E-Stuff for Service Marketing
By Shera Mikelson


Has your boss just told you to "do something with e-stuff"? You’ve already put your services brochures and data sheets on your company’s web site. There’s an online FAQ for your customers. And you finally convinced your corporate web group to include a link to services from the home page (that feat alone should merit a 20% pay raise, right?). Sure, you’d like to do something that would make your services the next "Amazon.com" (except for the part about no profits - that would be bad), but Service Marketing doesn’t have the kind of resources that would take. So now what do you do?

The good news is, the basics that you learned in Marketing 101 - those four P’s - still apply. Even better, you don’t have to do everything all at once to be successful. In order to determine what steps to take into the e-world, start with a reassessment of your portfolio and how it fits in this new environment. Reevaluate the services (Product), who will sell it and how (Place/channels), what kind of pricing to use in today’s market (Price), and how to promote it (Promotion). Let’s start with looking at the product, i.e., your services.

How the Internet is Shaping Support Services P1: Product (Services)

There are several crucial ways that the Internet is shaping support services being designed today. Understanding the following factors is fundamental to a successful move into e-stuff:

• Merging of Business and Technology

• Services Integrated into Product

• Web Expectations

The technology that is propelling the Internet itself is also becoming the core of many businesses. In many cases, the IT application is so integrated with the business processes that it is impossible to tell the difference between the process and the application. Prime examples of this are Amazon.Com and ebay. Try to imagine these businesses without their Internet applications. They just can’t be separated.

The Internet technology is also enabling services to be built right into the product itself. For example, look at what Dell is doing with their "support.dell.com". An icon on the Windows desktop takes you directly to their support web site. Try ordering some clothes from the major online catalogue stores. If you have a question, you don’t have to go the phone and wait in a queue. With a simple click you can be connected to their support team via instant messaging. Type in your question and in a few seconds you get an answer and can continue on your (shopping) way.

Note that building support into the product means that service marketing and product marketing must work closer together than ever before. Service options MUST be considered during the early stages of the product design. A call from the product team to services marketing a week before product launch with a request for service pricing spells disaster in the e-world.

The rapid acceptance of the Internet for doing business is driving customer expectations of services. Today’s web-based products require minimal downtime and have a higher need for mission critical support. There is a strong expectation of support being available worldwide, 24-hours a day, every day of the year. And don’t forget that now projects must be completed in "Internet time", which is setting a manic pace.

According to a recent White Paper by IDC, the demand for application availability is growing, with the key market driver being the Internet. The paper notes that the e-commerce revolution is thrusting organizations into a 24x7x365 dependence on IT and is causing an ongoing globalization of markets. The paper states, "Today, if the database on an Intranet server located in Hong Kong becomes unavailable, it can affect a company’s operations in Paris, New York and Los Angeles. This represents far greater impact from downtime than would have been the case only a few years ago, when even most multinational companies implemented applications on a local or regional basis only."

Not only are operations affected by downtime, but today a company’s reputation is also at stake. Recall last year’s headlines about big-name Internet businesses experiencing downtime and their subsequent stock plunges. About that same time I had a conversation with the vice president of a major financial organization regarding high availability solutions. He told me that his company had recently experienced a 15-minute period of downtime during the day, and they received calls from the news media within the first seven minutes asking what was happening.

With all of this going on, you’ve probably heard about the IT skills shortage in the workplace. The current worldwide shortage of IT workers is estimated to be over one million. Yet at the same time, web-based solutions require faster implementation than traditional products, using technology that is evolving and demanding even more in-depth skill sets This creates a vast need for services to fill the gap between the technology available and the ability of companies to take advantage of these technologies, leading to new opportunities to offer technology-based services. New e-services such as Remote System Administration and Auto-response Email are gaining in popularity. Self-help services via the web are getting quite robust and in some areas are replacing first-line telephone support

The Internet’s Affect on Channels

The Internet’s affect on channels is full of complexities and contradictions. On one hand, online ordering provides a direct connection between a company and its customers. Customers can have their questions answered directly by the company, and the company can find out who their customers are and learn their buying patterns and support needs, too. This basically expands the direct channel.

On the other hand, this can give companies the appearance of competing with their own reseller channels. If the customer can buy directly from the vendor’s web site, where does the reseller fit? Actually, the reseller now has an even stronger role the relationship remains a key component in the sale of complex services. What we’re actually seeing is a rise in "coopetition" between vendors and resellers. Vendor web sites are providing information and a means to purchase simple services, plus providing links to their resellers’ sites. By handling the routine sales online, the reseller sales representatives are freed for consultative selling.

The Internet also affects the direct sales channel. An advantage of the web is that now simple services can be self-selected by the customer. Good programming can ensure that all orders are error-free by guiding the customer through a step-by-step process that results in an accepted order. Self-selection of simple services has the added advantage of freeing up the sales team to devote more time to selling the complex services, which still require phone or face-to-face interaction and a consultative relationship.

Many companies are struggling with why, how and when to pay commissions for services that are sold via the web. Some have decided to reinforce the importance of selling services by paying commissions to sales reps on services bought over the web by customers in their region. Some have decided to reinforce the evolution to e-business and thus have taken the opposite approach. In these cases, not only does the sales rep receive no commission for services sold over the web, they don’t even receive commission on a sale they make in person for a service that is available for purchase via the web. Expect to see more experiments with compensation plans for e-stuff.

Pricing For Today’s Market

With today’s manic pace of change, you may be relieved to know that some things stay the same. The fundamental strategies and dynamics of pricing still hold. Unless your goal is to be the low-price leader, stick with value pricing of your services. Make sure any discounts provided are earned discounts (volume, multi-year, pre-paid, etc.). Know where your prices fit in the competitive market so you can resist pricing pressures that are based on folklore rather than on facts.

In general, people do expect prices on the Internet to be lower than what they would find elsewhere. However, this doesn’t mean you should offer the same product for less just because it is being sold through a different channel. (Remember, many of the "dot coms" have yet to make a profit.) Instead, the services to be offered on the web need to be redesigned to have reduced delivery costs.

Note that customers are still looking for quality. A survey by BizRate.com of what drives customer loyalty in the Internet environment (see below) shows that quality support still rates high, while price remains the lowest factor.

: BizRate.com

New Opportunities for Promotion

Internet technology offers all kinds of interesting, new opportunities for the promotion of services. For one thing, a web-based service can be demonstrated to the customer. With most services being a promise of a future activity, this has always been a drawback for selling services, as it is much harder to make the service tangible to the customer. Now, with technology-based services, Sales has something to demo.

The web also offers us the opportunity to know more about our customers and to develop this customer information into directed promotions for specific customers. For example, Hewlett-Packard now provides an automatic link to product registration once a customer installs any HP software. I recently purchased an HP printer and at the end of the software installation a pop-up window appeared for me to register my product. While I normally put aside registration cards to fill out and send in "someday" (I recently discovered a stack in my closet from 1997), this was so easy that I saw no advantage to procrastinating and went ahead and registered. I must not be alone, as HP ‘s customer registration rates have nearly quadrupled from 5 percent to nearly 20 percent.

According to an article by Lane Michel, managing partner and director of the Western United States for Peppers and Rogers, "Now, HP is able to personalize its communications with its customers and offer up-sell or cross-sell opportunities: Thirty seconds after registering, a customer receives a personalized email that might say, "Thank you for your printer purchase. Did you know you could add a tray for legal-sized paper? Click here to connect to the Web page or to print out a coupon redeemable at a local HP dealer."

And of course, the Internet provides an instant global reach not even imagined in pre-web days. However, watch out for some unintended effects. With all of your international customers able to peruse your web site, inconsistencies between regions become more apparent. You’ll need to make sure that your web site delivers a global message that is consistent with your strategic objectives and with your corporate messages. Any differences between the regions should be intentional, designed to meet unique needs of the region, and clearly spelled out for the customer.

Where to Start?

As always, start with the customer. If you know how your customers use your company’s product and what problems they encounter, then you can take advantage of this new medium, the Internet, to help them get the most out of their investment. Although this is a new medium and requires unique attention, services are still essential to your customer, and to your company.

Whether you are looking at ways to "e-market" your existing portfolio or plan to design new "e-services", remember that it is not required to have everything "whiz bang" up front. While the instantaneous global reach of the Internet means your website must work, this e-stuff is an iterative process. Changes and improvements are made every day on even the most successful sites. And despite all the attention being given to the highly successful sites, you aren’t that far behind, as very few companies are really at the leading edge. So go ahead - get started - do something with e-stuff.