Trends from the Best Practices of World Class Service Marketing Organizations
By Al Hahn

Approximately every two years, my company undertakes to determine the best practices of the world's leading service marketing organizations. We literally search the globe for the best performers and document their techniques so that readers of our study can upgrade their own processes. We are currently finishing such a study, to be published in January of 1998. Out of the dozen case studies being developed, we can detect some common themes that disclose trends in marketing services that I am reporting in this article. The companies selected represent many different market segments of high-technology, including computers, software, medical equipment, broadcast television equipment, analytical instruments, independent service providers and distributors. That we should find some commonality among such a diverse group is not entirely surprising. It is a reflection of marketplace challenges that cut across this broad spectrum of companies; challenges such as increasing product reliability that makes the need for service contracts less apparent to customers, and the increasing difficulty of selling services, whether you are marketing break/fix maintenance or professional services. Issues like these cut across all segments and have provoked many responses. Our study identifies the techniques that are working and have proven results. Adapting them to your situation can help you to avoid the wasted effort of techniques that may not bear fruit and to swiftly implement solutions that have a high probability of success. While this year's study is not quite completed, and a few more trends may be identified in our final report, we have enough information to report on five specific trends:

• Applying product marketing techniques to services.
• Branding services.
• Internal marketing of services and service organizations.
• Niching service.
• Direct sales of services internationally.

This is a very important trend that we sincerely hope continues. It is not necessarily something that marketers set out to do specifically, but is a byproduct of using good marketing practices and trying to use better marketing communications to coworkers and customers alike. Probably none of the companies we spoke with said to themselves, "Let's use product marketing techniques to market services." They just did it in response to their needs. Having the opportunity to observe several companies using similar techniques, we are in a unique position to label this trend and report it to you as a recommended technique.
     What do I mean by product marketing techniques? Things like branded product lines (described in more detail later in this article), packaging, good data sheets and brochures, articulate presentations, simple and consistent pricing, and good competitive positioning and information. As mentioned, these are all just good marketing practice. So what's the big deal? Well, we have discovered an amazing result when such techniques are used. The product sales force responds enthusiastically! Think about it. They are used to product information flowing to them in certain ways and having some consistency in approach. When services are marketed like products, sales people understand them better and are more comfortable with them. We always have the challenge of our services being intangible. That does not disappear with this approach, but some of the sales force confusion is dissipated and they respond better. This is not the holy grail, but it is a big help. Studies and our own experience have found that the major cause of new service program failures is the lack of buy-in by the sales force. The product marketing approach can greatly increase your success rate when launching new services. It can also help improve the effectiveness of marketing and selling of existing programs. Customers are affected in the same way. Your company probably has a fairly consistent product marketing approach. Aligning service marketing with product marketing allows you to gain strength from synergy and leverage from each other's efforts. This does not translate into a recommendation that you let product marketing take over service marketing. Experience has found that to have a dismal track record. Just tie into their techniques. Try it, you'll like it!

Branding Services

One of the techniques mentioned above is branding. This has become such a hot topic among service marketers that it merits its own special section. While there is still more talk in the industry than action, we are seeing companies brand their services with exciting results. The best programs we have seen have established an umbrella identity and name for their entire service product line. When used most effectively, the company announces the services product line by name ( Sony Electronics uses SupportNet, Waters Corporation uses Connections) right along with its branded product family names. This gives equal weight to services as to products. It also helps to make services more tangible to salespeople and customers. We have heard compelling testimony from salespeople who have related that service organizations are finally making their programs lucid and understandable to the sales channel.
     Successful implementation requires work on two levels. Service marketers must craft a careful, detailed branding campaign. Some important elements include good naming, consistent reinforcement at every opportunity, inclusion of all or most services under one umbrella (more than one creates confusion, negating the positive effects), strong marketing communications and clever packaging. Put the brand on everything! On parts boxes, brochures, data sheets, hats, T-shirts and Web sites. I haven't seen tattoos on technicians yet, but I wouldn't be totally surprised! Don't forget to serve some sizzle with your steak, either. Most service presentations, particularly from executives that have risen from the ranks, are too factual and boring. Presenting your new program to the sales force should be accompanied with the same kind of fanfare and fun as other products (see above). The same exciting approach should be extended to PR campaigns, borrowing yet another product marketing tactic.
     On another level, branding strategies require buy-in at the highest levels within a company. Many CEOs don't truly understand the strategic value of services, and we need their sponsorship. Instead of the usual 15 minutes at the week long sales kickoff, we need equal time and status with tangible products. Sales execs have to be on our side for this to happen. Certainly service marketers can work with their product marketing peers to gain cooperation, but high-level support is essential, which leads naturally into our next trend.

Internal Marketing of Services And Service Organizations

The need for better positioning of services within companies is well established. What has been lacking is some good ideas on how to accomplish this. Service organizations and our leaders are part of the problem. Those of us who have risen from the ranks tend to be conservative, solid and process-oriented. When we reach the executive level, we tend to be regarded the same way as accounting executives. Solid and reliable, but not noted for our strategic leadership. We need help. In an article in this past October's edition of The Professional Journal entitled "How To Avoid Becoming Roadkill on the Services Superhighway," I suggested that service marketing could assist us in becoming more strategic and in selling ourselves and our organization. Working together with our leaders we can elevate our position in the company and get the attention to our efforts that we need.
     Working with one of our clients to develop a strategic plan for their services organization recently, we came to the conclusion that we had no hope of achieving the plan without repositioning the whole services organization within the company. We would never get the resources we needed, nor the cooperation of different departments. What we needed, we decided, was an internal marketing plan. This is constructed much the same as any marketing plan, but is directed at the internal customers, such as company executives and other departments. By the way, they should be researched much like external customers, i.e., What are their needs? Most service organizations have missed this step. They are thinking only of their own needs, not what other departments might be trying to do. Aligning service with other departments will produce remarkable results. This does not mean that you actually provide everything they might want. It means taking the time to understand others in your company and using this insight to better sell them on your programs. Let them know how cooperating with you will benefit them and the rest of the company. Generally, sales will want to know how you can help them sell products. Finance will want to know about your financial contributions. The CEO will want to understand how supporting service will help him or her achieve their goals. We all compete for resources. Service organizations can use internal marketing to better compete and reposition themselves internally.

Niching Service

Niche marketing has been around for a while. Recently we have seen it applied well to service providers, especially in professional services. The key element has been in deciding what not to do. It is easy for some manufacturers' service organizations: they just service what the company sells. For others, there has been a confusing array of opportunities including multivendor service, asset management, systems integration, consulting and a slew of others. The temptation is to go after too much. This is one reason that many service providers have failed to successfully launch professional service programs. It is also one of the reasons that professional services, on average, are about half as profitable as traditional services.
     International Network Services (INS), one of the participants in our Best Practices study, has niched themselves well. They only provide professional services for networking applications. As an independent services company, they sell no tangible products and do not offer maintenance services. Recently named as one of the fastest growing technology firms in Silicon Valley with over $100 million in revenues, INS has disciplined themselves to routinely turn away from opportunities that would take them out of their chosen market. Burrowing deeper into their niche allows them to focus all their energies and resources very tightly. Given the breadth of networks, it is clear that they would not have achieved their success without this focus.
     In the marketing and selling of professional services, we have learned from experience that it takes dedicated efforts to succeed. Trying to have the same people sell tangible products and professional services, for example, does not seem to work. The selling cycles are different, and so are the buyers. In addition, you can demo products, but that doesn't work for services. Niching your services makes a lot of sense for some providers, and we are seeing companies like INS and others forego traditional services completely.

Direct Sales of Services Internationally

As services have gotten more challenging to sell, we have seen many companies responding by adding both telesales groups and field located service sales specialists. At first, this was just a U.S.-based phenomenon. Lately we have found some spectacular successes in other geographies. Despite local objections that "it will never work in France (or Germany, Japan, Taiwan, etc.)," telesales of service and support contracts is working just about everywhere that it is being seriously tried. One company convinced their dubious French counterparts to try it in just one small product area for one month—December, no less. The results were absolutely convincing—on the order of a 40 percent increase in this admittedly small market. The same company convinced their German peers to try a more expansive six-month test, with similar results across a much broader front.
     Oracle has used telesales very aggressively to sell support contracts, to the tune of millions of dollars per year per person. At the same time, their European counterparts, who had gone a different route, were very successful using dedicated field-located people to sell support directly. Recently they have been teaching each other their techniques and setting up groups in Latin America, the Far East and Europe that are using blends of both methods. The results have been gratifying and Oracle sells over a billion dollars worth of support each year.
     We first noticed this trend to have dedicated sales people sell services a few years ago when preparing our first Best Practices report. The longevity, extension into other geographies and growing pervasiveness of this activity cause us to label it as one of the most significant trends in marketing services today. If you have not tried it, we urge you to consider it. Telesales, in particular, is relatively inexpensive and easy to set up. Even if you are not fully convinced it would work for your business, try a test. Chances are you will become convinced.

Summary

These are not all the trends in services marketing today, but they are good ones. We will probably identify more for our final report, due out about the time that you read this. I am pleased to note that
     AFSMI will offer the report for sale, and probably at a discount to members. Give AFSMI a call if you're interested. In the meantime, there are some good ideas to try in the above material. Maybe we will be reporting on your best practice next time.