Services Marketing: 4 Unique Challenges in Selling the Invisible
Accountants, law firms, IT consultants, educational providers and numerous other businesses make a profit from selling an idea, a process and the people behind it. However, selling a service poses a unique challenge for providers: how do you sell the invisible?
Aside from intangibility, service providers also need to address how inseparability, variability and perishability affect client perceptions during the sales and service delivery process. By understanding the unique characteristics of selling a service, providers can begin to establish client relationships, mitigate engagement risk, create differentiation, and choose the right tactics for promoting their businesses.
Since services lack physical presence, their quality and value can be hard to assess. A client won’t be able to fully appreciate a service’s worth until after it has been performed. In some cases, there can be an extended gap between buying and receiving a service. For example, the service aspect for someone who’s purchased home owners’ insurance will only be activated once they file a claim.
This can be disconcerting for potential buyers, as we typically base our buying decisions on tangible attributes, such as touch, composition, colour, quantity and/or size. By comparison, consider the thought that goes into hiring a lawyer, accountant or even a contractor for your home. Aside from price, the most important criteria might include recommendations, reputation and personal connection – all unquantifiable attributes. With less concrete criteria on which to base their decision, services’ buyers assume a larger risk and tend to feel less confident in their purchasing decisions.
To sell services, companies need to reduce worry and build confidence in their buyers. A great place to start is branding. A strong brand identity that emulates a company’s defining qualities can offer a sense of tangibility. It’s also important to ensure that branding and messaging stays consistent across channels and media, as it speaks to the company’s dedication to detail and quality.
The concept of “show, don’t tell” is integral to effective services marketing. Client references, case studies and testimonials are all powerful ways to communicate your value to potential buyers and build rapport. Services businesses can also build confidence by offering insight and perspective on their process and people. Blogs, white papers, and articles are a great way to demonstrate the knowledge and expertise of your people and begin to build client relationships.
However, tangibility needs to extend beyond branding and promotional material. Marketing represents the voice of the customer in an organisation, thus it plays a crucial role in understanding the clients’ perception of quality and influencing service delivery design.
In most cases, the delivery of a service can’t be separated from its consumption. For example, when you receive a haircut, it’s delivered to and consumed by you instantaneously. In contrast, if you buy a burger, you may consume it a few hours later. This poses two unique challenges for providers.
Firstly, clients have a front row seat to the production of the services. So, it’s important to carefully manage the production process to ensure a quality experience. Take for example, the growing trend of open kitchen restaurants, which put diners in the thick of the action. Not only can diners see how and where their food is being prepared, but also the personal interactions that occur between the kitchen staff.
Secondly, clients may have specific expectations in how their service is delivered. Restaurant guests most likely expect their servers to be friendly, attentive and armed with a wealth of knowledge about the food and wine they serve. Depending on the restaurant, they may even expect a certain chef to prepare their food. This can make it challenging to assign the correct staff, manage the end-to-end process and ensure customer satisfaction.
People are a core part of the service delivery process, so it’s important to recruit the right individuals. Strong employer branding can help attract the right talent, but marketing’s impact should integrate with human resources. Just as traditional marketing can help turn prospects into customers, recruitment marketing can help covert candidates into applicants by ensuring the right messaging, channels and tactics are employed.
To manage successful delivery in the face of inseparability, providers need to find elements which can be standardised across the process. A great place to start is with a service blueprint, which describes the details of the service delivery process. Though every customer will have a different experience, you can ensure that same standards of quality are applied to each service.
Products can be homogenous and mass produced, however the same is not true of services. Services are consumed and produced at the same time and delivered by people, which means the process is never exactly repeated. For example, let’s say you take a taxi from the airport to a hotel, and again from the hotel to the airport. Even though the service is similar, the quality will be affected by factors such traffic conditions, weather, route and the driver.
This variability in service delivery can make it hard for providers to build and maintain client trust. Since so much of service delivery is based on human interaction, it also can be risky to have multiple people engaging with a client. As an example, a client may build a relationship with sales person, but then be transferred to a project manager to handle implementation of the service once the deal has closed. The client has already established trust with the sales person and may not connect as well with their new contact, putting the relationship at risk.
To overcome the challenge of variability, service providers need to find the optimal balance of standardisation and personalisation. One way you can achieve this is through standardised service offerings. As an example, Xero offers its accounting software-as-service in three standardised packages: Starter, Standard and Premium. By standardising its offerings, Xero limits its service variability by denoting specific deliverables and levels of quality. At this point, variability can become a point of differentiation, by providing customisable software and personalised support.
To further ease clients’ qualms about trust and quality, consider establishing a customer advocacy programme. Research shows that people are more likely to buy based on positive reviews and references. Integrate customer success stories into your marketing strategy and give customer advocates a platform for sharing their stories. You also can develop incentives to encourage customers to leave positive reviews online.
Unlike products and goods, services cannot be stored, saved, returned or resold once they’ve been used. Essentially, the value of a service vanishes once it’s been rendered. Consider that airlines can only sell seats prior to departure. Once the plane departs, the inherent value of an unsold seat is lost.
Perishability can greatly impact a provider’s performance since it can be hard to balance supply and demand. Demand for service may vary based on a variety of factors, such as time of day, season and business cycle. For example, to offset higher demand, a hotel might hire more staff during tourist season. Yet, during periods of bad weather, the hotel may be overstaffed. As demand fluctuates, it can be challenging for service providers to main high performance levels.
Perishability presents two main challenges: distribution and pricing. For many service providers, demand can be managed through appropriate scheduling, such as reservations at a restaurant. On the other hand, increasing supply can be managed by outsourcing, seasonal hiring or adding additional locations.
When it comes to pricing, demand-based pricing structures can be implemented for highly time-sensitive services. This is often seen in the airline industry, as the price of a flight fluctuates with demand. Providers also can use retainer agreements to better balance supply-demand challenges. Typically used for long-term, consultative services, retainer agreements allow you to provide more consistent service while also establishing a predictable cash flow.
What’s right for you?
Just as every service interaction is unique, so is every service provider. Understanding the factors of services marketing can help you re-think how you approach the delivery process, customer interactions and marketing tactics. However, the important factor is finding what’s right for your business and clients.
Need some help determining the right approach for your business? We’re here to help! Feel free to get in touch with us for expert advice on marketing your services business.