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Marketing and Selling Services Globally^©
by Al Hahn

I've noticed that my deadlines for this column seem to often coincide with my company's training classes. This should probably not surprise me since I travel frequently to present our classes on the techniques of selling services to groups around the world. As I write this, my partner is speaking to a class of approximately 30 service managers from 17 different countries. When they discuss elements of the class, I can hear conversations in 8 or 9 languages. Of course, we give the class in English, but they discuss it in languages shared by groups of 3 or 4. For instance, there is a group of Spanish speaking managers. Ramon, Carlos, Salvador, and another Carlos come from Spain, Puerto Rico, Mexico and Brazil, respectively. The latter Carlos has a greater challenge because Portuguese is his native tongue, but Spanish is closer to Portuguese than English.

The pace of a mixed group like this is noticeably slower than our U.S or North American classes. We have to slow down and try to avoid American slang expressions that don't translate well. Its exciting to work with these groups, however. Besides the obvious opportunity to feast on the richness of different cultures, it is gratifying to see our techniques work in all those countries. We know this from feedback from former students who are actually using their training to sell services.

There are some surprising stories. A service manager from Russia told of issuing bullet-proof vests and sidearms to service engineers that were in constant danger of being hijacked for the parts they were transporting in their cars. Scary stuff!

International Trends

So what are we learning from this work? Quite a lot, actually. First, there are some trends to note. There is a slowly growing movement to globalization of services portfolios. Some customers want consistent services in all of their local offices and may want to negotiate their prices with one person. In fact, only a minority of customers are able to speak for all of their operations at this time, but that is changing. Some technologies, such as networking or enterprise-wide software lead the way for globalization. Once a company has deployed a network or a database to the field, they become dependent upon its use and often require global service contracts.

Secondly, the needs and challenges of marketing & selling services are similar around the world. Our classes confirm what we have seen in international surveys; increasing price pressure on service providers throughout all high technology segments. Whether you are supporting desktops, instruments, office equipment, large scale computing, networks, hardware or software, chances are that your customers are pushing back on your prices and negotiating harder for discounts. This is driven by the vastly improved reliability of products today, with the accompanying decrease in the visibility of the need for services. Consequently selling service is an increasing challenge in most countries.

Marketing To The World

The challenges of marketing services worldwide are many. They start with one of the first steps in the marketing process, market research. Markets can be at many different stages in different countries. Your company may be well established in a niche in one country, but a new and rather unknown supplier in another. While there are many similarities in customer needs, there can be many differences as well. And finally, competitors are different and their market position can differ from place to place. For example, Siemens Nixdorf may be a formidable competitor in Germany, but may not have the same marketing clout in the U.S or Australia. Likewise the existence and penetration of third party service providers varies considerably from country to country. English speaking countries such as the U.S., Canada, U.K., and Australia tend to have well established third party providers, other countries generally do not.

One of the greatest challenges to marketing services globally is in gathering market and competitive information in multiple countries. It is almost impossible to do this from one country. At Hahn Consulting, we use a network of consulting firms in different countries that speak the language, understand the culture and business climate, and are familiar with the competitive landscape. Gathering information outside the U.S., can be time-consuming and expensive. People in most other countries do not speak out or share information as readily. Market research in Europe can take twice the time and cost double the price of the same work in North America. In Asia, particularly Japan, it can be 3 or 4 times as expensive. This is not to say you should avoid local research. Quite the contrary. It is vitally necessary to design and price programs that will meet global needs. It will be necessary to allow more lead time, however, and you should utilize the services of local firms or those that have international locations or affiliates.

Most companies have friction between product sales and service people We need to sell our sales counterparts on the strategic importance of service, and how service can benefit them. (See my past article on The Strategic Value of Service). All service providers are challenged by the intangible nature of services. In response we see increased service marketing efforts, although marketing staff are primarily located at headquarters for most companies. These marketing efforts are evidenced internationally by more attention to international concerns, more travel to the field, with attendant improvement in relationships. Most companies are developing the blueprints of new service programs and prices at headquarters with local customizing acknowledged and accepted. The result is better consistency of services around the world. When service marketers design services with global deployment firmly in mind, instead of as an afterthought, locals feel less need to reinvent everything just to put their stamp on them.

Some of the most visible global efforts are on the selling of services front. My company is being asked to train more international groups. This is in response to the need for increased and improved direct selling activities. The good news is that techniques we have been using in the U.S. are working elsewhere. The challenges are fairly universal and the methods to respond can be easily adapted to different countries.

I am excited to report that Telesales is alive and working in international settings. Peter Boler, Manager of Customer Assurance Marketing for Waters, an analytical instrument company, reports success of local telesales efforts in Germany, France, UK, Spain, Netherlands, Japan, and Australia. While the bulk of telesales success has been in renewals of contracts as opposed to new contract sales, it is producing dramatic results at minimal cost. Similar experience is being reported by Oracle in telesales of software support agreements in South America and elsewhere. Speaking of South America, it is emerging as somewhat of a hot spot for growth of product and service sales. If you are not now active there, it may be a significant opportunity to explore.

Local Issues

While there is increasing globalization, there are still a host of local issues to be considered. Most multinational businesses are organized as local subsidiaries. Country managers, while holding general management responsibility, are almost always chosen from product sales. They may not have much of a general management viewpoint or skills. If they view services as an expedient to sell products, it can impede the evolutionary development of services (see The Natural Evolution of Service, published this May), and they may resist service sales efforts.

A lack of marketing expertise may result in local offices modifying service programs or prices inappropriately. One example I heard of resulted in travel time being charged at a higher rate than on-site labor. Some Europeans feel that all service contracts should be priced at 10% of the price of their products, an unfortunate misconception. Mindsets can be very difficult to change, particularly in other countries. Eager to preserve their cultural identity, and turned off by home office attitudes of superiority, many locals can display stubborn adherence to old paradigms and fiercely resist change. This is as much a personal issue as an international one. Headquarters staff must learn to value local viewpoints, and to solicit their opinions before constructing new programs. Then, they must sell them on the new programs, train them on their use, and exercise patience and persuasion. Companies that use positive reinforcement seem to be much more successful in this regard. The need for training cannot be overemphasized. If locals have poor service sales skills, we can hardly complain if we have not attempted to help them.

Mindset and paradigms of behavior are often the greatest challenge to selling services. Some Asian countries still expect lifetime service to be bundled into their products. We still hear reports of this in Japan, Taiwan, and China. Our clients are experiencing success in changing this expectation and selling service contracts, however. The biggest difficulty is in changing the expectation of the service providers themselves. You can sell services in these countries if you try. Customers are easier to sell than our own employees. In one case, a service manager in Taiwan doubled his penetration of contract sales in about 6 months. How did this happen? First, we "brainwashed" him in our sales training class, convincing him it was possible. He, in turn, convinced the local country manager to let him try. Then they raised the price of hourly service because it was competing with contract sales. Lastly he used his sales skill to sell directly to customers and convinced them of the need for a comprehensive service plan.

Recommendations

So, do I have any recommendations? You bet. To keep it simple and clear, I'll bullet them

Do your international homework - you can't design a good package, or get any respect if you don't understand the local situation. This means market research, competitive analysis, and some personal visits to familiarize yourself with the culture and business climate.
Design & price programs with international situations in mind - easier after step 1.
Expect and encourage local marketing - this includes staff ( be willing to sponsor), and local adjustments to you programs and prices.
Develop and maintain personal relationships - we all work better if we know and trust our colleagues. This will take travel and telephone or email time.
Never stop selling internally - this includes personal efforts as well as formal presentations and training.
Keep track of results - this includes the results of local customization as well as contract penetration rates, renewals, revenue and profit measurements. Careful analysis may reveal that someone is adjusting all your prices to equal 10% of product price as happened to one company I know. They had to educate the services marketing person in that country.
Partner, don't preach - treat your colleagues with respect.