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Marketing Concepts

Services Marketing Is Different - The People Factor

By Dee Davey, Services Marketing, Griffioen Consulting Group

Although services marketing has been practiced by some enlightened professionals for decades, the concept of services marketing is still new to many marketing professionals.

Services play an increasingly important role in the economy and in individual organizations. Services are particularly relevant in industries where competitive pressures are forcing companies to find ways to create competitive differentiation. However, there are significant differences between the marketing of services and the marketing of tangible products.

Although services marketing has been practiced by some enlightened professionals for decades, the concept of services marketing is still new to many marketing professionals. Many current marketing concepts and tools have simply been transferred from the manufacturing sector. There are common elements between services and products, yet there is a need for marketing methods, tools and concepts that are specific to services.

Developing a New Service Offer

Marketing a service differs from marketing physical goods. Goods provide benefits because of their physical characteristics. Services are actions and are:

Performed, not produced
Experienced - the result of a deed or action
Intangible - cannot be seen, felt, tasted or touched
Cannot be stocked
Once performed, the service cannot be returned
Highly dependent on the human element
Typically, the customer is a participant in the service delivery process
Service delivery quality is dependent on the individual service provider

Services can be tangible acts directed at people's bodies, for example medical procedures, or beauty salons. Or services can be directed at goods and other physical possessions, for example maintenance services. Services can also be intangible acts, for example education, or consulting services.

When a company is considering creating a new service for its customers the starting point is to determine:

what should be done
to whom
how the service will be performed
with which resources
why there is a customer need
which benefits are provided to customers

It takes a managed approach to creating, assessing and developing a new service concept to ensure the company offers the right things, to the right customers, and for the right reasons.

Traditionally, marketers have used a product marketing approach to services, focusing on a careful balance of the well-known Four P's of the Marketing Mix: Product, Place, Price, and Promotion. The right mix of these is still critical. However, because of the nature of services, the additional P's of "People," "Process," and "Physical Evidence" take on a greater importance. The intangible nature of services requires a special approach at the strategic stage of service offer development.

The following factors need to be addressed through the P's of "People," "Process" and "Physical Evidence":

Services do not have physical properties to shape a customer's perception. Because of this, services need to be defined so customers can understand and value the service, and therefore will buy the service. In other words, service descriptions need to emphasize "benefits." Also important is recognizing the value that service personnel provide because of their interaction with customers ("People" considerations).
People, processes, tools, methods and management capability need to be in place ready to respond to a market opportunity. Processes need to enable a consistent level of service delivery. These factors are of importance for the service provider organization for efficiency and for quality management in your customer's eyes ("Process" & "People" considerations).
Service needs to become more tangible so they can be charged for and perceived as something to be purchased ("Physical Evidence" considerations).

Create a Service Definition and Focus on the People Aspect of a Service

Service is all about people. People buy and use services and people deliver the service.

Your Customer. Customers ultimately use or consume services and play a greater role in service delivery. Therefore, it is important to set and manage customer expectations of what will be provided. A first step in doing this is the creation of a service description.

A service description should clearly outline what a customer can expect as well as the rationale behind why the service is relevant. It should also demonstrate how the service satisfies a real customer need. When marketing services, it is imperative to focus on the benefits that a service provides to a customer.

A service definition should detail the following:

What the service is - what is performed or provided
Why the service is important - the perceived pain, problem or environmental factors that drive customer need
Benefits of the service to customers - time saved, reduced costs, improvements
Tangible deliverables a customer can expect - a report, a certificate, 24 hour response

Internal Personnel. Not only does a service description make a service more "real" in the eyes of your customers, it also plays an important role for the service provider and is an important internal communication tool.

Any employee who interacts with your customer is involved in the delivery of the service - a part of the customer experience. Service delivery personnel can either create a competitive advantage or become a liability.

A description of the offer (together with good internal processes) helps internal personnel understand what is expected of them. It ensures that service delivery is consistent across the organization.

A service description is also a tool to help sales people "sell." A well-crafted service description creates value in the eyes of the purchaser and becomes the key item in the sales tool kit. To help pinpoint sales opportunities include the following in service descriptions for an internal audience:

Opportunity spotters
Guidance on handling objections
Internal benefits of selling the service (what's in it for the sales person)
Sources for customer reference

Any employee who interacts with your customer should know and understand the value your business brings to your customers and how they, as individuals, contribute to the successful delivery of services.

A service description is the foundation for creating an understanding both externally and internally - a tool to manage customer expectations of what will be provided and a tool that provides guidance for service delivery personnel to ensure consistent delivery of service.

Dee Davey is a senior marketing consultant with the Griffioen Consulting Group. She has been marketing global services for over 18 years. Dee helps businesses become more successful by delivering strategic market planning, service product development and business operations improvement projects; primarily for companies who offer technology or business services to their customers. Dee Davey can be contacted at ddavey@griffioenconsulting.com or by calling 734-259-0060.

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