Trends from the best practices of world class service marketing organizations


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Trends from the best practices of world class service marketing organizations

  1. 1. Trends from the Best Practices of World Class Service Marketing OrganizationsBy Al HahnApproximately every two years, my company undertakes to determine the best practicesof the worlds leading service marketing organizations. We literally search the globe forthe best performers and document their techniques so that readers of our study canupgrade their own processes. We are currently finishing such a study, to be published inJanuary of 1998. Out of the dozen case studies being developed, we can detect somecommon themes that disclose trends in marketing services that I am reporting in thisarticle. The companies selected represent many different market segments of high-technology, including computers, software, medical equipment, broadcast televisionequipment, analytical instruments, independent service providers and distributors. Thatwe should find some commonality among such a diverse group is not entirely surprising.It is a reflection of marketplace challenges that cut across this broad spectrum ofcompanies; challenges such as increasing product reliability that makes the need forservice contracts less apparent to customers, and the increasing difficulty of sellingservices, whether you are marketing break/fix maintenance or professional services.Issues like these cut across all segments and have provoked many responses. Our studyidentifies the techniques that are working and have proven results. Adapting them to yoursituation can help you to avoid the wasted effort of techniques that may not bear fruit andto swiftly implement solutions that have a high probability of success. While this yearsstudy is not quite completed, and a few more trends may be identified in our final report,we have enough information to report on five specific trends: • Applying product marketing techniques to services. • Branding services. • Internal marketing of services and service organizations. • Niching service. • Direct sales of services internationally.Applying Product Marketing Techniques To ServicesThis is a very important trend that we sincerely hope continues. It is not necessarilysomething that marketers set out to do specifically, but is a byproduct of using goodmarketing practices and trying to use better marketing communications to coworkers andcustomers alike. Probably none of the companies we spoke with said to themselves,"Lets use product marketing techniques to market services." They just did it in responseto their needs. Having the opportunity to observe several companies using similartechniques, we are in a unique position to label this trend and report it to you as arecommended technique. What do I mean by product marketing techniques? Things like branded product lines(described in more detail later in this article), packaging, good data sheets and brochures,articulate presentations, simple and consistent pricing, and good competitive positioning
  2. 2. and information. As mentioned, these are all just good marketing practice. So whats thebig deal? Well, we have discovered an amazing result when such techniques are used.The product sales force responds enthusiastically! Think about it. They are used toproduct information flowing to them in certain ways and having some consistency inapproach. When services are marketed like products, sales people understand them betterand are more comfortable with them. We always have the challenge of our services beingintangible. That does not disappear with this approach, but some of the sales forceconfusion is dissipated and they respond better. This is not the holy grail, but it is a bighelp. Studies and our own experience have found that the major cause of new serviceprogram failures is the lack of buy-in by the sales force. The product marketing approachcan greatly increase your success rate when launching new services. It can also helpimprove the effectiveness of marketing and selling of existing programs. Customers areaffected in the same way. Your company probably has a fairly consistent productmarketing approach. Aligning service marketing with product marketing allows you togain strength from synergy and leverage from each others efforts. This does not translateinto a recommendation that you let product marketing take over service marketing.Experience has found that to have a dismal track record. Just tie into their techniques. Tryit, youll like it!Branding ServicesOne of the techniques mentioned above is branding. This has become such a hot topicamong service marketers that it merits its own special section. While there is still moretalk in the industry than action, we are seeing companies brand their services withexciting results. The best programs we have seen have established an umbrella identityand name for their entire service product line. When used most effectively, the companyannounces the services product line by name ( Sony Electronics uses SupportNet, WatersCorporation uses Connections) right along with its branded product family names. Thisgives equal weight to services as to products. It also helps to make services more tangibleto salespeople and customers. We have heard compelling testimony from salespeoplewho have related that service organizations are finally making their programs lucid andunderstandable to the sales channel.Successful implementation requires work on two levels. Service marketers must craft acareful, detailed branding campaign. Some important elements include good naming,consistent reinforcement at every opportunity, inclusion of all or most services under oneumbrella (more than one creates confusion, negating the positive effects), strongmarketing communications and clever packaging. Put the brand on everything! On partsboxes, brochures, data sheets, hats, T-shirts and Web sites. I havent seen tattoos ontechnicians yet, but I wouldnt be totally surprised! Dont forget to serve some sizzle withyour steak, either. Most service presentations, particularly from executives that have risenfrom the ranks, are too factual and boring. Presenting your new program to the sales forceshould be accompanied with the same kind of fanfare and fun as other products (see
  3. 3. above). The same exciting approach should be extended to PR campaigns, borrowing yetanother product marketing tactic.On another level, branding strategies require buy-in at the highest levels within acompany. Many CEOs dont truly understand the strategic value of services, and we needtheir sponsorship. Instead of the usual 15 minutes at the week long sales kickoff, we needequal time and status with tangible products. Sales execs have to be on our side for this tohappen. Certainly service marketers can work with their product marketing peers to gaincooperation, but high-level support is essential, which leads naturally into our next trend.Internal Marketing of Services And Service OrganizationsThe need for better positioning of services within companies is well established. Whathas been lacking is some good ideas on how to accomplish this. Service organizationsand our leaders are part of the problem. Those of us who have risen from the ranks tendto be conservative, solid and process-oriented. When we reach the executive level, wetend to be regarded the same way as accounting executives. Solid and reliable, but notnoted for our strategic leadership. We need help. In an article in this past Octobersedition of The Professional Journal entitled "How To Avoid Becoming Roadkill on theServices Superhighway," I suggested that service marketing could assist us in becomingmore strategic and in selling ourselves and our organization. Working together with ourleaders we can elevate our position in the company and get the attention to our effortsthat we need. Working with one of our clients to develop a strategic plan for their servicesorganization recently, we came to the conclusion that we had no hope of achieving theplan without repositioning the whole services organization within the company. Wewould never get the resources we needed, nor the cooperation of different departments.What we needed, we decided, was an internal marketing plan. This is constructed muchthe same as any marketing plan, but is directed at the internal customers, such ascompany executives and other departments. By the way, they should be researched muchlike external customers, i.e., What are their needs? Most service organizations havemissed this step. They are thinking only of their own needs, not what other departmentsmight be trying to do. Aligning service with other departments will produce remarkableresults. This does not mean that you actually provide everything they might want. Itmeans taking the time to understand others in your company and using this insight tobetter sell them on your programs. Let them know how cooperating with you will benefitthem and the rest of the company. Generally, sales will want to know how you can helpthem sell products. Finance will want to know about your financial contributions. TheCEO will want to understand how supporting service will help him or her achieve theirgoals. We all compete for resources. Service organizations can use internal marketing tobetter compete and reposition themselves internally.Niching Service
  4. 4. Niche marketing has been around for a while. Recently we have seen it applied well toservice providers, especially in professional services. The key element has been indeciding what not to do. It is easy for some manufacturers service organizations: theyjust service what the company sells. For others, there has been a confusing array ofopportunities including multivendor service, asset management, systems integration,consulting and a slew of others. The temptation is to go after too much. This is onereason that many service providers have failed to successfully launch professional serviceprograms. It is also one of the reasons that professional services, on average, are abouthalf as profitable as traditional services. International Network Services (INS), one of the participants in our Best Practicesstudy, has niched themselves well. They only provide professional services fornetworking applications. As an independent services company, they sell no tangibleproducts and do not offer maintenance services. Recently named as one of the fastestgrowing technology firms in Silicon Valley with over $100 million in revenues, INS hasdisciplined themselves to routinely turn away from opportunities that would take themout of their chosen market. Burrowing deeper into their niche allows them to focus alltheir energies and resources very tightly. Given the breadth of networks, it is clear thatthey would not have achieved their success without this focus. In the marketing and selling of professional services, we have learned from experiencethat it takes dedicated efforts to succeed. Trying to have the same people sell tangibleproducts and professional services, for example, does not seem to work. The sellingcycles are different, and so are the buyers. In addition, you can demo products, but thatdoesnt work for services. Niching your services makes a lot of sense for some providers,and we are seeing companies like INS and others forego traditional services completely.Direct Sales of Services InternationallyAs services have gotten more challenging to sell, we have seen many companiesresponding by adding both telesales groups and field located service sales specialists. Atfirst, this was just a U.S.-based phenomenon. Lately we have found some spectacularsuccesses in other geographies. Despite local objections that "it will never work in France(or Germany, Japan, Taiwan, etc.)," telesales of service and support contracts is workingjust about everywhere that it is being seriously tried. One company convinced theirdubious French counterparts to try it in just one small product area for one month—December, no less. The results were absolutely convincing—on the order of a 40 percentincrease in this admittedly small market. The same company convinced their Germanpeers to try a more expansive six-month test, with similar results across a much broaderfront. Oracle has used telesales very aggressively to sell support contracts, to the tune ofmillions of dollars per year per person. At the same time, their European counterparts,who had gone a different route, were very successful using dedicated field-located peopleto sell support directly. Recently they have been teaching each other their techniques andsetting up groups in Latin America, the Far East and Europe that are using blends of bothmethods. The results have been gratifying and Oracle sells over a billion dollars worth ofsupport each year.
  5. 5. We first noticed this trend to have dedicated sales people sell services a few years agowhen preparing our first Best Practices report. The longevity, extension into othergeographies and growing pervasiveness of this activity cause us to label it as one of themost significant trends in marketing services today. If you have not tried it, we urge youto consider it. Telesales, in particular, is relatively inexpensive and easy to set up. Even ifyou are not fully convinced it would work for your business, try a test. Chances are youwill become convinced.SummaryThese are not all the trends in services marketing today, but they are good ones. We willprobably identify more for our final report, due out about the time that you read this. I ampleased to note thatAFSMI will offer the report for sale, and probably at a discount tomembers. Give AFSMI a call if youre interested. In the meantime, there are some goodideas to try in the above material. Maybe we will be reporting on your best practice nexttime.