The term "value added services" is used to refer to options that complement but a core service offering from a company but are not as vital, necessary or important. This term is used in many industries, most notably the telecommunications industry. Value added services are often introduced to customers after they have purchased the core services around which these ancillary offerings are built.
Costs
In some instances, a value added service is something extra that is provided to a customer at no additional charge. At other times, the ancillary service is offered to an existing customer for an extra fee. The actual pricing structure for a value added service usually depends on whether the provider sees the service as an amenity that is intended to create a stronger rapport with customers or as a source of additional revenue.
Telecommunications Example
One of the easiest ways for one to understand the concept of value added services is to look at the nature of audio teleconferencing services. The core service provided with an audio conference call is the ability for multiple attendees to participate in a single telephone conference. Several non-core services also can be offered to complement the basic conference call, enhancing the desirability of the core service.
With audio conferencing, value added services such as an operator-conducted question-and-answer session, polling services and the ability for the moderator of the meeting to initiate a sub-conference with specific attendees are routinely offered. Other non-core services such as transcriptions, on-demand dial-in formats and audio recordings also help entice customers to sign up with a particular conference call provider. From this perspective, value added services can be viewed as ways to attract and hold onto clients in a very competitive industry.
Other Industries
It is not unusual for other types of businesses to offer some types of value added services to stand out from the competition. An Internet Service Provider might provide its subscribers with multiple email addresses or the ability to store digital files online, for example, whereas other companies might provide only one email address and no online storage. A house cleaning service might provide a free drapery cleaning to customers who orders carpet cleaning services for a certain number of rooms. Pesticide services might give their customers free inspections at specific intervals in exchange for contracting their services for a certain number of years.
Benefits
Value added services provide advantages for both the customers and the service providers. Customers have the opportunity to receive something above and beyond their basic needs. Providers benefit from an increased rapport with the client, which could translate into more revenue. These additional custom services often cost the company little extra but have the potential to significantly enhance the growth and the reputation of the company.
