5 Keys to Service-Based Business Management

A hospitality professional greets a guest at a hotel check-in counter.

How a business markets to consumers varies depending on whether it’s selling a product or a service. Those providing services face unique demands for success and growth.

Product-based businesses market items that customers can purchase and use. The clear benefit to customers is that they now own whatever it was they needed or wanted. Service-based companies, on the other hand, advertise to those who need specific services that they either can’t or don’t want to do themselves.

Service-based industries also differ from product-based operations in that services are intangible, perishable, and not easily separated from the service providers. Business professionals who work in service fields are primarily in business to offer their skills and knowledge. Any physical products they sell are incidental or secondary to the service itself.

To succeed in a service-oriented business, students pursuing an Online Master of Business Administration (MBA) degree should understand how management of a service business differs from leadership in a product-based company. Following certain key strategies—from hiring the right employees to tracking business and consumer data—can help increase their chances of success.

What Is a Service Business?

A service business sells services, also known as intangible goods, directly to consumers or other businesses. The service sector of the economy includes fields such as:

  • Hospitality
  • Civil engineering
  • Advertising
  • Rental services
  • Home repair

When considering what a service business is, it can be helpful to think of it as one that provides ideas and actions instead of tangible products. Its results are the outcomes that people experience. Therefore, service-based businesses should think of their products as the experiences they offer to customers and clients.

For example, if a hotel has a reputation for clean, comfortable rooms and lots of amenities, more customers might be interested in staying there. Some customers will choose a hotel with notable luxuries over less expensive options when booking a room.

Service Business Management: 5 Keys to Success

The rewards of managing a service business can be many. But promotion and management of service businesses can be challenging because there’s no specific, tangible product to focus on or evaluate.

By relying on strategies related to staff, customer needs, and competitor research, service business leaders can help ensure they are providing what the marketplace demands. These strategies can be the keys to success in service business management.

1. Hire High-Quality Employees

Seeking out employees who can provide outstanding performance can help prevent staff issues before they begin. Service business managers should look for employees who are a good fit with the organization’s values. Top employees generally exhibit qualities such as dedication and honesty in addition to job-specific skills.

Interviews that include behavioral questions, aimed at revealing personal experiences and history, can help in hiring the right people.

2. Identify the Service Business’s Needs

Service-based business managers can use knowledge of their company’s productivity, profitability, and other data metrics to understand its performance and make adjustments. To get the most value out of this data tracking managers should not only collect the information but also share it with others in the organization to shape corporate strategy and actions.

Investing in technology that assists with tracking and analyzing data that ranges from website visits to financial transactions can simplify the process.

3. Listen to the Customer

Seeking customer input—and adjusting plans for the business’s services accordingly—can help ensure that an organization is adapting to the marketplace. Tools like surveys and focus groups that help managers understand who their customers are, what they want, and what motivates them can provide valuable information. Businesses should ask questions such as:

  • How was the service the business provided?
  • Why did the customer choose the business?
  • What challenges does the customer face?
  • What does the customer look for in this service?

4. Research the Competition

Another key to successful service business management is understanding the competition. Researching competitors can help businesses adjust their strategies and stave off market share challenges. Managers can review competitors’ products and marketing approaches, identifying information such as:

  • Gaps in services provided
  • Biggest sources of competition
  • Approaches to improve marketing messages

5. Seek New Opportunities

Identifying new opportunities can help a service-based business grow and protect it from shifting trends in the marketplace. Another advantage of listening to customers and researching the competition is that the information gained can lead to opportunities such as:

  • Diversifying provided services to protect against changing demands
  • Bringing on new people with innovative ideas
  • Adjusting processes to increase efficiency
  • Adding locations to accommodate demand

How Service Businesses Grow and Expand

In addition to customer service, outside factors also affect service-based businesses’ chances for success. To identify opportunities, service managers should remain vigilant for signs of growth in their industry.

For service-based businesses, growth often begins when a shift happens in the culture surrounding the company. Reference for Business highlights 8 factors that can lead to growth in the service industry:

  • Increased affluence: Raised standards of living increase the demand for luxury services.
  • Increased leisure time: Automation, remote working, and artificial intelligence provide more opportunities for free time.
  • Changing workforce dynamics: Shifts in workplace demographics place services such as child care and housekeeping in high demand.
  • Longer life expectancies: Because people are living longer, health care services are in higher demand.
  • Increased complexity of technology: As technology becomes more complex, the need for repair services will continue to rise.
  • Increased complexity of life: Service businesses that offer legal, financial, or health assistance are in increasingly high demand as these needs grow in a rapidly changing society.
  • Increased environmental awareness: The rising demand for efficient waste and recycling programs creates opportunities for expanded waste services.
  • Increased numbers of available products: Advances in technology and manufacturing mean that services such as programming and engineering are in higher demand.

Managing a Service Business: Strategies Designed with Service in Mind

Taking advantage of these growth opportunities demands strong leadership. The duty of implementing strategies for the service side of any business falls on the shoulders of a company’s managerial staff. Business school students aiming for positions in management should remember that all businesses include an element of service, even if the businesses exist to manufacture and sell consumer goods.

To successfully manage a service business or the service element of a product-based company, leaders should strive to understand their profession and how the business can fend off competitors.

One strategy is to analyze every touchpoint with a customer, ensuring that each aspect of their interaction with the business is positive. Business leaders can also work to increase their employees’ engagement, which affects their performance and the level of service they provide.

Excel at Service Business Management with an MBA

Those looking to lead service-based businesses might consider advanced education as an avenue to gaining the skills and knowledge necessary to grow their company. Washington State University’s Online MBA program is one of the top-ranked programs in the nation. WSU offers an MBA curriculum designed to equip students with the tactics, skills, and strategies employed by today’s high-profile business leaders.

The program offers several MBA concentrations—marketing, finance, hospitality business management, and international business—as well as a general MBA. Explore how WSU can help you reach your business leadership goals.



Breezeworks, “Top 10 Tips for Service Businesses”

Connecteam, “7 Effective Management Tips for Hotel Management”

Entrepreneur, “The Ultimate Guide to Competitive Research for Small Businesses”

Handyman Startup, “Essential Service Business Tips”

Investopedia, Service Sector

Marcus Lemonis Business Learning, “How to Identify Business Opportunities”

Reference for Business, “Service Businesses”

ServiceTitan, “Expert Advice: How to Run a Service Business in 2022”

SmartCapitalMind, “What Is a Service Business?”