Customers value services in a significantly different manner than traditional software products. Customers judge the value of the service in terms of Service Quality. Traditional service industry, which has been around for quite some time :), can provide valuable insight into customer perception of service quality. In Delivering Quality Service: Balancing Customer Perceptions and Expectations by Valarie A.; Berry, Leonard L.; Parasuraman, A. Zeithaml (Free Press, 1990), the authors present the relative importance of five dimensions of service quality from customer perspective based on service industry research. I think this research, although it predates S+S, is still very much applicable to S+S/SaaS space.

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· Reliability: Ability to perform the promised service dependably and accurately

· Responsiveness: Willingness to help customers and provide prompt service

· Assurance: Knowledge and courtesy of employees and their ability to inspire trust and confidence

· Empathy: Caring and individualized attention

· Tangibles: Physical facilities, equipment and appearance of personnel

If you interpret these results in the context of S+S/SaaS, reliability of the service (which reflects technical quality) is most important but can get us only to the one-thirds the way to delivering quality service to customer. Rest two-thirds (which is process quality) journey of delivering quality service to customer is all about supporting the delivery of the service (“how” to deliver as opposed to “what” to deliver)!!! This finding matches with another service industry finding that only 30% of incidents that prompt customers to switch service providers are related to “core service failure” or technical reasons. 70% incidents are related to service encounter failures which are related to how companies interact with the customers.

So in S+S/SaaS business model (esp. subscription-based) where you live and die by CLV (Customer Lifetime Value), process quality features of the service play very crucial role in successful service offerings. These process quality features have to be designed from the start (along with the technical features) and not as an afterthought.

These findings are of significant importance for any software company that wants to be a service provider as well and be successful in that business.