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)
• Sales
• Marketing
• Finance
• Operations/expertise
• Human Resources, L & D

However a service business will not usually have the following management functions:
• Production
• 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.

Linked articles
http://fruitsofsuccesswithhugh.blogspot.com/2011/05/fast-talkers-smooth-talking-or.html

http://fruitsofsuccesswithhugh.blogspot.com/2011/01/3-key-parts-to-dvp-tuning-into-buyers.html

If you are in Professional Sales, please complete our latest research questionnaire on Sales Leadership- Thank You

http://www.surveymonkey.com/s/3VHFZ5Y

“The News of the World” a toxic Brand? Jumping on the toxic ‘brandwagon’ and personal responsibility

Rather than perhaps manufacturing failure, an accounting fraud or a dip in sales, the thing that seems to keep some company bosses awake at night is reputational risk - the fear that the behaviour of even just one rogue employee in a large organisation will destroy the reputation of the whole business.

It will make the brand so toxic that even its most loyal customers, suppliers and workers will want nothing more to do with your brand, lest they too become tainted by association in the public mind.

That is what appeared to happen at the UK Sunday Newspaper “The News of the World” (NOTW) in its last week when first Ford, then Virgin Holidays, Mitsubishi, the Lloyds Banking Group and Vauxhall decided to pull their advertisements from Sunday 10th July paper.

These brands were protecting their own image or perhaps enhancing their image by being first in the queue with the publicity coverage.

The story was they did not want to be seen supporting a toxic brand, in case the public thinks that also means they approve of its actions - hacking into mobiles.

Well perhaps but as the aria in Gershwin’s Opera “Porgy and Bess” - “ it ain’t necessarily so “.
Enclosed with the main News of the World Sunday newspaper was its magazine called “Fabulous” with its banner claim – ‘Supplement of the year’.

Of course not all conventional advertisers completely disassociated themselves the Fabulous magazine displayed advertisements for example from :-
1. Olay – total effects moisturiser,
2. L’Oreal sublime hair mousse,
3. TESCO direct , supermarket
4. Tesco British Strawberries,
5. Boots (Chemist) ,
6. Ribena Blackcurrant Drink, Soft drink
7. Sleek Make up available from Superdrug, Cosmetics
8. Nivea body lotion, Cosmetic
9. Jenny Craig diet plans, Lifestyle
10. LG cinema TVs ,Consumer Electronics
11. Unilever’s Sure, Deodorants
12. O2, mobile communication
13. Virgin media
14. Vodafone
15. and Sky.
In the main paper there was a bonanza of advertising space taken up by those who presumably feel they are immune to the toxicity. These were the 28 or so Charities including one small charity for gay parenting who although they would normally not want to be associated with The News of the World (for their not particularly supportive line over the years on such matters) seized the chance to promote their small charity to the millions of readers some of whom are presumably their target audience of LGBT people www.Newfamilysocial.co.uk

No doubt in the Business Schools and Universities there are case studies already being written up on how the 168 year old News of the World title failed.

All this has reminded me of an excellent presentation at Marketing live 2011 a couple of weeks back, given by the Global Innovation Director of Diageo Syl Saller.

Syl has a more onerous brand responsibility for her brands - not a paltry 168 years but nearer 400 years for example heritage brand Guinness. (One would not like to be the executive who blew out that brand)!

Syl’s talk was more Diageo ‘lite’ and Leadership heavy.

Her talk resonates with me now with the debacle of The News of the World.

Many at the paper and in Fleet Street ( the London community of journalists) have said “they (NOTW) have lost their way.” In essence that means a loss of leadership.

One of Syl’s points from her talk was that what we like to dress up as business risk is more often the fear of personal risk , personal reputation in reality.

In my little black book of quotes ( All trainers should have one) I came across this quotation I had scribbled down years before the days of personal computers!


Responsibility: by Admiral Hyman G. Rickover 1900-1986 US Nuclear Submarine Fleet Commander

Responsibility is a unique concept.

You may share it with others, but your portion is not diminished.

You may disclaim it but you cannot divest yourself of it.

Even if you do not recognise it or admit its presence you cannot escape it.

If responsibility is rightfully yours, no evasion, or ignorance or passing the blame can shift the burden to someone else.


Who will claim the responsibility for the toxicity of the News of the World? Tough question.

Related links on Branding

consumer trust
http://fruitsofsuccesswithhugh.blogspot.com/2011/02/consumer-trust-gained-through-brand.html

life of your brand
http://fruitsofsuccesswithhugh.blogspot.com/2010/12/its-not-brand-in-your-life-but-life-in.html

brand extension
http://fruitsofsuccesswithhugh.blogspot.com/2010/11/advantages-of-brand-extension-and-risks.html

For TACK International's "Marketing Essentials" course http://www.tack.co.uk/course_details.php?cat_id=72&co_id=67&col=F6082E

Price negotation- Cost benefit is not just about the cheapest price

An email 29th June 2011 came into my inbox from a past delegate

Hi Hugh

I attended your TACK Pro Payback Selling in Action course at Warwickshire Uni on 11 April 2011 - 12 April 2011.

I would just like to thank you for a great 2 days, your knowledge and advice has really helped me develop my sales techniques and as a result I have seen a great improvement in my relationships with clients and overall sales figures!

I feel that your tips and guidance answered many questions for me, but I have one issue that I am not sure about and was hoping that you could shed some light on the matter…

In the majority of the appointments I have, the customer will ask for a price list. This is fine but on one occasion the customer took the prices we negotiated over a few days and showed them to their current supplier, and of course their current supplier matched our prices and the customer decided to keep their existing supplier, despite they were paying higher prices than necessary for a number of years.

How do I get around this? And more importantly do you have any advice to prevent this happening again in the future?

Neil*



(It is great to receive such an email of thanks for a training course. Of course 50% of training effectiveness comes from the application of the skills by Neil in the field but is great to know that the course helped Neil on his road to the fruits of his success.)

I guess the first response to Neil's problem is "experience is a great teacher" in selling also. What the buyer did was legal but not particularly ethical. His trimming of his incumbent supplier's prices will make him look like a skillful buyer in the eyes of his company and possibly his purchasing peers.

It also emphasises that Price is not the only motivator for this buyer see the Research results from the Buyers' Survey of Supplier Salespeople.(left)

Neil's experience is proof that cheaper prices he offered was not enough to unseat the incumbent.

Of course much of business has to be based on trust.

"Caveat emptor" buyer beware is often quoted but there is also a balancing phrase of 'caveat venditor' which translates as seller beware!

Perhaps one option Neil may care to try is rather than give a discounted price try to trade it.

i.e. " If you place your business with me today then we will offer you this discounted price" followed by a trial close " Do we have a deal?"

Remember " If you don't try and close - you are working for the competition!"

Neil's experience is the uncomfortable truth of this old saying. Maybe revisit the article on closing skills on this site - scroll down for link.

Now that inflation looks on the return it may be a good idea to ensure any offer has a contract end date so you are not held to a fixed price which may prove increasingly unprofitable over time.

So far as preventing it ever happening again that is not possible but one can try to protect oneself a little better.

Finding out more about the buyer's priorities on matters such as quality, service, brand, track record, references etc.is important. Be better prepared next time. Take a look at the questioning skills article - scroll down to link below.

Remember also that although the incumbent supplier has held onto the account he must have gone down in the buyer's estimation.

From my experience sometimes a short gain loss such as this can act like a shot below the waterline which takes a little while for the ship to sink.

So don't give up on this buyer entirely but be better prepared next time.

Fortune favours the brave - Good luck.

* For reasons of confidentiality Neil is not my delegate's real name. The case details are genuine.


Click for free executive summary of the Buyers Views of salespeople research study

Other related links


Link on Questioning Skills
http://fruitsofsuccesswithhugh.blogspot.com/2011/05/38-great-sales-questions-craft-of.html


Link on Closing skills
http://fruitsofsuccesswithhugh.blogspot.com/2011/02/7-effective-sales-closes-and-ways-of.html

For details of the TACK courses Neil was referring to:
PRO-PAYBACK SELLING – The Sales Training Course
http://www.tack.co.uk/course_details.php?cat_id=72&co_id=48&col=F6082E

PRO-PAYBACK SELLING IN ACTION
http://www.tack.co.uk/course_details.php?cat_id=72&co_id=27&col=F6082E

Sales- A respected profession ?

The Times July 4th 2011 came out with a supplement yesterday on Sales Performance some 15 pages with articles, advertorials ( labelled commercial feature) and advertisements.
www.raconteurmedia.co.uk


It is good to see the newspaper supports the Selling Profession.

Beth Rogers from Portsmouth University’s Business School in her piece for the supplement stated 7% of UK working Population is in sales related work. She describes the still lingering stigma of the ‘S’ word.

Beth pinpoints that much of bad selling is because conscientious people are caught in a web of

• Out of date training
• Poorly designed reward systems
• Aggressive peer competition
• Hire-and-fire-management

UK salespeople are woefully under qualified despite the NVQs of the nineties, launch of National Occupational Standards since 2005. Both academic and vocational and distant learning qualifications are available.

Many reputable companies have launched their own academies to develop the skills of their salespeople.


( left -An example of a Company's International Academy in different languages.)

Indeed Beth Rogers heads a MA in Sales Management ( see link for course at end of this post)

She wished in her article to dispel three common myths about selling


Selling Myths:

1. "Sales people are born not made" yet the diversity of people who fall into selling would seem to contradict this. Certainly from the huge variety of folk come on my courses they come form all sorts of disciplines etc. e.g. sciences, engineering, health and law to name a few..

2. "Salespeople only work for money" All of us are more productive when we have some intrinsic motivation- the personal satisfaction in a job well done. Research suggests that sales people are no exception in that regard.

( left TACK's Sales barometer Study concurs that Money is not the only motivator.)

3. "Close the deal or your children starve".

This 'medieval approach to motivation' as Beth expresses it, can drive promising candidates away from sales as a long-term career choice.

Beth quotes a saying “ the quality of everything depends on the thinking behind it”
Both vocational and academic courses can provide a full cycle of learning to provoke creative, analytical and reflective thinking can be applied to real commercial challenges.




( CIM's centrefold in Raconteur On -Inaugural Sales Investment Index in Raconteur On.More than 60% of companies are optimistic about economic prospects over the next year.)


Research into sales performance provides convincing evidence that teaching questioning approaches, listening skills, respectful challenge and ethical negotiation can lead to better results for them and their teams.

The essence of customer focus is high levels of competence in the sales department who are qualified and respected in "a respectable profession !" as Beth puts it.

Link to MA in Sales Management at Portsmouth University http://www.port.ac.uk/courses/coursetypes/postgraduate/MASalesManagement/

Click for free executive summary of the Buyers Views of salespeople research study

CIM's Sales Investment Index www.global-benchmark.com/sii

Link on recruitment and careers in Sales http://fruitsofsuccesswithhugh.blogspot.com/2011/04/recruitment-of-talent-who-is-buyer-who.html

Body language in Business - Book Review

Title of Book: Body language in Business

Subtitle: Decoding the Signals

Authors: Adrian Furnham & Evgeniya Petrova

Publisher: Palgrave macmillan

ISBN 978-0-230-24146-6

3 stars The quotes from research post 2002 are useful. A good modern edition for the business library shelf.

Genre: A read-through book rather than “Dip In Reference” so have your pencil ready to mark up the bits you will want to come back to.

Style: 'Worthy' Academic style -references dutifully noted at the end on pages 207/8 like for a lengthy studious 'paper' – all dust jacket endorsements are from PhDs or Professors- i.e. no Business leaders. The book is meagerly illustrated

Contents page: 2 pages and thorough

Index: Adequate 8 ½ pages for 208 page book

Flick through eye appeal: Poor - Only four illustrations Microsoft Word type symbols but plenty of useful and interesting tables

Time for a breather Stops : Fair. There are good conclusions at end of each chapter which would please a school master who corrects and marks essays. Few prompted opportunities to pause and reflect on the learning. One suspects readers perhaps are expected to go away to write and submit their own essays for Furnham and Petrova to mark and hand back at a subsequent tutorial.

Golden Nuggets: Balance of the importance of verbal, visual and vocal clues. There are flouncy polemical attacks on the “so called experts”- as academics are prone to do. The book dispels some of the urban myths of the body language self-appointed gurus. The misquoting of Mehribian etc. by others is stressed at some length.

Topic Summary: 8 strong chapters

War Stories: Few – This is 'Business' described from the conservatoire/ballet school/drama school rather than the concert hall or stage platform of the muck and bullets of doing it. It is written more at the abstract level than the concrete level of daily business but still of use to practitioners of business to try out.

Illustration: Poor - but many useful tables almost make up for this weakness.

Short review: Personally I miss Prof. Furnham’s regular column in the old Pink Business Section of the (Thursday ?) edition of the Daily Telegraph. This book is a serious read and more up to date than many others covering the topic on the market. Although printed and bound in Great Britain (Chippenham & Eastbourne) it is littered with American spelling – color, odor and words like obsessionality for ‘obsession’ . There is quite a lot of psychological jargon which is usually explained but don’t let that put you off.

Worth buying if you are after an up to date book on the subject and you enjoy reading the work of Psychologists 'sounding off' ( which I do !).

UK Bribery Act 2011 - finger lickin' reasonable & proportionate ?

Last Thursday I joined a client’s pitching team for a final beauty parade presentation to a large utilities firm.

Our team had been selected and invited to the final with two other competitors.

We had rehearsed our presentation and spent hours of preparation over the last week crossing the ‘t’s and dotting the ‘i’s of their comprehensive and extensive RFI and RFP documentation.

The buying team we presented to, consisted of 7 people from various functions of the utilities organisation.

On our way back home, our pitching team stopped off for a late lunch at a motorway service station. I was bought lunch by my client.

OK it was not oysters and caviar washed down with a bottle of Veuve Cliquot at some 3 star Michelin swanky restaurant but a delicious ‘street wise lunch box’ of Kentucky Fried Chicken that also included an ice cream - "so good!" as the KFC logo states.

http://www.kfc.co.uk/our-food/snacks/streetwise-lunchbox

But what if I had offered to buy the other three members of the pitching team their lunch?

- who can by the way, potentially give me work if they choose to offer the training part of this potential contract- would I fall foul of the law?

Listening to BBC radio 4 the next day ( July 1st) there was an interview between John Humphreys and Vivian Robinson who is General Counsel for the UK Serious Fraud Office ( SFO)- I realised the new Bribery Act had come into force.
http://news.bbc.co.uk/today/hi/today/newsid_9527000/9527563.stm

Mr. Robinson explained that the new Act is a corporate law. The OECD and other international bodies have applied pressure to the United Kingdom to revise its laws some of which stretch back over a century and do not reflect the current seen in global business.


Failing to prevent bribery to gain systematic advantage over one’s competitors will make not only individuals but businesses liable under the new act.

Mr Robinson explained that the new law has "massive jurisdictional reach” across business across the world. Also international companies can become liable if part their organisation works in the UK.

Firms will need adequate procedures in place to prevent crossing the legal boundaries set by the act.

BBC’s John Humphreys then in a light-hearted way asked if firms offered "say a lavish dinner, offer a client the use of their private jet or a fortnight’s holiday" would such things fall foul of the new legislation?

Mr Robinson stated he wished to dispel what he described as the ‘myth’ on reasonable and bona fide corporate hospitality.

The SFO will first be considering what is in the Public interest. They will look for clear policy on such expenditure and gifts. So long as the expenditure “ fell within the ambit of the policy” ( I had to check what ambit means - ) it will be accepted.

It will be about using common sense.

Companies will need to exercise an appropriate action over such areas. However when the link of hospitality to contract awarded could be traced -this might well cross the boundary. ( Should I be choking on my KFC lunch?)

There is an old joke that describes the three lies in business

1. "The cheque is in the post"
2. "IBM compatible"
3. "Good morning , I’m from the ministry I am here to help you!".

Well the first two look rather dated now but the third is looks as fresh as ever.

The Serious Fraud Office assure us that so long as corporate hospitality offered by Sales & Marketing for example is “reasonable and proportionate” we are OK.

In any question of business ethics in practice though, there is always a scale where individual discernment will make drawing the line on any action different per individual.

For example - Take STEALING- At which of the three questions below would you draw the line ?

Q1. If I take a pencil from the office stationary cupboard to do my crossword or sudoku puzzle is that stealing? Answer- Yes but many would let that one go.

Q2. If I took 12 pencils from the company stationary cupboard for my church’s Sunday school is that stealing? Answer -Yes but maybe some would let that one go

Q3. If I took a gross of pencils ( 144 pencils) from the stationary cupboard to start up my own pencil selling business. Is that stealing? answer - Yes and probably most of society would have said that action had beyond the acceptable line! 'Reasonable' and 'proportionate' can be quite subjective though.

Mr Robinson of the SFO outlined six principles which are quoted on the Mesiro Financial website. These principles have been turned into six questions all in sales and sales management should be considering from now on.

The ACT will make it a crime for a business failing to prevent a person from bribing on its behalf.
1. Is the company keeping up to date on new risks?
2. Is there senior level support?
3. Has the company done adequate due diligence on its business partners?
4. Are there clear, practical and procedures in place? Have they been adequately communicated and do they apply to all employees and business partners?
5. Is the company going beyond “mere paper” compliance?
6. Is there a process for auditing the controls?
https://www.mesirowfinancial.com/mfc/collateral/mfc_whitepaper_what_you_dont_know.pdf

Come what may, it looks like the lawyers and auditing industry ( compliance, quality and regulatory) have been given a new source of fees or revenue stream from the new act- and possibly training also!

Other related links

http://fruitsofsuccesswithhugh.blogspot.com/2011/03/bribery-act-implications-for-sales.html

There was also a spokesperson from this law firm on the BBC Today programme
http://www.lg-legal.com/what_we_do/services/disputeResolution/The-Bribery-Act-2010-a-short-introduction.html

Eoin O'Shea is the author of "The Bribery Act 2010: A Practical Guide", published by Jordans in 2011. More details are available here:
http://www.jordanpublishing.co.uk/publications/company-law/bribery-and-corruption-law-and-practice

Blake Lapthorn is advising businesses on the impact of the Bribery Act and assisting with the adequate procedures defence. If you require any assistance or guidance on what the Bribery Act means for your business, please contact Philip Somarakis in the Business Regulatory team in Oxford on 01865 254277or by email at philip.somarakis@bllaw.co.uk