What would it take to convince you to pay for services on Facebook? What about LinkedIn? Or Classmates.com?
In today’s world of “try now, buy later” premium models, it’s harder than ever to sway social networkers to upgrade to premium services. There is certainly a recipe for success, but what is the secret to creating a win-win scenario for both the user and provider?
Take Classmates.com, for example. For a social site like this, the study concludes that nonpaying members are much more likely to respond to premium programs that convey economic value, while paying members prefer to see social value from the service. Classmates.com, in particular, offers its All Access Pass to enable direct messages and provide more in-depth information to help users get in touch with old classmates. For those looking to re-connect with their high school sweetheart, or that brawny basketball player from algebra class, the All Access Pass may just be worth the price.
Service innovations are notoriously difficult. It takes decades for innovations to penetrate market. More importantly, managers and service professionals are incredibly slow to react to consumer needs. While many frameworks exist to help us think through innovation ideas, we often ignore lessons learnt from other industries.
The service related challenges in Higher Education and Healthcare are particularly vexing and can benefit from some lateral thinking borrowed from related professional services industries. Higher education and healthcare industries are a significant part of the service economy. According to the Department of Education, total revenues at U.S. public and private universities in 2009-10 exceeded $400 billion (National Center for Education Statistics). According to the Department of Commerce, US hospital revenues exceeded $800 billion in 2010, and outpatient services accounted for another $750 billion (SelectUSA). Clearly, the potential for improving societal welfare by addressing the service delivery challenges in these two industries is enormous!
Many academics, practitioners and entrepreneurs are busy addressing these challenges. However, in my opinion, the focus has been mostly on changing industry structure and funding models. Efforts to improve service delivery in both education and healthcare have been sporadic and limited. Clearly, we need to do more.
In today’s tumultuous global climate, people inevitably face forces or situations that test the limits of their control. Natural disasters, political and economic turmoil can all threaten feelings of control over personal and professional outcomes. Hurricane Sandy or the recent tornadoes in Oklahoma show how people can be strikingly affected and feel a profound loss of control over their lives. Even if not suffering from tragic losses of stability, customers often seek help from service providers for an issue or situation when feeling that things are moving out of their control. A freelance journalist may seek tax advice as her income begins to grow; a start-up biotech company may need larger-scale technology support as it forms new alliances.
In these types of contexts, how can you, as a service provider, best satisfy your customers? After meeting and identifying key issues, is it best to inform the client that you will manage the issue and do all of the hard work, so that the client can relax and entrust the problem to you? Or, is it better to seek the client’s input; perhaps even ask to tackle some of the more difficult tasks with you? Along with a colleague, Keisha Cutright, at the Wharton School, we examined this question at a broad level, asking when people prefer products or services that position themselves as “heroes” (products that will do the hard work for you and deliver impressive outcomes) or as “helpers” (products that will aid you in achieving the same impressive outcomes, but require you to invest hard work). Continue reading →