A new trend is emerging in the service industry. Attorneys, event producers, real estate firms, language translation companies, architects, cleaning services and even electrical contractors are beginning to differentiate themselves with technology. We’re calling it the tech-service hybrid.
Each industry uses technology differently, but they’re united by a competitive advantage that relies primarily on software to make a service offering more unique. The result is a service business that’s easier, faster, cheaper and more effective for their clients. And they’re leaving their competitors in the dust.
But why tech, and why now?
Service businesses existed before humans invented currency. There is a very mature, price-sensitive market for low barrier-to-entry services like dog-walking, but services requiring higher education, expensive equipment or years of experience have historically enjoyed insulation from pricing pressures.
Any master craftsman, attorney, financial advisor, business consultant, or real estate professional will confirm that those days are over, and competition is at an all-time high, resulting in bigger price squeezes than they could have imagined when choosing a career path. The backdrop of a more competitive market is the struggle to pay back exorbitant student loans and carry expensive professional insurance policies. Needless to say, monthly cash requirements are high, and winning customers at a reasonable price point becomes harder with every graduating class willing to work for less.
Enough gloom and doom; the smart professional service providers will save themselves from this fate. The trend is to forego the crushing expense of yet another meaningless masters degree and instead actively differentiate themselves to capture more of the market, and increase profits. Today’s barrier to entry is no longer education, it’s technology.
This is where technology enters the picture. Younger consumers don’t want to do business “the old fashioned way.” The new-age customer seeks service providers that “get it,” and understand the new demands of our time.
Tech-Service Hybrids DO NOT rely on out-of-the-box software, or publicly available technologies to set themselves apart. They are creating custom web and mobile applications that become a proprietary businesses asset. They use out-of-the box web and mobile technology for other reasons, but understand that only custom tools unavailable to competitors will differentiate them.
The size of tech-service hybrids varies to a surprising degree. Many are large, established companies with tens or hundreds of millions in revenue. But companies with a handful of employees are also trying to claim a bigger share of the market by integrating custom technology into their workflow. I anticipate that many of these smaller companies will be shaking up their industries and gaining ground on larger competitors.
Regardless of company size, service companies should be aware of the rise of the tech-service hybrid. The service industry has gone too far to turn back now, so we’d better embrace the change.
