Marketing services requires a different set of tools than when you market goods. This is because services are different to goods.
When Philip Kotler first defined the marketing mix, he named four criteria; Product, Price, Promotion and Place. Today we talk of the extended marketing mix adding People, Physical Evidence and Process to the mix. These are the service elements of a marketing plan. We apply the extended mix to goods because these days, very few goods are sold without additional services. You do not buy a car, you buy a car with finance, a servicing package, roadside assistance, wi-fi connectivity, a warranty and a host of other additional services.
So what makes services different from goods when delivering them to customers:
- Service Intangibility: Services cannot be seen, or touched, or tasted or smelled. You cannot handle a service before you purchase it. So before you sell a service to your customers you need to transmit signals which declare service quality only then can consumers define service quality.
- Service Inseparability: Services cannot be stored. You cannot have a warehouse filled with spare services. Customers don’t just buy a service; they play a part in its delivery. Services need provider-customer interaction. Both the customer and the provider are affected by the service outcome.
- Service Variability: Even the best actor has a bad performance. Services rely on people. People vary. Their mood varies. A hotel receptionist can be bright and breezy one day and in a bad mood the next. If you staff’s mood can vary, so can your service quality.
- Service Perishability: As stated, you cannot store services. Once a service has started, you can’t add more customers to that service. When a jumbo Jet has taken off, you cannot put more passengers on that plane. When a restaurant sitting has finished, you can’t fill those empty tables. That is why most service firms aim for 100% capacity. that is why package travel firms and budget airlines operate flexible pricing strategies.
So what strategies are suitable for the marketing of services?
The aim of service marketing strategies is to leverage the service profit chain:
- Develop internal service quality through training and improving service standards
- Create employee satisfaction. Satisfied employees leads to satisfied customers
- Develop greater service value
- Encourage increased customer satisfaction and loyalty.
- Leading to better levels of turnover, profit and growth.
This profit chain is an extension of the Kaplan and Norton Balanced Scorecard which has already been discussed in this blog.
There are three main aspects to services marketing:
- Internal Marketing: You need to orientate your staff to your organisational vision and values. You need to support service providers through your admin and support staff. You need a charismatic leadership group. You need to develop a customer centred organisation.
- Interactive Marketing: You need to develop the provider-customer interface. That means dialogue not monologue. It means involving your target customers with your organisation. This means forums, social media groups, customer events. Your customers need to be involved in the setting of your service standards. Customers need to help define your service quality. Your loyal customers should matter. They should see your organisation as having a ‘passion to serve’.
- External Marketing: You need good external marketing as you would if your business was supplying goods.
It is often difficult to differentiate services in the market place. How do you differentiate a boiler service, or a haircut, or a restaurant meal, from the offer of your competitors?
But to stand out in the marketplace, you need to differentiate your offer, how it is delivered and your corporate image.
By providing innovative service features, you can differentiate yourself from the competition. For example, the Japanese restaurant chain, introduced sushi conveyor belts into the UK, a new way of delivering food to UK diners. Others have tried to install self-service beer taps (and faced issues with UK licensing laws). Cinemas introduced ‘bonkettes’ and leather arm chairs. One of my favourite cinemas re-introduced the intermission and bar service at your seat. Tyre fitters and vehicle valets began mobile services where they come to your home or place of work to di car maintenance. Services can be differentiated through the physical evidence of your brand e.g. logos, brand statements, etc.
It is important when delivering services that you aim for consistent service quality. Service standards and their communication are critical. You should aim for consistently higher standards than your direct competitors. Your target customers must drive your service quality. So customer feedback and retention statistics are crucial measures of service standards. You should strive for zero defects. A service standard of 98% sounds good, but if Royal Mail operated at such a target, that would be millions of misdirected parcels and letters annually. One of the most reliable services in the world is the Mumbai tiffin tin lunch service, where Indian office workers have a homemade lunch delivered in a stacked series of tins. If the tiffin service can use the Indian railway system and porters with little or no modern technology; and achieve staggering levels of service quality; so can you.
It is also important to have good service recovery processes. On the odd occasion something goes wrong, you need to be able to reinvigorate the customers trust in your brand. You need more than an apology. You need to explain what has gone wrong and how you intend to put things right. You need to offer suitable compensation including gifts and discounts off future purchases.
You need to continually improve service productivity. This means staff training, recruitment processes and your technology needs to continually improve. Marginal gains are important. Often small changes in service efficiency leads to big increases in productivity and customer retention.
But don’t push productivity so hard it harms service quality. The more you rush staff, the more work you pile on their plate, the more likely service standards will slip. It is amazing how often efficiency drives and cost-cutting backfires. Rather than improving productivity you harm service provision and your brand promise.
the aim of productivity changes should be to create customer value and so, once again, tools like value chain analysis are useful.