SUPERIOR SERVICE IS FASHIONABLE in the business press these days. From the American Banker to Fortune magazine, service cheer-leaders extol the virtues of investing to improve all types of customer service across industries ranging from financial services to manufacturing. One magazine notes that the rewards of service have never been clearer. Similarly, competitors in every sector are declaring their determination to be first in service. As one division manager said recently, “We worship service. I am considered a heretic if I ever question a service initiative.”Indeed, traditional elements of competitive differentiation are declining. Markets are overcrowded. Competitors imitate product innovations quickly. Proprietary manufacturing techniques are soon diffused throughout the industry. In contrast, service appears to offer an opportunity for positive lasting differentiation, at least theoretically. But many executives are skeptical. They ask: Can companies truly distinguish themselves from competitors based on greater service? Will customers pay for service? In the final analysis, is the payoff from better service likely to be worth the investment?Like most fads, the current wave of enthusiasm for service contains elements of truth.
