The Secret to Selling More Service Contracts

This article first appeared in Field Service News on May 28, 2018

Field service executives often face challenges when it comes to generating additional service revenue for their companies.

They often face resistance from customers as evidenced by low contract attachment rates. The natural tendency is to blame the price as the reasons why customers aren’t purchasing more services contracts.

After all, this is the feedback they received from their sales teams and from the customers.

Being logical and rational business people, field service executives try to solve the problem by lowering the price, after all, if the customer says that the price is too high, it must be the reason why they are not buying, right?

To quote, the popular song by George and Ira Gershwin, “It ain’t necessarily so!”. While price may be a factor in the purchase decision, seldom is price the only reason why customers don’t purchase service contracts.

In market research studies that I have conducted for clients in a wide array of technology service markets, I have found that price is often low on the list of criteria that end-users consider when selecting and evaluating service providers. Criteria such as quality of service, knowledge and skill of service personnel, breadth of service offering, and vendor’s knowledge of their business are perceived by customers to have higher importance than price alone.

The truth is “your price is too high” will always be an objection that customers provide when they cannot justify the value of a service contract.

This is because they have no way of logically defending the value of the service being purchased. Stated another way; they are not able to differentiate the benefits of service contracts from time and materials service. The problem is that Field Service Organizations (FSOs) often attempt to sell service contracts without providing justification about why a service contract is better than simply paying for service on a time and materials basis.

A common saying among sales professionals is that customers buy emotionally and then defend their purchases logically. All too often, FSOs provide little emotional reason why a customer should purchase as service contract as opposed to T & M and even less logical supporting evidence about why a service contract is more valuable.

To achieve high attachment rates, FSOs must be able to articulate the value of their service offerings to customers as well as to their own salespeople. The value proposition must impact customers’ emotionally by addressing their fears, worries, doubts, and concerns about the impact of service or the lack thereof on their operations.

For example, fear of excessive equipment downtime, lost revenue, low machine utilization levels, or the possibility of quality defects. Of course, the FSO needs to provide logical supporting evidence why their service offering will eliminate these issues.

FSOs achieve this results by articulating, either through a sales conversation or marketing collateral, what’s included in a service contract that is not included in time & materials. This requires they do an effective job in defining the coverage, entitlements and resources available to the customer through a service contract.

They must be able to answer the customer primary question “What’s in it for me?”. If the only difference between a service contract and time & materials is that the customer can prepay for service, then there is no emotional value or logical contrast. However, if the service contract provides a preferred level of service (e.g., 4-hour response time, 99.9% uptime guarantee, 7 by 24-hour coverage, parts, etc.) or preferred price structure then the customer is presented with some real value and contrast.

Ultimately, FSOs must be able to help customers defend their purchase of service contracts. They do this by offering more value in a service contract than the customer could possibly receive through time and materials services.

Fundamentally, FSOs can deliver better service to customers under contract.

This is because the contacts provide data about the installed base and service demand requirements. As a result, FSOS can anticipate service events and be more effective at planning and allocating service resources. This, in turn, makes it possible for FSOs to provide a guaranteed level of service to their customers.

Honesty is always the best policy especially when it is supported by a guarantee and exceptional service!

Do you have any comments or questions?  Let us know by posting below !!

The Role of Data in the Servitization Journey

Data is becoming more important as we consider one of the most significant trends impacting the technology industry, "Servitization".

Several years ago, Blumberg Advisory Group worked with a company that provided hardware maintenance on film based photo labs found in big box retail outlets. Their service revenues and profits were declining because digital photography was replacing the need for film based photo labs. Although the client offered a new digital based technology to replace film based photo-labs, these systems were not being installed at the same rate as the older systems were being phased out.   Digital systems didn’t require as much service and support. They were less complex and easier to maintain than their film-based cousins.

Our client required a new strategy to offset their declining revenues and profits.  They needed a solution urgently or the parent company would shut down this division.  If we did not know the importance of data or the concept of managing the capability to serve, we would have probably recommended that the client lay off some of its field service workforce to reduce costs and improve profits.  This could have led to a downward spiral of layoffs, company morale and growth.

So what steps did we take?  We analyzed their data.  We reviewed their field engineer utilization rates, customer response times, field engineer skill levels, and the equipment on customers’ premises.  In conclusion, we found that their field engineers were not being completely utilized.  We found out that these engineers had further knowledge and expertise in supporting other types of equipment found on the customer site.  They were typically able to respond to a customer request within four hours even though the guarantee was for eight.  

Based on our analysis, we recommended that they expand their service footprint to other types of equipment located on the customers’ premises, i.e. electronic cash registers and point of sale equipment.  We also recommended that they charge a premium price to customers who required faster (e.g., 4 hour) response time.  As a result, this client went from losing 20% of their profits per year to a 50% increase in new business within 24 months of implementing our recommendations.

Ultimately, the key to our client’s success lied within the data.  Data is becoming more important as we consider one of the most significant trends impacting the Technology Industry, “Servitization”.  This trend describes the transformation that many companies are undertaking as they move from primarily selling products to generating a sizable portion of revenue and profits from services.   Ultimately, the path toward Servitization leads companies toward offering anything as a service (XaaS).  In other words, their business has reached the stage of development where they are no longer selling products or solutions to their customers, but outcomes.   For example, instead of selling a copier machine they are selling their customer the right to use the machine to produce a certain number of copies over a specific period or time.

To deliver on this promise, the provider must not only have great people, process, and technology but access to data related in terms of machine condition and performance (e.g., alerts and notifications), parts availability, field engineer location and skill sets, diagnostics, etc.  With this data in hand, the provider can ensure resources are available when needed and that the customer receives the outcome it purchased.  The data is made available through technologies like the Internet of Things, Artificial Intelligence, Virtual Reality, etc.   Examples of companies that are along the servitization journey are Rolls Royce, ABB, Siemens, Kone, and General Electric. They have generated profitable income and know that a truly exceptional service business is built on four foundations – people, process, technology, and data.

Comments or questions? 

Please post below and we will respond as soon as possible!!

Field Service Scheduling Software and What You Need to Know

Scheduling software has long been a foundational technology for field service companies allowing them to meet customer demands.

This article initially appeared in Field Service News – September 7, 2018

 

Michael Blumberg, President of the Blumberg Advisory Group lifts the lid on all of the key aspects of this crucial tool…

If you have spent any time in Field Service, you probably understand the importance of managing service delivery functions against key performance indicators (KPIs). Among the most critical KPIs in the Field Service Leaders track are First Time Fix (FTF), Service Level Agreement (SLA) Compliance or Onsite Response Time (ORT), and Mean Time to Repair (MTTR). These KPIs measure the effectiveness of a Field Service Organization (FSOs) in delivering quality service in a timely manner.

The inability to meet KPI targets may result in exponential costs, customer attrition and loss of revenue; whereas the ability to exceed customer expectations can result in customer appreciation followed by an increase in profit margins and sales. To effectively schedule/dispatch the right technician to arrive on time with the right parts and skillset plays a significant role in meeting these outcomes. This is definitely not a small feat for your typical FSO.

Scheduling and dispatching Field Service Engineers (FSE) poses a challenge for most FSOs, particularly those with more than 5 FSEs. The reason behind this is there are many variables and factors involved.

An FSO with only one or two FSEs and a few customers may not perceive scheduling to be a major challenge. The volume of service requests may be relatively low while the options of who, when and where to send them may be rather limited. Scheduling becomes more of a challenge as the volume of service requests (i.e., customers) and the number of FSEs increases.

Adding to this complexity are the business objectives and/or constraints an FSO must optimize to meet its scheduling requirements.

With additional constraints or objectives, the more difficult it becomes to produce a solid schedule. For example, if the objective is to only meet a response time commitment to the customer, then the decision is easy – assign the FSE who can arrive in a timely manner at the customer’s site.

If FTF, MTTR, and/or SLA Compliance targets are also part of the equation, it becomes even more difficult to produce that solid schedule. Adding a profit margin objective, high call volumes, multiple geographies, and a sizable pool of FSEs, the decision becomes even more overwhelming.

The reason why scheduling is so excruciating of a task is that there are numerous factors that an FSO would need to create and evaluate to determine the optimal assignment for each FSE.

This is a time-consuming activity that requires an extensive amount of computational power to achieve. Many companies have suffered from a loss of time and resources in dealing with confusion and potential human error. The solution is Dynamic Scheduling Software.

Dynamic Scheduling Software provides FSOs with the feature-rich functionality that streamlines, automates, and optimizes scheduling decisions.

This technology ensures the FSO sends the assigned technician to the right job having the proper skill set and arriving on time. These applications typically leverage a scheduling engine that optimizes FSE job assignment. Scheduling engines vary in their complexity ranging from those based on business rules to Linear Programming (i.e. goodness of fit) techniques, Operations Research Algorithms (e.g., Quantum Annealing, Genetic Algorithms, etc.), or Artificial Intelligence (AI)/Self-Learning applications.

The complexity of the scheduling problem, number and types of resources involved, duration of tasks, and objectives to be optimized play a role in determining which scheduling engine is most functional.

Critical factors to consider may include whether the scheduling engine can handle:

  • Multi-day projects or short duration field service visits,
  • People and assets (e.g., tools, parts, trucks, equipment) or solely people,
  • The number and types of KPIs that are part of the objective, and
  • Route planning requirements.

In evaluating Dynamic Scheduling Software, FSOs are also advised to consider the following criteria:

  • Cloud versus On-Premise Deployment Options
  • Speed and Ease of Implementation
  • Integration with Back-office Systems
  • Availability of Real-time Visibility by the Customer
  • FSO Requirements for Best of Breed or Integrated Enterprise Solution
  • Total Cost of Ownership
  • Return on Investment
  • Vendor Industry Knowledge and Experience

There are over a dozen software vendors who offer some form of dynamic scheduling functionality for field service.

Obviously, no two Dynamic Scheduling applications are alike. Each one has their points of differentiation. The best solution is a function of the level of importance the FSO places on each criterion and how each vendor meets these criteria.

Regardless of which vendor is selected, the benefits of Dynamic Scheduling are clear.

In fact, industry benchmarks show that companies who implement these types of solutions can achieve a 20% to 25% improvement in operating efficiency, field service productivity, and utilization. The impact on bottom line profitability and customer satisfaction is substantial. To enable FSOs to provide customers with an Uber-like experience and significant profitability, FSOs should consider deploying Dynamic Scheduling Software as part of their service delivery infrastructure.

Is Now The Right Time To Replace Your Field Service Management Software?

 This article first appeared in August 20, 2018 online issue of Field Technologies Online 

The market for field service management (FSM) software market is large and growing. In 2017, the market for cloud- based applications was valued at $1.2 billion by Blumberg Advisory Group, and we anticipate that the market will experience a five-year compound annual growth of 22.8 percent. In other words, it will more than double by 2022.  

Given the size and growth of this market, it is no wonder that dozens of software vendors are vying for share. Each vendor claims that their software will help field service organizations (FSOs) transform operations, keep up with industry trends, adhere to best practices, increase profits, and maximize customer satisfaction.

These claims are prompting many field service leaders to evaluate if now might be the right time to replace their existing FSM solution.  Being rational business managers, field service leaders need logical reasons to upgrade or replace their software. Of course, there are many reasons but some are good and some are not so very good. With more than three decades of experience with this topic, let me share with you five good reasons why NOW might be the right time to make a change:

  1. Your current system is costly to operate and maintain. Lets’ face it, if you are spending too much to operate and maintain your existing system, then it is probably time to replace it. Typically, companies that operate antiquated, disjointed, and/or fragmented systems experience higher IT operating expenses than those who do not. I worked with one client whose IT operating expense were 12 percent of revenue (while best in class is 4 percent). The cost savings alone was enough to justify the purchase of a new system.  
     
  2. Your existing FSM software is hindering growth. Depending on its feature functionality, your FSM software can either facilitate or limit your company’s growth. A few years ago, I helped a client expand into a new service business. Unfortunately, their existing systems did not have the required functionality to manage the transactions and workflow of this new business. As a result, my client had to postpone the launch of the new business until they could replace their system.
     
  3. You can’t get good data from your current software. This is one of the most frequently cited reasons for replacing software. If you can’t obtain good data on your installed base, equipment service histories, field service engineer skill sets, cost of service, failure rates, etc., then your company is at a disadvantage because it lacks the business intelligence to effectively plan and manage resources. 
     
  4. Your current solution is impacting KPIs. Ultimately, the success of your FSO’s ability to meet financial targets and keep customers happy depends on its ability to manage service processes against KPIs. For example, first-time fix, SLA/response time compliance, MTTR (mean time to repair), etc. If your company’s performance trails significantly from industry average or best in class, then it is possible your FSM is to blame. Perhaps its time to consider replacing your current system with one that does a better job and drives performance gains?
     
  5. Your current solution lacks flexibility and scalability. It is important that your FSM software can scale up or down without a massive investment in capital or labor. In addition, it should offer flexibility in terms of how workers can share and access data as well as flexibility or openness in terms of the ability to add on third party applications.     

There will always be software vendors who offer new and innovative applications to the field service market. The desire to keep up with industry trends and best practices will also drive purchasing decisions. Implementing a new solution can be costly and time consuming, even if the ROI exists. Therefore, the decision to switch should not be made lightly. You can use these five reasons to provide an objective framework for decision making.  

Make Way for a New Marketing Power:

Service Marketing

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In this week’s blog post, I am sharing an article that first appeared in Field Service Digital on July 15, 2016.  The article was written by Derek Korte, editor at Field Service Digital and a senior editor at Original9 Media.  

Thanks to technologies like the IoT, and enticed by the promise of more revenue and a cozier relationship with customers, traditional manufacturers are now getting in on the service game. It’s a shift that not only blurs the lines between manufacturing and service, but also how companies market those products and services.

Sure, tried-and-true product marketing strategies are still relevant, but service marketing is a different beast entirely, says Michael Blumberg, president of the Blumberg Advisory Group. Below, he explains service marketing’s growing importance — and why it’s so hard to do well.

Is service marketing now more important than product marketing?

It’s not that product marketing is less important, it’s that service marketing is becoming more important. There are several reasons why: First, many companies have made it a strategic priority to build and grow their service businesses. Second, they recognize that services can be sold independently from products and, in some cases, in lieu of products. Third, they recognize that service marketing is different from product marketing and a different approach is need. Fourth, they understand they have to step up their marketing game if they are going to generate more service business.

So products might sell themselves, but that’s not necessarily true with services?

That’s true. You can sell a product by showing the customer the great things it can do because it has cool features, such as the IoT and augmented reality. On the other hand, service is intangible.

There is nothing you can show or demonstrate to the customer before they buy it. Just because a product has certain features, doesn’t necessarily mean that they will buy the service and support that comes with it. This is different sale all together.

How do you convince customers to invest in an unfamiliar service — especially if they don’t immediately know why they need it?

You have to focus on the economic value to the customers of having (or not having) the service available when they need. When you understand that, you can start selling services around that value proposition. Companies that struggle with service marketing can’t explain this benefit to the customer. Instead, they talk about service as an insurance contract. That’s a very general term. It doesn’t tell them anything about how the service will be provided, when it will be provided, or what outcomes it will produce.

What are the biggest differences companies should consider when marketing services, rather than products?

In a product sale, you sell the customers on the form, fit, and function of the product:. You basically sell them reality: what it does, how it works, its dimensions, etc. When selling services, you also have to sell customers on perception: the outcome or defined level of service they can expect. Bear in mind, you also have to sell reality, which is also known as the actual capability to serve, by describing or showing all resources that make it possible to deliver that level of service.

Is it fair to say service marketing is a lot harder — and a lot more work — than product marketing?

It’s a lot harder for a couple of reasons. First, service is an afterthought for many companies. They think that because the customer owns the product, they’ll buy the services, too. That’s often not the case.

Secondly, you can’t market a service like you would a product. Marketers talk about the four principles or Ps of marketing — product, place, promotion and price. But those principles are product-oriented. They don’t work with services marketing. Why? Services are intangible, and it’s hard to market something that’s intangible. To market services, companies need a new mix — the Seven Principles.

Are new technologies changing how companies market their services?

Service technologies like IoT, Big Data, and even field service software enable companies to collect and analyze very granular data about service events, product usage, failure rates, etc.

This information enables them to offer very tailored and customized solutions to their customers in terms of service coverage, response time, pricing levels, etc. The technology also helps companies be more precise about who they market to, when they market to them, and what they market.

Any standout companies that are doing this well?

Siemens, GE, and Philips are doing a pretty good job in marketing their service. They’ve made service marketing a priority because they understand services’ strategic value to their bottom line. They have carefully designed their service portfolios and pricing strategies to meet customer needs and requirements.

Their service marketing and sales people are adept at articulating the economic value of their services, and they are properly trained and incentivized to sell those services. They are effectively leveraging technology to find new market opportunities and exploit existing ones.

Are you interested in growing your service business? 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.

Got a question? Click here to schedule a free consultation

Turbocharge Your Service Business

Maximize Revenue through Market Research

race car

In my last series of blog posts I wrote about what it takes to build a Successful Service Marketing™ program.  To review, I described the strategic concepts of service marketing and introduced you to the 7 Ps. These are of course very important concepts. However, there are a few more concepts you’ll need to master if you are going to win at service marketing. If you’re going to be successful at service marketing or any kind of marketing, even if it is product marketing, you have to have good knowledge of your market.  You get that knowledge through market research. If you know who buys, what they buy, and why they buy then you can sell more to them and get them to buy more often.

Market research also provides the insight needed to communicate effectively with your current and prospective customers. It helps determine what messages, what images, what ideas will resonate with them and get their interest to want to buy from you.  Marketing is about taking a need and converting it into a want. You may need a watch to tell time but you want a Rolex because of the status and prestige associated with owning one.  So when you have really good market research of who buys, what they buy and why buy, then you can construct your message in such a way that you turn a need to a want.   In the field service world, you customers may need to know that they can get service on their equipment when it is down but what they really want is a guaranteed Service Level Agreement with a 4-hour response time.

Good market research not only helps in creating a service portfolio your customers really want but it helps in developing an optimal pricing strategy for that portfolio.  Chances are that you are familiar with cost plus and competitive pricing strategies. With cost plus pricing, you calculate what it costs to deliver service and then mark it up by an amount to cover you profit.  With competitive pricing strategies, you conduct market research to find out what your competitors are charging and then price your services at a lower amount.

A third type of pricing strategy is called value-in-use pricing. It basically involves measuring the economic value or loss to the customer of not having the service available in a timely manner.  This can be significant.  For example, a manufacturing facility may lose millions of dollars every hour its machines are down.  Therefore, they may be willing to a pay premium for faster service.  Market research can help you understand your customers’ value-in-use and determine whether or not you should pursue a cost plus, competitive, or value-in-use pricing strategy.   You’ll need to understand all three pricing strategies and how to effectively leverage market research to maximize service revenue and optimize profits.

The final aspect that you have to master to win service marketing is called ‘‘Invisible Selling”. This is based on the premise that you win business not by pushing your offers onto prospects, but by pulling customers towards you. One of the ways you pull customers to you is through indirect marketing as opposed to direct selling.  What’s an example of indirect marketing?  It’s an article or white paper that demonstrates that your company understands the problems that companies in your market are experiencing and that you have solutions to these problems.  It’s about using social media and public speaking opportunities to influence others to want have a conversation with you to learn more about what you do, and how you can help them.   It’s about positioning you and your company as experts and trusted business partners.   By the way, seeding your thought-leadership content with market-research data is a sure-fire way to build credibility with current and prospective customers.  Once you establish credibility they follow you and then it’s only a matter of time until they become your customers.

When you put all the elements of a Successful Service Marketing™  program together, when you fully understand the strategic concepts of service marketing, when you effectively apply the seven principles of service marketing, when you learn how to optimally price your services, when you use market research effectively, and implement an invisible selling strategy, you’re going to experience incredible results.  Your marketing program will be extremely successful, your sales will take off, and your business will skyrocket.

If you are really interested in achieving extraordinary results, 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

Got a question? Click to schedule  a consultation.

The Service Marketing Mix

Understanding the 7 Principles

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One of the reasons service executives struggle when attempting to grow their businesses is they try to apply product-marketing concepts to service marketing. This is like trying to hammer a square peg into a round hole.  The 4 P’s marketing mix is one such concept that works great for products but not for services.  It’s based on the theory that the success of a company’s marketing program is based on how well the company manages strategies and tactics related to product (i.e., design, form/factor, etc.), price, promotion (e.g., sales, advertising, etc.), and place (i.e., distribution).

The problem is that these 4 P’s do not apply to services. First, service products are intangible and difficult to describe.  This begs the question, how can you promote something that is difficult to describe?  Another problem for service marketers is that place has a very fuzzy connotation in service marketing because there are multiple entities involved in service distribution. Sometimes they cooperate, other times they collaborate, and still other times they compete.  Services can be offered by one entity, ordered through another, and delivered by a third.  Without well-defined product, promotion and place strategies, all that is left is price and that becomes a slippery slope for service marketing.  Sales and marketing can never be just about prices because customers will always find a way to negotiate price.  In product marketing, the 4 P’s makes it possible for a seller to justify the price.

For the past 20 years, I’ve devoted a great deal of time and resources to understanding this dilemma, in the process developing my own theory about service marketing.  I determined that a Successful Service Marketing™ mix is actually based not on 4 but on 7 key principles.  These principles are:

  1. PORTFOLIO: Often described in terms of a service-level commitment, such as 24/7 with a four-hour response time. The more distinctions you can make to define your service portfolio, the more likely you will be to fulfill the needs of prospective customers.
  2.  PROVIDER: Tangible elements of your service infrastructure, such as your call center, self-service portals, enterprise systems and service technology that make it possible to deliver on the promise of your service portfolio.
  3. PROCESS: The steps your customer must take to request the service, and the tasks that occur to deliver the service. For example, performing front-end call screening and diagnostics before dispatching a field technician.
  4. PERFORMANCE: Evidence that you can deliver on your promise, such as KPIs, customer satisfaction results and customer testimonials.
  5. PERCEPTION: Your ability to win business and retain satisfied customers is based on your ability to influence their perception of you. This goes beyond simply promotion through advertising, branding, and communications. It gets to the essence of who you are, what you stand for, and how you portray yourself in the market.
  6. PLACE: Services distribution channels can be complex.   Quite often, consumers can purchase service from one place, order or request it from another place, and have it delivered to them at a third place (e.g., onsite, depot, remote, etc.).  Sometimes it’s the same company delivering this service. Other times it’s not.  Regardless, the service marketing mix must deal with these complexities.
  7. PRICE: Of course, there is always the issue of price. The important thing to remember is that price is a function of value in use and perception that consumers have about your company (i.e., expertise, experience, capability).

Many people have asked me why I haven’t included “People” as one of the Ps in my service marketing mix.  While people are important to the success of any endeavor, I feel very strongly that their ability to deliver exceptional results is a function of the 7 Ps that I’ve identified above and not the other way around.  Ordinary people can achieve extraordinary results when there are great strategies and tools in place.

Please let me know what you liked about this blog and your key takeaways.  If you’ve found this blog of value and think your colleagues or business associates could benefit from it, kindly share it with them.

If you are really interested in achieving extraordinary results, 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

 

Strategic Concepts that Fuel Revenue Growth

The Basics of Service Marketing Theory

Fuel Growth

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.

Please let me know what you liked about this blog and your key takeaways.  If you’ve found this blog of value and think your colleagues or business associates could benefit from it, kindly share it with them.

Is it time for a mid-course correction?

mid course correction2

 

The summer is here and with it brings the beginning of the second half of the year. This is great time for re-evaluating progress in meeting our business goals.  It represents a half-way point to determine if we are on track for the year, if we need to change course in direction, or simply act with greater resolve and urgency to achieve our outcomes.

One thing that we uncovered in our recent Readership Survey is that a large percentage (47.7%) of subscribers desire to learn about strategies for achieving better results. The most frequently occurring response when respondents were asked about what they want to achieve in their business over the next 3-5 years in “growth”.  I think that it is safe to say that many of our readers can benefit from strategies that will help them achieve higher levels of growth.

In my attempt to provide readers with more of what they want, let me give you some action steps to follow if you find that your actual growth for this year is not in line with your original target.   First, remember that the trend is your friend.  This means that you need to periodically evaluate your market to determine if the trend is working in your favor.   You’ll want to get a handle on the size and growth rate of the market you serve, the level of competition, industry dynamics, buyer behavior, and purchasing criteria.   You can uncover this information through internet research, market surveys, analysts, and other secondary sources of data such as articles, press releases, annual reports, etc.

Assuming you’ve concluded that the market you serve is large and growing, then you need to ensure you have the right marketing strategy in place to capture your share of this opportunity.  Think of your marketing strategy in terms of a triad.

market strategy triadAt the base of this triad is your company’s performance.  The ability of your company to deliver on its promise is critical to keeping customers. If they are happy with your service, they will tell others and you will gain word of mouth referrals.  The second side of the triad is the value your company provides to customers. Is it defined in a way that the value is clear and compelling to current and potential customers?  Value is often defined by the quality of your offering and the little things you do to win over the customer.  For example, are you providing them with options so they get exactly what they want?  It also includes offering great service and support before they buy.

The third side of the marketing strategy triad is your tactics.  You want to make sure that you are implementing tactics that will drive customers to you and encourage them to do business with you.  Tactics to consider are pricing, social media, advertising, promotion, etc.  Most importantly, the tactics you use must be consistent with the other elements of your triad.  In other words, your advertising and pricing tactics must align with the value you provide and the performance you deliver, and vice versa.

This triad provides a good framework for evaluating the results of your marketing efforts. Like most frameworks, they are only effective if use them as an analytical tool.  If sales are not where you want them to be then look at your marketing strategy triad. Use it to evaluate how effective your performance, value, and tactics are in attracting and keeping customers.  It will provide you with insights on how and where to improve.  If used consistently, it will enable to you win more than you fair share of business.

Please take my 2015 Reader Survey

I want to make my blog better and more relevant to your needs and interests. To do that, I need to know more about YOU. As a result, I have created my 2015 Reader Survey.

reader survey

Would you please take a few minutes to fill out the survey? By doing so, you will ultimately be helping yourself. Why?  By participating in this survey, you will be helping me make my content even more interesting and relevant to you and your company. Your input is important to me. The survey is easy to fill out. The survey results are completely anonymous. I can’t tell who said what. And it will only take five minutes of your time.

Yep, I’m Happy to Help. Take Me to the Survey!

Thanks in advance for your help.