Service expense, services diversity and business model innovation

Recent studies on service management mainly focused on service satisfaction, IT-enabled services, industrial transformation, or service-oriented technology. Few studies explored business model innovation strategies from the perspective of service value creation. The purpose of this study is to establish a business model innovation strategy from the perspective of customers' service expense and diversity of services they receive. This is a multiple case study that constructs a strategy matrix using service expense and service diversity for analysis (as shown in Fig. 1); the cases are four listed companies in the domestic service industry, namely Taiwanmobile, Hotel Royal, Lung Yen, and National Petroleum Corporation (NPC). Data is mainly collected from the secondary data of cases and by conducting in-depth interviews with experts, in which secondary data is mainly business models adopted by each company between 2005 and 2014. Data is analyzed at the company level to find their strategy and changes in service expense and service diversity, allowing for further exploration of their business model innovation strategy and development process. Findings of this study are as follows: 1. All four companies moved towards "integrated fee-based services" when the number of their clients were growing, not only extending their customer service value, but also increasing their overall revenue; 2. Taiwanmobilealternated between free service and fee-based service in the service expense aspect of its business model, and actively provided "diverse free services" along with technological developments to create win-win with consumers; 3. Royal Hotel and NPC require customers pay a fixed service fee for their hardware facilities and service personnel, and could only develop towards "differentiated fee-based service" and "integrated fee-based service"; 4. When Lung Yen first entered the funeral industry, its marketing team provided "value-added free services" that helped grow the company's membership, after which it extended to "integrated fee-based service"; 5. All four companies have a membership system to create inseparable specific assets, in which the company and its consumers are mutually benefitted, thus creating stickiness; 6. All four companies need to create "diverse free services" to grow in their severely competitive market.