“It’s been called “selling the invisible”-delivering intangible is at
its core “product” offering”. Rahul was trying to explain me
the difficulty he was facing in selling insurance. Fresh in the
field, he had just switched his job from selling a consumer
product to Insurance industry.
Lawyers/Law firms, Management consultants, IT services
and Telecom providers, Architectural groups, Doctors and
healthcare organizations, and Educational organizations,
Hotels and hospitality organizations, and a multitude of
business-to-consumer operations profit from performing and
delivering people-based services. Financial products and
Insurance products too are a part of Service industry.
“It is therefore difficult selling them”. Rahul added.
Of course it is ‘different’ if not difficult selling the services.
But, invisibility, (or intangibility), is just one factor that
distinguishes services marketing from product marketing.
There are three other characteristics that affect the way the
clients behave during the buying process and the way
organizations must interact with them.
Additionally, these characteristics influence the development
of marketing strategies and the more tactical marketing
mix-from the “packaging” and pricing of services bundles, to
defining distribution plans and promotions options. Rahul
looked confused, but eager to understand more about this
aspect of Services Marketing. It was obvious.
To ensure business success, services marketing professionals
must clearly understand these characteristics, how they
affect client behavior, and how they can respond to diminish
engagement risk, improve customer perceptions, and
enhance market opportunities. Let us have a look through
the entire four basic characteristic, and how significant it is
for our industry.
1. Intangibility
Services are not physical and cannot be “possessed.”
Because they can’t be seen, touched, or made tangible in
some way, assessing their quality and value is difficult.
A services client will never know how good the service is
until after he receives it. In some cases, it actually may be
months or years before a trigger event occurs to activate
the service, at which time the client hopes to experience
the promised service quality (e.g., an IT crisis triggers
service, or in our Insurance industry, accident initiates an
insurance claim).
This can be unsettling for the client, whose response is to
look for tangible signals about the service process and
quality prior to purchase to reduce uncertainty and
reservation.
How we should deal:
Services marketing professionals must determine how to
effectively Communicate the services Process, Deliverables,
and Benefits in order to build client confidence. Tangible
signals that indicate services quality and value come from
personal interaction, trusted recommendations, clear
communications, equipment used or processes followed,
pricing, and the physical environment in which the business
operates.
With promotions, a logo symbol (mnemonic) can offer a
sense of tangibility-the “good hands” of LIC of India, the
Merrill Lynch “bull”, the Prudential Insurance “rock”.
Testimonials and case studies can be used to build client
confidence and rapport. The communications material
itself (paper, design, and content) can convey quality, too.
Pricing can also be an indicator of quality: Premium pricing
often suggests higher quality, while prices that are too low
may hint at the inexperience, limited depth, or vague
processes of the services producer.
But tangibility must extend beyond promotions and price.
Because positive personal interaction and “chemistry” is a
gauge of quality to the client, marketing as a discipline
must be influential in the training of sales and service
associates. These individuals literally are the embodiment
of marketing for the organization. Their ability to deliver
on the brand promise affects business success.
Therefore, creating client relationships, setting appropriate
expectations, and learning to represent the company in
an acceptable way (e.g., through appearance, attitude,
and communications) should augment standard knowledge
and process training. Because it is critical to services delivery,
the success of client interactions should be quantified,
measured, and improved with regularity.
2. Inseparability
The production of the services can’t be separated from its
consumption. For example, the production and consumption
of a medical examination happen together, as do many
consulting services and IT maintenance contracts.
In Financial / Insurance advisory too, moment one starts
consulting about the options a particular client may opt for
(in other words, client presentation), the production (and
consumption) of service starts.
Many agents think that collecting premiums, dispatching
receipts, changing names/ address etc. are the services
they offer. These issues are only a small part of the total
package of the services offering and could be taken for
granted. They will definitely not distinguish a service from
one advisor to other. The distinguishing factor here would
be a quality of advice, and a way of presentation.
This leads to two important factors. First, the client is,
essentially, “in the factory,” watching production all along
the way. It is very important for a service provider or
consultant to carefully manage the “production process”
as the client is able to observe it in action and make
judgments about quality and value.
Second, the client often expects the service to be provided
in a specific way or by a specific individual-and that can
pose challenges in assigning staff, delegating, managing the
process, and ensuring the frontline people display the
appropriate knowledge, attitude, and appearance when
delivering the service.
How we should deal:
Services marketing professionals can encourage client
participation during the delivery process. As the client is
engaged through interviews, fact finding process, strategy
sessions, regular communications, testing, and face-to-face
updates at major milestones, he gains confidence and builds
commitment to the engagement and relationship.
To manage distribution and pricing considerations and other
paraphernalia services, in the face of inseparability, the
marketing professional can identify the level of
personalization that the client requires and the company
can support. For example, interactions can be managed
through conference calls versus on-site visits, or exchanges
can be shifted from high-contact to low-contact operations
(e.g., personalized banking to ATM or online banking). These
changes should be carefully evaluated to ensure client
acceptance and positive brand impact.
3. Variability
Sometimes called “heterogeneity,” services quality and
consistency are subject to great variability because they are
delivered by people, and human behavior is difficult to control.
Personal performance and quality can vary by time of day
(people get tired), time of month or year (during tax time for
CPAs), workload (as is generally in March), experience (past
experience the service provider has had with a particular
client and vice versa), attitude, knowledge, and various other
factors. Maintaining client trust during lapses (which will
happen) is very critical. Also, variability is why it can be risky
to have one person make the sale and establish the
relationship, and another deliver the service. (Most important
factor in selling is creation of trust. And this is truer in the
selling of Insurance and other financial services). The original
contact person is the one who reduced risk for the client;
when someone else delivers the service, the client may
become agitated or wary.
How we should deal:
Services marketing professionals particularly can overcome
variability by developing special service packages.
For example, the level of quality to be received can be
deliberately limited. IT maintenance contracts frequently offer
a range of service packages (e.g., from “basic” with response
in 4-6 hours, to “premium” with immediate, on-call support).
Standardizing some service offerings enables the organization
to be very specific in noting service and quality deliverables,
thus decreasing variability and meeting client expectations
simultaneously. Instead of providing similar types of services
to all the clients, different standards could be created for
various categories of clients and various types of services,
depending on the amount of skill and man hours required for them.
When this method is used, variability can become a point of
differentiation as it enables flexibility and services customization.
When promoting services, marketers can overcome client
concern about service consistency in two ways-through team
introductions and through positive referrals.
The sales leader should make it clear that a qualified team will
work with the client, and schedule face-to-face introduction
and discovery sessions to smooth the next-phase transition
process.
In addition, positive word-of-mouth referrals, written
testimonials and case studies, or reference-able accounts can
dispel client concerns about variability.
LIMP THE LOOPHOLES: Because things can and do go wrong,
the services producer should know how to deliver a
professional client response. How quickly the response is
delivered is critical. The objective is to maintain client trust;
so shifting blame, explaining it away, or ignoring it can further
damage the relationship. The services producer should provide
an apology, fix the problem or situations quickly, make up for
the inconvenience with additional free services or a token of
appreciation, and determine the reason for the error and fix it
at the root-even if it means people or process changes.
Finally, research shows that employee satisfaction is the most
important factor in providing high quality service. Potential
client interaction problems can be minimized through adequate
training, empowering employees to make more customer-
focused decisions, and rewarding them for positive customer-
oriented behavior.
Also, establishing employee feedback mechanisms so that
management can hear and take action on issues of concern
will strengthen employee perceptions of the company, increase
satisfaction, and result in better client interactions.
4. Perishability:
You can’t store services for future use. When a client misses
an appointment with his attorney, that time can never be
recaptured. When hotel rooms are empty and theater tickets
go unsold, the inherent value vanishes.
Perishability also affects performance, as balancing supply and
demand can be difficult. Demand may be seasonal, time sensitive,
or crisis driven. When demand fluctuates, it can be a challenge to
maintain high performance levels.
For example, a Tax consultant at tax time in March; may have
difficulty giving the same personalized attention as at other times
of the year. In IT services, performance could be tested during
peak times of disaster recovery, massive server outages, or
when juggling new installation projects in four states. While
product marketers handle supply/demand issues through
production scheduling and inventory management, services
marketers don’t have that advantage. Probably that is the
significance of March hours in India, as Saving Tax becomes
priority in the period.
How we should deal:
Unlike the other three characteristics, perishability primarily is a
concern of the service producer-the client is aware of this factor
only when there is an insufficient supply and he has to wait for
the service. For the services marketing professional, perishability
affects pricing and distribution most distinctly.
If the services are particularly time sensitive, demand-based
pricing can be instituted as with airline tickets, seasonal vacations,
or even a partner’s hourly fee structure.
For many services, managing demand is handled by scheduling
delivery through appointments, while increasing supply is
addressed through multiple locations or additional site personnel.
Another way to balance supply-demand issues is through the
use of retainer agreements. For those services that are long-term,
maintenance, or consultative in nature, this pricing and delivery
method ensures the client of ongoing services delivery with a
greater consistency in quality and allows the services producer to
establish a more predictable cash flow and forecasting scenario.
Some factors, like use of modern technology; additional
personal and judicious delegation which is done to take care of
the variability, may actually help in handling perishability and
improving the efficiency and effectiveness, especially during the
pick times.
The Final Factor
What’s right for your services? How can you strengthen client
relationships and improve your competitive position?
Understanding the characteristics of services can provide a unique
opportunity for services producers to improve business success
by rethinking their models and packaging options, improving
production processes and client participation, enhancing customer
focus, and building employee relationship skills.
Yours views and experience is very critical for all of Us. Learning
by sharing is a continuous two way process. So do write us back.
Wish you a happy selling.
Yours Enthusiastically,
Amal Mondkar.
