There are four central tasks facing managers in the service industry: 
* Managing quality
* Managing productivity
* Managing service staff
* Achieving differentiation

Managing Quality
The single most important factor of a service is its quality. This determines the long-term profitability and market share of the firm. However, quality is very hard to define in the service sector. Many have suggested doing it right the first time or having zero defects, but few have achieved these objectives on a consistent basis.

Firstly, it's hard to measure quality because there is nothing physical to measure. There is no fuel consumption or music power to rate. Secondly, heterogeneity means that consistency can rarely be achieved. Thirdly, the inseparable nature of production and consumption make it difficult for firms to control the quality process. Lastly, the interaction of staff and customers means that customers evaluate not only the outcomes but also in terms of the process or manner in which the service is delivered. The difference can be a smiling waitress as opposed to a frowning one.

Managers have to focus on the determinants of quality as follows;
* Reliability - how consistent is the service?
* Access - is the service easily accessible?
* Credibility - can consumers trust the company?
* Security - is the service free from risk and danger?
* Knowledge - is every effort made to understand the needs of the customer?
* Responsiveness - how willing are employees to provide service?
* Competence - do staff have the knowledge and skills to give good service?
* Communication - does the company clearly explain its service?
* Tangibles - does the appearance of personnel, the facility project an image of high quality?

Customers judge quality by comparing the service with their expectations and performance.
If they perceive that quality exceeds expectations, they are satisfied, or even delighted.
If performance falls below expectations, they will be dissatisfied and are likely to look for alternatives. The expectations of customers are created by past experiences, word-of-mouth, advertising and other forms of communication.

Four problems can cause a gap between what consumers expect and what they perceive they must receive.
1. Management misperception - understanding the important service attributes by    customers
2. Mis-specification of service quality - management are unwilling, unable or simply do not care enough to put resources into solving the problem.
3. Service delivery gap - the problem is recognised, but front-line staff are not motivated or are incapable of consistently achieving service targets.
4. Communication that promises too much - even good service is judged harshly if it exaggerates the level.

Managing service staff
The customer normally meets a wider spread of employees in the service sector. Each contact is a 'moment for truth,' so to speak, in which it is decisively judged.

In goods firms, marketing focuses mostly on external factors but, in services, it is mostly internal. Unless management meets the needs of employees, the organisation will not have staff who buy into the mission statement.

The following are techniques to motivate employees:
1. Employee-of-the-month awards
2. Increase employees' visibility and proximity to customers by allowing them to see and hear how the customers respond to their work.
3. Training and indoctrination to instil a sense of pride in the employees.
4. Peer group control via commitment and team building to reinforce commitment.
5 Appropriate environments, such as equipment and systems, to be able to satisfy the customer.

Achieving differentiation
In achieving a differential advantage there are certain areas to take notice of:

Integrating marketing and operations
In services, managers are usually responsible for marketing and operations. Marketing thinking can often be forgotten by the problems of running a bank, hospital or a large IT company. Use time management systems to allocate time for marketing and operations and avoid trying to do both simultaneously.

Product differentiation
There is no tangible product to compare in services and judgment is therefore purely subjective. The areas to concentrate on when servicing a client should be:
The quality of service
Friendliness and courtesy
Punctuality
Being right the first time
Paperwork in order
Follow up and after-sales service

No patent protection
Service advantages are easy to copy and improve. The advantage is easy to erode and new entrants have few barriers to enter the market.
Keep your systems guarded and protect them as Microsoft does with their operating system. Keep how you operate your company confidential to your staff and management.

Control the customer interface
Consistent performance is difficult to achieve because of the unpredictable behaviour of customers and employees. It is imperative to create systems so that the service is always consistent, like Macdonald's Big Mac. Once you have created an initial system, it can be tweaked to conform to the ultimate service. Naturally, things change so the system must be able to change with time and circumstances.

Growth
Economies of scale in services can rarely be achieved since growth requires setting up small autonomous facilities. Be sure that all your figures are correct before branching out as any new venture can make or break you.

Productivity
Services are hard to automate without driving down service quality. Remember quality, rather than quantity, is the overriding principle to sustainable growth and market share.

Innovation
Innovation is one area where services can differentiate most widely. There is a downside: as with any new idea/invention, there is a learning curve that the client needs to go through but, with adequate communication and user-friendly literature, it should not cause a problem.