Wednesday, 20 July 2011

Selling Services and Intangibles

“ My business is different – it’s a service”.
This view is expressed by many in the profession and service sectors in business.

Surprisingly there is not a great deal written for these sectors despite the growth and significance of the services sector in the UK.
But what are the key differences between marketing and selling intangible service compared to physical products?
I have conducted many programmes for banks, building societies and financial services as well as a plethora of industrial services. As a result I have come to one clear conclusion.

If you ask a group of five sales professional services executives what the differences are between selling products and services you will get at least 50 opinions!

A conventional approach to the question might generalise the differences and products as follows..

A service organisation will usually have the following ( informally if not formally)
• Marketing
• Finance
• Operations/expertise
• Human Resources, L & D

However a service business will not usually have the following management functions:
• Engineering
• Buying
• Security
• Distribution
• Quality Control
• Research and Development

This is perhaps how some of the literature tells you what they perceive as the differences between services and products.
In reality there is considerable overlap between marketing services and products and this overlap will differ from business to business.
Selling skills essentially focus on the interactive communication between client and provider and can easily be adapted into selling services.
Many sales trainers would argue that that ALL sales executives are selling services in any case, since what buyers buy are the benefits not the features or facts of your offering.

For example YOU SELL:
The sizzle not the steak ( product)
Holes not the drill bit ( product)
Security not the policy document (service)
The design not the drawing ( service)

The challenge of all selling is to match your offer to the needs and wants of your client – the process of communication differs little between products and services- although the language and jargon will be a little different
For example services often charge ‘fees’ rather than prices, a high street bank will ‘lend’ rather than sell money.

Many of the perceived differences between services and products are just that perceptions.

It is fair to say that services do differ from products, such as Corn Flakes or baked beans, but not in all respects. B2B can learn a lot from FMCG and vice versa, and services can learn from both!

However we should also accept that there are also some real differences between marketing and selling services compared with products.

These differences have the following characteristics:-

1. Services tend to be intangible.
All services have a degree of intangibility. When buying a product, a customer can measure it against a specification or sample. On the other hand, when a client buys a service, (s)he buys a description. With the rise of quality standards ISO 9002 etc and specific trade codes of practice such as NICE, COSH, FSA, some element of measurement and quality can be introduced but it is not possible for a client to know what they will receive until the service is rendered. Consequently trust becomes the dominant factor of all transactions involving a sales service executive.

2. The service provider is often the service.
A product salesperson tends not to be part of the product unless (s)he offers some technical expertise.
Product salespeople are often perceived as company representatives conveying the image of the supplier, and the product that is offered has physical dimensions and specifications which are unique to it alone. On the other hand a services salesperson is inextricably part of the service offered. For example, an architect sells their expertise to a client rather than the blue prints. The architect is the service.

3. Services are often difficult to standardise.

Since the supply of a service is usually inseparable from the service provider, standardising services is difficult because individuals vary widely in personality, attributes, skills, and knowledge. Although certain services can be standardised in some of their routines, most services that are rendered are ‘one-offs’ and customised for each client. Therefore, any assessment of quality before the prospective client purchases the service becomes difficult.

4. Services are perishable.
Services cannot be stored or built up for some future date as demand occurs.
In many services the key resource is TIME, and nobody has yet come up with a way of storing that!
Perishability of services causes many problems.
Fluctuations in client demand make it impossible to build up stock in slack times and similarly in good times a services salesperson can’t make 'hay while the sun shines'. Some problems can be covered by using additional temporary staff or subcontractors or outsourcing but this perishability characteristic causes serious challenges for service providers.

The implications of these real differences between services and products are seen when the client is evaluating the service offered.
The client tends to look more closely at:-
• Quality of personnel
• Expertise in the client’s market
• Ability to keep project deadlines
• Fee levels
• Range of services
• Size of the services provider relative to the client
• Location of the supplier’s office
• Reputation and track record

Acknowledging these differences, however, will not preclude the use of most techniques employed in marketing and selling products.
They can be adapted with little bother to match the requirements of the services sector.
In the same way that the accountant uses standard techniques and approaches to obtain a financial picture of a business ( e.g. P&L, Balance sheet and Cash Flow statement), marketing use classic models such as the 4’P’s , 4’C’s 7’P’s etc. to produce a marketing picture of a services company and develop strategies and tactics for it. Selling will offer both step processes as well as approaches to develop relationships.

The vocabulary of the services businesses is special. They may take ‘instructions’ rather than orders, and liaise with ‘clients’ rather than customers.
But the unifying part of all business products and services is the customer. All businesses whether offering services or products should be about anticipating, identifying and satisfying customer requirements profitably. Be it a service or a product, we are all marketers and salespeople under the skin.

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