Some services start in the premium range, then face competition as other service providers develop the audacity to match the offering at a lower price. Take the airline industry for example. There are few things as audacious as flying passengers and bags at over 500 mph, over 35,000 feet, for more than 10 hours nonstop, and very few people who have the need to be somewhere far and quick, own private jets. In other words, they have high propensity. Low-fare airlines have forced legacy carriers to introduce the basic economy fare. In return for paying a very low price, passengers don’t get to pick seats, board last, and cannot use the overhead bins for their carryon luggage.

At the same time airlines such as Lufthansa and Emirates are expanding on their premium offerings. Emirates have the audacity offer first-class suites with turndown service, a selection of food and wine from Michelin-star chefs, and shower facilities on their Airbus A380. Why?

Propensity and audacity establish the possibility for a service. The quality of outcomes and experiences, influence the actual pricing within markets and segments. Customers and service providers expect payoffs and payments. Users and agents expect the service to be easy to use and easy to deliver.

quality of experience = pleasure/pain

quality of outcomes = payoff/payment

The quality of outcomes is really about the benefits of gains that flow from fulfillment. It depends on timely, complete and accurate performances and affordances. There are two types of gains. Real gain and effective gain or avoided loss. Entire services, such as those in security, healthcare and insurance, are about preventing loss. People tend to pay a lot more to avoid a loss than they would for an equivalent amount of gain. Did they start and end on time? Did they produce the desired effect for artifacts and events? Was the effect within the acceptable margins or tolerances? Delays diminish the value of payoffs and payments.

Posted by:Majid Iqbal

TL;DR I bring clarity to the concept of a service.