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?

By Laura Tiffany

Opinions expressed by Entrepreneur contributors are their own.

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

Marketing and branding guru Harry Beckwith went looking for theanswer to that question, and when he didn't find a book thataddressed the subject, he wrote one. The second in his Invisibletrilogy, The Invisible Touch: The Four Keys to ModernMarketing (Warner Business, $21.95) covers four key concepts inmarketing service businesses: price, brand, packaging andrelationships, in addition to looking at such issues as marketresearch, the fallacies of marketing and the meaning ofsatisfaction. We've asked Beckwith to share some of theknowledge he's gleaned from being a best-selling author andowner of his own branding consulting firm, BeckwithPartners. How is selling a service different thanselling a product?

Harry Beckwith: One huge difference is that people cansee 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 lotof information about what they assume to be the quality of theproduct from simply inspecting it with their senses: their eyes,their hands, their nose. But a service doesn't exist at thetime you buy it. It's just a promise that someone will dosomething for you and you're going to have to pay for it. Andso that makes buyers of services, among other things, much lesscertain of what they're buying and much more fearful. And sohelping them feel more certain and less fearful is one of the majorstrategies you need to follow when successfully sellingservices. You spend time in the book pointing outthe limits of market research. Do you find businesses rely too muchon the findings of focus groups and surveys? Where should they befocusing their efforts?

Beckwith: I think most companies could benefit fromgetting more information about their customers, and there are someways that work much more effectively [to gather that information]than others. Focus groups are one method I've found thatdoesn't work well at all. You really want to engage inprolonged conversations with representative prospects who canprovide 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 samereason that the Catholic Church decided that confessionals wouldwork if the priest was behind [an opaque partition] so the priestcouldn't see who was speaking. Because of that confidentiality,the person would be much more open and honest about how he or shefelt and what he or she had done. The same is true aboutinterviewing people about products or services. If you get them allin a room, they're going to say what they think the others wantto hear and what [they think] will make a favorable impression.There are a number of dynamics at work. When there are just two ofyou having a phone conversation, the other person is going to be alot more open and honest, and is going to help you get insight intowhat you need to do to succeed. Why isn't a goal of satisfying acustomer enough?

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

When you get [satisfaction] reports in most companies--eventhose that have dissatisfied customers--you'll tend to seefairly high rates of reported satisfaction. A 92- to 94-percentsatisfaction rate is very common even among companies that arehaving a great deal of trouble--again, because people in thosekinds of surveys really don't reveal themselves or expose allthe problems they're having. And that causes companies to getvery complacent. Everybody thinks they have incredibly satisfiedcustomers, but how many incredibly satisfying service experiencesdo you really have in a day? You can have satisfactory ones, butwho wants satisfaction when there's something so much betterout there? Why is it important to not beconsidered a "good value," or as inexpensive?

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

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

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

Normally the satisfaction for the individuals involved in theservice [comes from having the service] done extraordinary well.And if you do it extraordinarily well, you ought to be compensatedfor it. What's the incentive in doing it to the level ofquality where you can charge less than anybody else? I don'tthink you can find that very inspiring: "We're number six,but we charge less." That's not a very powerful rallyingcry. Why is a brand just as important for aservice company as it is for a product company?

Beckwith: Because the brand is really one of the fewtangible manifestations of or communicators for what the service isor does. Perhaps the best example is the "good hands" ofAllstate. That symbol and branding help people understand and feelsomething about insurance. What is insurance, after all? Is it apolicy or what? Not at all. It's "good hands" or"solid as a [Prudential] rock." In fact, if you look atinsurance companies, you'll find historically they were thefirst to perceive the power of branding because they may providethe ultimate invisible product--insurance. How are service companies affected bybeauty and packaging?

Beckwith: The environment and the package you surroundthe experience with or that you put into your printed materials oradvertisements does so much to suggest what the quality is. Thereare so few ways you have to really express your quality, and yourpackage becomes one of the few tools you have. And people know thatfrom the experience of going to restaurants. Restaurants with awonderful package and ambiance tend to be a great deal more popularthan many of the restaurants that serve fabulous food. Andthat's because for the most part, in choosing a restaurant,people opt for the packaging because they aren't really thatgood at discriminating between tastes. And so the package, youcould argue, is more important for services than for productsbecause products themselves have a visual identity. They have apackage. The product itself is a package. You list eight keys to lastingrelationships in the last section of your book. What is one of themost important keys?

Beckwith: The idea of sacrifice. We don't realize ourclients feel much more at risk in their relationships with us thanwe do. They've risked time and money and even the chance thatsomething might go terribly wrong. So it becomes important forservice providers to recognize that in business relationships, justas in personal relationships, occasional sacrifices are enormousprotection against the inevitable mistakes you'll make.

Sacrifices that you make, more than anything else, signify toyour client that they're really important to you. And Imaintain that ultimately what's most important in a lastingservice relationship is the client's sense that they'reimportant to you. If they feel they're important to you,they'll put up with any number of what you would considerproduct defects, if it were a product. If they don't feelimportant, you have a very, very short leash and in fact, they willinterpret your first mistake as confirming what they feared: thatthey're not really important to you. And they'll take theirbusiness someplace else.

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