Technology-driven service strategy

Advancements in technology are radically transforming service, and increasingly providing the underlying basis for service strategy. In this paper, we develop a typology and positioning map for service strategy, in the context of rapid technological change, and outline the process for firms to position or reposition their service strategies. Which strategy to choose is based on the degree to which customer demand is heterogeneous, and the degree to which potential customer lifetime value varies across customers. This results in four strategies: the McService strategy that is standardized and transactional, the Relational Service strategy that is standardized and relational, the Customized Transaction strategy that is personalized and transactional, and the Adaptive Personalization strategy that is personalized and relational. We provide firms a roadmap for identifying a “sweet spot” strategy in relation to a segment’s realized or potential customer lifetime value, combined with the firm’s technological capabilities. Because technological capabilities inevitably advance, firms will tend to move from standardized to personalized and from transactional to relational over time, implying that firms should be alert to technological opportunities to personalize their relationships with customers. Our strategic framework also produces a useful bridge from marketing practice to the conceptual evolution of the service literature, showing how the historical trends toward continuing customer relationships and co-productive personalization should drive strategic thinking in service.