It probably comes as no surprise that service executives are often focused on finding ways to increase top line revenue, boost profits, and expand market share. Indeed, these are usually among the most important initiatives that service executives pursue when it comes to charting the future of their business.
In order to achieve results, service executives need to master three fundamental or strategic concepts about service marketing. It is important to understand these strategic concepts because they form the underling theory of service marketing, and – as you will read below – theory is what forms the basis of our reality. By understanding service marketing theory, you can shift your perspective from product marketing to service marketing. Without this shift you can never expect to implement a Successful Service Marketing™ strategy.
One of the most critical strategic concepts of service marketing is that perception is just as important as reality. Ultimately, the perception that a customer has about a service provider is what influences their decision to work with that service provider. In other words, customers buy both perception and reality. As a service provider, you must influence their perception of your capabilities. Customers need to trust that you have the capacity to deliver service before you actually deliver it. It’s not just the actual service that they are buying that creates value; it’s your ability to manage their perception that creates value. Perception is what sells; your performance is what keeps them coming back. Reality must equal perception otherwise you will have an unhappy customer on your hands.
A second strategic concept that service marketers need to understand is that customers pay more for services over the lifetime of a product than they do when purchasing the product itself. In fact, they may pay as much as 8-10 times more for services than what they originally pay for the product. This may seem like an absurd statement at first glance. However, consider the fact that the customer may own or operate a piece of equipment for five to ten years or more. Over that period of time they may require a broad spectrum of services ranging from installations, to remote support, to field service, to replacement parts, to training, and so on. Clearly the dollars can add up over time.
The third concept has to do with understanding the relationship between “value in use” and time. Value in use is about understanding the cost to your customer in absence of the service. This is typically a function of time. Some services are mission critical. If they are not performed in a timely manner, the customer may lose a lot of money by not having the service available. You need to understand value in use in order to effectively price your services and articulate the value of what you can provide. Most services are valued in terms of time. That’s because downtime equals money lost in the service world. The longer it takes to obtain service, the more costly it becomes for the customer. The quicker the service is performed, the more valuable it is to the customer. By understanding your customers’ wants from the standpoint of time, you can develop service offerings that meet these needs. Furthermore, if you can meet the strictest of time requirements, than you can command a premium price for your service particularly if it is on a mission-critical product or application.
By mastering these strategic concepts you will begin to observe a shift in the way you think about service marketing. This shift will help you become more effective in implementing marketing strategies that lead to higher revenues, greater profits, and increased profit share. If you are really interested in achieving these outcomes, then check out my online training course where you will learn strategies, tactics, and insights for Successful Service Marketing. ™ As a starter, I’ve put together a brief video that describes the course content. You can access it here.
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