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Service Business Marketing Expert Harry Beckwith

Riddle: What technically doesn't exist until a customer pays for it? Your service. Here's an even bigger riddle: How the heck do you market what is essentially a promise on your part?
July 31, 2000
URL: http://www.entrepreneur.com/article/31028

When you're marketing a service, what you're really marketing is yourself. You're marketing your expertise, your reliability and your commitment to excellent service. So how can you communicate that important of a message to prospects?

Marketing and branding guru Harry Beckwith went looking for the answer to that question, and when he didn't find a book that addressed the subject, he wrote one. The second in his Invisible trilogy, The Invisible Touch: The Four Keys to Modern Marketing (Warner Business, $21.95) covers four key concepts in marketing service businesses: price, brand, packaging and relationships, in addition to looking at such issues as market research, the fallacies of marketing and the meaning of satisfaction. We've asked Beckwith to share some of the knowledge he's gleaned from being a best-selling author and owner of his own branding consulting firm, Beckwith Partners.

Entrepreneur.com: How is selling a service different than selling a product?

Harry Beckwith: One huge difference is that people can see a product and that means that they can evaluate what they see. It's a tangible item so they can touch it. They can gain a lot of information about what they assume to be the quality of the product from simply inspecting it with their senses: their eyes, their hands, their nose. But a service doesn't exist at the time you buy it. It's just a promise that someone will do something for you and you're going to have to pay for it. And so that makes buyers of services, among other things, much less certain of what they're buying and much more fearful. And so helping them feel more certain and less fearful is one of the major strategies you need to follow when successfully selling services.

Entrepreneur.com: You spend time in the book pointing out the limits of market research. Do you find businesses rely too much on the findings of focus groups and surveys? Where should they be focusing their efforts?

Beckwith: I think most companies could benefit from getting more information about their customers, and there are some ways that work much more effectively [to gather that information] than others. Focus groups are one method I've found that doesn't work well at all. You really want to engage in prolonged conversations with representative prospects who can provide insight into why they do or they don't buy a service [and you can't do that in focus groups].

I found that phone conversations are better at that for the same reason that the Catholic Church decided that confessionals would work if the priest was behind [an opaque partition] so the priest couldn't see who was speaking. Because of that confidentiality, the person would be much more open and honest about how he or she felt and what he or she had done. The same is true about interviewing people about products or services. If you get them all in a room, they're going to say what they think the others want to hear and what [they think] will make a favorable impression. There are a number of dynamics at work. When there are just two of you having a phone conversation, the other person is going to be a lot more open and honest, and is going to help you get insight into what you need to do to succeed.

Entrepreneur.com: Why isn't a goal of satisfying a customer enough?

Beckwith: Because people themselves aren't satisfied with being satisfied. [Americans] are a very restless group of people who are hard to satisfy. And if we're merely satisfied, we'll go for something more. The fact is there are businesses out there who give us such a deep sense of something greater than mere satisfaction, that [those companies] have become the benchmark people need to meet.

When you get [satisfaction] reports in most companies--even those that have dissatisfied customers--you'll tend to see fairly high rates of reported satisfaction. A 92- to 94-percent satisfaction rate is very common even among companies that are having a great deal of trouble--again, because people in those kinds of surveys really don't reveal themselves or expose all the problems they're having. And that causes companies to get very complacent. Everybody thinks they have incredibly satisfied customers, but how many incredibly satisfying service experiences do you really have in a day? You can have satisfactory ones, but who wants satisfaction when there's something so much better out there?

Entrepreneur.com: Why is it important to not be considered a "good value," or as inexpensive?

Beckwith: It's presumed that your service is ultimately priced at a rate people are willing to pay. There's some reasonable correlation between what you're charging and what you're offering to people because the market is willing to pay for it. So value is really just the entry fee of getting into any game.

So you've got to price your service at a value that is reasonable. Now the questions are: What does your company really do? How is it different? What unique benefit can your service deliver to clients that the others can't? Value isn't a differentiator; value is the cost of entering the game.

Having a lower price is a huge problem in service companies because it connotes lower quality. I distinguish this from product companies or retailers. If Wal-Mart or other retailers take items that you can find in other places and offer them for less, that's appealing. But if you're offering a root canal for less or plastic surgery for less, what it tends to provoke in most people is the fear that the root canal will hurt or your nose will end up closer to your eyebrows than to the middle of your face. And you don't want to do that.

Normally the satisfaction for the individuals involved in the service [comes from having the service] done extraordinary well. And if you do it extraordinarily well, you ought to be compensated for it. What's the incentive in doing it to the level of quality where you can charge less than anybody else? I don't think you can find that very inspiring: "We're number six, but we charge less." That's not a very powerful rallying cry.

Entrepreneur.com: Why is a brand just as important for a service company as it is for a product company?

Beckwith: Because the brand is really one of the few tangible manifestations of or communicators for what the service is or does. Perhaps the best example is the "good hands" of Allstate. That symbol and branding help people understand and feel something about insurance. What is insurance, after all? Is it a policy or what? Not at all. It's "good hands" or "solid as a [Prudential] rock." In fact, if you look at insurance companies, you'll find historically they were the first to perceive the power of branding because they may provide the ultimate invisible product--insurance.

Entrepreneur.com: How are service companies affected by beauty and packaging?

Beckwith: The environment and the package you surround the experience with or that you put into your printed materials or advertisements does so much to suggest what the quality is. There are so few ways you have to really express your quality, and your package becomes one of the few tools you have. And people know that from the experience of going to restaurants. Restaurants with a wonderful package and ambiance tend to be a great deal more popular than many of the restaurants that serve fabulous food. And that's because for the most part, in choosing a restaurant, people opt for the packaging because they aren't really that good at discriminating between tastes. And so the package, you could argue, is more important for services than for products because products themselves have a visual identity. They have a package. The product itself is a package.

Entrepreneur.com: You list eight keys to lasting relationships in the last section of your book. What is one of the most important keys?

Beckwith: The idea of sacrifice. We don't realize our clients feel much more at risk in their relationships with us than we do. They've risked time and money and even the chance that something might go terribly wrong. So it becomes important for service providers to recognize that in business relationships, just as in personal relationships, occasional sacrifices are enormous protection against the inevitable mistakes you'll make.

Sacrifices that you make, more than anything else, signify to your client that they're really important to you. And I maintain that ultimately what's most important in a lasting service relationship is the client's sense that they're important to you. If they feel they're important to you, they'll put up with any number of what you would consider product defects, if it were a product. If they don't feel important, you have a very, very short leash and in fact, they will interpret your first mistake as confirming what they feared: that they're not really important to you. And they'll take their business someplace else.