Growing Negative Services

Negative services — those that are needed in emergencies, when problems arise or to ensure against unwanted outcomes — are part of most businesses and central to many. Their very nature presents unique growth challenges.

When people hear the word services, they often think about offerings that are “neutral” or “routine.” They conjure up familiar experiences that they navigate regularly — for example, dry cleaning, haircutting or lawn care. Such services are distinct from the types of services people aspire to use, such as those associated with travel and entertainment; for classification purposes, these might be labeled “positive” services. However, there is a third type of service, which is not often considered or particularly well understood. We refer to these as “negative” services because they deal with events most people hope they will never have to deal with — things such as toothaches, leaky roofs or collision repairs.1 Whereas much of the writing about services has looked at the nature of the activity (for example, whether it is tangible or intangible) or has examined the activity from the provider perspective (for example, in medicine, whether the need is acute or chronic), we take a customer viewpoint. (See “About the Research.”)

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References

1. We first introduced this classification for service industries in our article “Making Routine Customer Experiences Fun,” MIT Sloan Management Review 45, no. 1 (fall 2003): 93–95.

2. D. Kahneman and A. Tversky, “Prospect Theory: An Analysis of Decision Under Risk,” Econometrica 47 (1979): 263–291; A. Tversky and D. Kahneman, “Advances in Prospect Theory: Cumulative Representation of Uncertainty,” Journal of Risk and Uncertainty 5 (1992): 297–323; and D.A. Redelmeier, P. Rozin and D. Kahneman, “Understanding Patients’ Decisions: Cognitive and Emotional Perspectives,” Journal of the American Medical Association 270 (1993): 72–76.

3. C4 is the percentage of market share held by the four largest companies in an industry.

4. “Sears Targets Growing Home Services Market,” Do-It-Yourself Retailing 173, no. 5 (November 1997): 21.

5. “Watch Out for the ‘Service Side of Sears,’ ” Air Conditioning, Heating & Refrigeration News, April 5, 1999.

6. M. Troy, “Building Out-of-the-Box Revenue Streams,” DSN Retailing Today, May 11, 1998, p. 56.

7. In 1997, for example, services made up 8.4% of sales but 16.5% of operating income (Troy, “Out-of-the-Box”).

8. The firm’s first airport rental office was opened at Denver International Airport in 1995.

9. See “Enterprise Rent-A-Car Fact Sheet,” n.d., http://aboutus.enter-prise.com/press_room/fact_sheets.html

10. H. Harreld, “Pick-Up Artists,” CIO, Nov. 1, 2000, 148–154.