Jessie Paul on Services Marketing For a FlatWorld

Saturday, February 16, 2008

Is a TV a product or a service?

Did I hear you say duh? Hear me out. Any complex product today has a large service component built into it. So if you buy an iPod, you also hope to be able to use iTunes which is a service. (different matter that iTunes can't be used in India though people buy the product anyways). If you buy a car, you hope that they will do a good job of maintaining it for you, which is again a service. If you buy a credit card, you expect that if you lose it or it gets stolen the card company will ensure you don't get robbed of your money, and will replace the card quickly. And if you buy an apartment, you expect that if the roof leaks it will be taken care of immediately. And, coming back to my original question, if you buy yourself a $4000 TV with all the bells and whistles, you sure expect that if it conks it will be serviced in a day or two.

But today, not many manufacturers are selling their goods on the basis of their superior service. Read any car magazine and while it will drill with agonizingly nerdy detail into features such as torque or mileage, it will spare barely a moment on how long it will take for you to get a servicing appointment, or get a spare part. Similarly, when you buy a TV there is a whole bunch of gobbledygook on the virtues of Plasma vs LCD vs HDTV but nothing on how long it will take the company to replace the PCB when it blows two years down the line. Contrast this with a "pure service" company like say IT or BPO. It has to clearly define its after-sales offering and set up things like Service Level Agreements (SLAs) which determine how long it will take to rectify a bug. Or even hotels - they are up-front about the services they offer - 24-hr concierge, room service, valet parking etc in the same breath they talk about their rooms.

Of course, part of the reason manufacturing firms don't yet think like service firms is because the consumers are not forcing them to. And I am as naive as the next person. When I bought an LG Plasma TV a couple of years ago, we checked out picture quality and features and never thought much about their service lead was truly a surprise to discover that they need constant follow up and can take a week to replace a faulty part. Ditto with our 5 year old GM car - but their authorized service center moved considerably faster and replaced the defective part within 3 days. Faber took just 2 days to replace a defective part. Of course today Annual Maintenance Contracts are available for many products, but even they rarely have time-based SLAs. But wouldn't the industry landscape start looking different if customers demanded SLAs for product services before buying?!

I think that as services become an ever greater part of products, this could happen. And then along with energy ratings and eco-friendly certifications, there will be "customer-service" ratings posted on every product! This is all the more important because products have an ever shorter window of being unique so what matters more is its survival rate in the home. Yes, the replacement rate of products is considerably higher, but this makes it all the more important that a company supports its products through its considerably shorter lifespan, so that customers will continue to upgrade with their brand.