BY Roland T. Rust AND Carol Miu
WHAT ACADEMIC RESEARCH
TELLS US ABOUT SERVICE
A computing-driven revolution is under way in the global economy guided by the principle that every business must become a service business in order to survive. echnology has revolutionized the way that companies perform
service, enabling the development of long-term individualized relationships with customers. Advancements in computing have allowed companies to improve both profits and financial
accountability by providing high quality, personalized service more easily and affordably than ever before. IT not only lowers the cost of service, it creates avenues to enhance revenue through service. Gone are the days of standardization, mass production, and mass marketing. Academic research has revealed that the service sector is now dominant in every developed economy. The goods sector is shrinking as a proportion of the overall economy; and as goods increasingly become commodities, service is becoming the key differentiator even in the goods sector. Thus, to compete effectively, all companies must become service companies. For over a century, technological development has driven an economic shift from a focus on goods to a focus on service. Innovation is often associated with greater efficiency in the manufacturing of goods, namely decreasing costs through faster and cheaper production and transportation. However, new technologies also have service-related consequences. Businesses can gain information about their customers, competitors, and the product market and use this information to separate
COMMUNICATIONS OF THE ACM July 2006/Vol. 49, No. 7
from the competition by providing services desirable to
customers. Consequently, technological advances have
led businesses to focus more on service and give service
a more prominent role in the economy.
The rise of service in the economy has been reflected
by an explosion of academic research on service. This
research has tended to emphasize different themes over
time (see Table 1 for a summary). In the 1970s the
emphasis was on the differences between goods and
services, recognizing that services had characteristics
that made for new aspects to consider. Research then
set out to understand the unique characteristics of services. The quality revolution of the 1980s resulted in service research of a different flavor—emphasizing service quality measurement, customer satisfaction measurement, and complaint management systems. This evolved in the 1990s into models for making service
financially accountable. At the same time, the advances
in IT in the 1990s resulted in academic research paying increased attention to direct contact with individual customers, storing and analyzing individual customer data, and then using that information to
serve individual customers better. Since 2000, academic research has moved to using customer relationships as a foundation for a new approach to strategy, based
on “customer equity” (the discounted cash flows
expected from the current and future customer base).
This requires managing the customer lifetime values of
individual customers, a topic that has received considerable research attention in recent years. The explosion of service research has been facilitated
by the introduction of several influential academic centers for service research. Notable centers currently include the Center for Excellence in Service at the University of Maryland, the Center for Services Leadership at Arizona State University (see the article by Bitner
and Brown in this section), the Service Research Center at the University of Karlstad (Sweden), the Maastricht Academic Center for Research in Services (Netherlands), and the Center for Relationship Marketing and Service Management at the Swedish School of Economics (Finland). The progress of the service
research field has been accelerated by international con-
ferences—most notably the annual AMA...
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