must be delivered by a team of experts with strong customer focus; and it must be based on the right organizational structure and processes. These four critical elements of service design can be difficult to grasp, but they are essential for creating a successful service business.