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Growing Negative Services

April 1, 2006 | Ivor Morgan , Jay Rao | Innovation
When people think of services, they often think about offerings that are neutral or routine. These tend to be services they use regularly -- for example, dry cleaning, haircutting or gardening. However, there is a third type of service that is not often considered or well understood. The authors refer to these as "negative" services because they are related to events most people hope they will not have to deal with: toothaches, leaky roofs or collision repairs, for example. Because the events that trigger the need for negative services are not everyday occurrences, many people are not equipped to diagnose the needs or to make informed judgments about the solutions required; furthermore, even after the service has been provided, most people are in a poor position to judge its quality or the price they paid for it. Negative services are offered by many kinds of companies in many industries, including health care, insurance, household repair, pest control, ambulance use and so on. Companies discussed in the article include Laidlaw International, Multiasistencia Group, American Home Shield, Terminix, Fresenius Medical Care AG, Enterprise Rent-A-Car and Sears. Sears HomeCentral, for example, is an attempt to turn negative services for homeowners into a profitable segment of Sears' overall business. Even companies that are not primarily negative-service providers have negative-service aspects to their offerings. For example, product companies often provide warranties as a means of staying competitive. Companies hoping to build positions in negative services face two major challenges: (1) how to access inexperienced customers who are not in a strong position to evaluate the service being provided and may have a poor idea of its cost and (2) how to organize and deploy their services to meet customer needs when demand is unpredictable.
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