How to overcome the 4 key challenges of service marketing [updated]

Grow your service business

The services sector in India is growing at a rapid clip. Even many businesses that sell products are introducing services for consistent revenue. While the global economy thrived on manufacturing and products in the last century, it is now dependent on services. In this article we shall explain the concept of service marketing.

Marketing a service to consumers or other businesses is completely different from marketing a product.

4 hurdles to promoting your service business

Any business that sells a service — IT, entertainment, education, healthcare, tourism — faces four challenges in promoting itself.

  1. Services are intangible.

  2. The provider is the product.

  3. They’re perishable.

  4. Quality can vary from day to day

According to Statistics Times, service is the largest sector in India. India’s services sector contributed almost 54 percent of India’s total GVA (gross value added) in 2020-2021. 

Some of the service-led industries in India are:

  • Information technology (IT).
  • Telecom, travel and tourism.
  • Media and entertainment.
  • Education.
  • Healthcare.

As more businesses turn towards services, they face new challenges on the marketing front. Learn from highly successful service businesses how to conquer each of them.

What makes service marketing different

The challenges of marketing services are different from the challenges of marketing products. By understanding the differences, service businesses can more effectively promote themselves.

1. Services are intangible

It is easier to sell a product than a service because a product is tangible or physical.

When customers can see a product and examine its shape, colour, features, size and the quality of materials used, they can immediately make a purchase decision. Indian consumers like to ‘feel’ the product before they buy — especially if it is clothing.

Service Marketing Developer
IT professionals are service providers. So are teachers, entertainers and doctors.
Photo: Hitesh Choudhary on Unsplash

How does one sell something that cannot be shown to or owned by customers?

However, a service is intangible. Consumers cannot feel or own it like a product. So it takes longer to convince them.

Take tourism for instance. That industry sells experiences. The only way a customer can preview the “product” is by seeing photographs, reading reviews online or by listening to other people who have travelled to those destinations.

Education is also a service. The various utilities you consume — electricity, gas, telecom, internet — are all services as well. Apart from pricing, customers choose a service provider based on quality of service.

Recommendation:

There are special approaches to overcome the challenge of selling a service. One is customer testimonials. You can take written testimonials from your existing customers and put these, along with each customer’s photo, on your business website, in your shop and in your brochures.

Customer reviews on established websites such as Yelp, Google and TripAdvisor also work well. Also enable social media ratings on networks that attract followers who are your potential customers.

2. The provider is the product

A product can be bought from different channels: online, in a mall, in a convenience store, etc.

But a service has one point of purchase. The buyer deals directly with the service provider or his distributor. And they go to that same point every time they need that service.

For example, when you need a haircut, it’s highly likely that you go to the same salon every month. You may go a step further and demand that the same person does your hair (because he/she knows your preferred style). Hence the relationship between the service and the service provider is inseparable.

How can one service provider offer customised service for thousands of customers?

When you are dealing with a few customers, it is possible to get to know them well. You will know their preferences and their level of satisfaction with your services. But that may not be possible when there are dozens — or hundreds or thousands — of customers.

Recommendation

The answer is systems and processes. The Marriott Group of hotels, for instance, records customers’ preferences in a master database that is accessible to any hotel in the Marriott chain, anywhere in the world. So when you make a reservation, they already know you, and set your room up accordingly! And their customers love that.

By using a customer relationship management system, you can keep track of the preferences of each customer. This will allow you to deliver highly customized service every time. Just don’t overdo it, as companies that know too much can spook customers.

3. They’re perishable

Like some products — food items for instance — services are perishable. There’s only so much time in a work day. The service provider needs to sell maximum capacity in order to be profitable. Unfortunately, there won’t ever be a steady queue of customers waiting to be served one after another.

How can service providers create a steady demand for their services?

Let’s take the example of an airline. If a flight is going half empty, the revenue collected from ticket prices will not suffice to cover the operational costs. So airlines use different strategies to fill their airplanes. They might club flights for a particular route or use code-sharing arrangements with partner airlines or join an airline alliance like Star Alliance.

So it is a matter of balancing demand with supply. If you can do that, then you minimise your business losses and increase your profitability. There are periods of demand (like the holiday season) and then there are periods when sales dip due to low demand.

Recommendation

There are a couple of marketing strategies to counter periods where there is less demand:

Savvy marketers can create a sense of false urgency and false demand, causing people to rush out to buy services. They do this by offering discounted pricing for a limited period.

4. Quality can vary from day to day

A product might have little variability, because every unit of that particular model is built to an exact specification or design created by a manufacturer.

How can a service be standardised so that the customer gets the same quality, every time?

But with a service, there is a lot of variability. There will be variations depending on who offers the service, and at what location, how busy that day’s service schedule is and other factors.

Service Marketing Teacher
Teachers can only point to student performance as indicators of the quality of their services.
Photo: US Department of Education on CC BY

Recommendation

This can be achieved through standard processes and frequent audits. By training yourself and your employees to adhere to the same process every time, you can achieve a higher overall level of service.

Use customer surveys and feedback to find out where/when/under what circumstances the greatest variation in service quality occurs. Frequent improvements, in response to customer feedback, can lead to increased customer satisfaction.

The secret sauce: emotion

The most successful service marketing creates an ‘emotional bond’ with customers.

The Incredible India campaign is a great example of service marketing using emotion. The government of India initiated this campaign in 2002 to promote tourism in India.

The campaign, which continues today, portrays India as an attractive tourist destination by showcasing different aspects of Indian culture and history like cuisine, yoga, spirituality, etc. The campaign is conducted globally and receives appreciation from tourism industry observers and travellers alike.

Effective service marketing strategies 

As we mentioned before, service marketing differs from traditional marketing, which promotes tangible products. Marketers need to use specific strategies for service marketing. Before that, they need to understand the Service Marketing Triangle.  

The service marketing triangle describes the relationship the company (or service provider), the employee (who delivers the service), and the customer (consumer of the service). 

Service marketing triangle
Source: MarketingTutor.net

The company defines and enables the promise of service to the employee. It trains the employee to deliver the service to the customer. In doing so, the company delivers the promised service to the customer.  

This involves three types of marketing strategies: 

Internal marketing 

A company must motivate its employees to deliver high-quality services to customers. This is done through internal marketing within the organization. It includes training, incentives, offsites, employee recognition, and even parties and gifts for employees.  

When an employee understands the service and is motivated to sell it, the company achieves its objective of delivering quality and reliable services to its customers. 

External marketing

This is about promoting your services to the consumer and helping them choose a service based on their requirements. External marketing involves sales promotion through advertisements and activities, personal selling, direct sales, offers, and direct marketing. 

Editor’s note: No business website? Now is the time to get one. Find a GoDaddy-certified web developer here by scrolling down to “Companies looking for certified GoDaddy professionals?” and submitting a request.

Interactive marketing

This is the kind of marketing that takes place when the employees of a company interact with its customers. These are regarded as “front-line” staff – they have defined roles and require customer relationship training.

Front-line staff includes salespersons, relationship managers, bank tellers, attendants, stewards, hosts, and professionals or practitioners.

The front-line staff represent the company – and they must promote the company’s services. They are also influencers, as they help the customer or buyer to make purchasing decisions – by recommending their services. They need to understand customer requirements and provide information about services. 

What good service marketing requires 

It’s important to note that service marketing strategies must include: 

Referral

Word of mouth publicity is one of the best forms of service marketing. Happy customers would rave about their experiences with friends, family, and office colleagues. So, they become influencers.

It’s likely that their social circle will want to experience the same services.

 

 

Referral schemes are common today. If you refer a friend to a service, the company is likely to offer you a discount or a free service for every new subscription. This is one proven way of promoting your services.  

Related: How to start a customer loyalty program

Educating customers 

Another way to create demand for services is to educate prospective customers. Customer education will often generate more leads. Providing more information will increase conversions and sales.  

This education can be done in several ways.

  • Blogging is a good way to start. Write and publish articles of interest to potential customers.
  • Perhaps you can get a journalist to interview the founder of your company and write an article about your unique services. This article may appear in the local newspaper or in magazines.
  • Booths at malls and other public spots are another way of providing customer education.

Some businesses organize seminars, webinars or meet-ups and invite like-minded people to discuss their challenges. They also provide solutions through their services.  

At this stage, you should talk about the benefits and utility of your service – not about the price or subscription plans. Speak about the uniqueness of your service and how it is different from what’s available in the market.

Focus on how your services solve customer challenges. 

 

 

It is more of a thought leadership and trends discussion.

For instance, if you are selling a wellness stay at a resort, talk about the importance of slowing down in life and taking a break to rejuvenate. People want to know how they can live happier and more fulfilling lives – to live longer. Speak about the benefits of:

  • Meditation
  • Decluttering
  • Gratitude
  • Diet and exercise
  • Minimalistic lifestyle

Then talk about the package at your resort and the unique features and services offered. 

Social media activity 

The number of people using social media increased phenomenally in the last two years. Analysis from Kepios shows that 58.7 percent of the total global population use social media. In fact, nine out of every 10 internet users visit social media every month. So, marketers cannot afford to ignore social media channels.  

Use popular social media channels like Facebook, Instagram and LinkedIn to market your services.

Facebook offers a variety of formats for presenting marketing collateral. And they also offer precise targeting based on the demographics you define. You can also make a business page for your company on Facebook.  

Social media is interactive media. That means, customers can interact with your brand by posting comments, clicking on links, sharing, liking, etc. These activities are called “engagements.”

You can even draw visitors to your company website by posting ads with links on social media. Offer coupons codes and discounts – and watch the enquiries come in. 

Related: How to start a social media marketing strategy

Demonstration 

Another good way to promote your services is to offer free demonstrations. Let prospective customers experience your services for free.  

For instance, if you are providing dental services, you can offer a free dental check-up. Another example is a free eye check-up. If you are selling Yoga classes, offer the first class free. 

Visit residential complexes, university campuses, and offices and offer this on-site if possible.  

Make service marketing work for you

We have seen that the challenges presented by service marketing are quite different from product marketing. Unlike products, services are intangible, there’s no difference between the provider and the product, they’re perishable and the quality can vary from day to day.

It is more difficult to sell something one can’t own or see.

The key to solving these four challenges starts with good systems and processes that allow you to standardize your service and record customer preferences. Pay attention to customer feedback, online reviews and conversations on social media. And act quickly to remedy and shortcomings.

The main thing for you, as a service marketer, is customer satisfaction, and then profitability.
If the customers are happy, they will tell others about your service.

And the profits will come!


Frequently asked questions

What is meant by services marketing? 

The industrial revolution produced products that depended on traditional marketing practices to make sales. But with the advent of the internet, the world moved to a services economy. More organizations, start-ups, and entrepreneurs began selling services.

Unlike products, services are intangible commodities.  

 

 

Service marketers are promoting something that customers cannot see. They are driving customer value by promoting something that cannot be held or used. The benefits cannot be seen upfront. The services cannot be examined, touched or felt. Services are largely experiential and emotional.  

So a different approach is required for marketing services. Read the section above entitled “Effective service marketing strategies” for details.

Examples of service marketing campaigns 

Here are some notable examples of how brands use effective communication methods to market their services: 

Incredible !ndia 

The government of India launched the Incredible India campaign in 2002, to promote tourism in India.

The campaign targets both international and domestic travellers. The ‘I’ in India is replaced by an exclamation mark to emphasize the word ‘incredible’ – suggesting unique and diverse experiences.

The campaign positions India as an attractive tourist destination and showcases its diverse culture, history, cuisine, historical monuments, spirituality, yoga, etc. 

Uber 

Mobility company Uber does not own any cabs. It connects drivers with customers via mobile apps. Uber is offering convenient services to its customers as they can avail of personal transportation at any time of the day.

It markets its services by allowing customers to rate drivers after a ride. Apart from a star rating, customers can also give critical feedback (for lower ratings) and driver compliments (for five star ratings). Compliments appear on the driver’s profile page and are visible to other customers.

Additionally, drivers are also rated on parameters such as: professionalism, driving, cleanliness, conversation, pickup, driver navigation, Uber app experience, and car quality.  

This approach to service marketing offers customers transparency and flexibility. They can share their trip experiences with others and also view the profile of the driver before getting into the cab.

If they do not like the driver profile, they may cancel the trip. This also provides a service assurance to customers.  

City of Las Vegas 

The city of Las Vegas, Nevada, launched a successful service marketing campaign to attract tourists from across the U.S.

The marketing phrase was: “What happens in Vegas, stays in Vegas,” and the purpose was to offer maximum freedom to tourists. This catch phrase is often recited by happy visitors returning from Las Vegas, albeit with tongue-in-cheek humour and a wink.  

Which industries use service marketing? 

An example of a service is when a family arrives at a restaurant and avails of its services (dining).

Yes, the product is food and drinks, but the delivery and presentation are its services.

The restaurant will focus on the quality of service in terms of quick delivery, hospitality, cleanliness, quality and variety of cuisine; the dining experience, and the ambience. And it will promote all this in its service marketing efforts. 

Sectors like hospitality, tourism, financial services and professional services (like consultancy) use service marketing.   

Healthcare industry 

In this industry, the service providers are doctors, nurses, surgeons, paramedics, and other hospital staff. They provide health services by meeting and looking after their patients. And they market their services by delivering value through care, attention, response, expertise, and quality healthcare services and treatments. 

Hospitality industry 

Hotels, restaurants, clubs, air travel, and cruise liners fall into the hospitality industry. They offer dining, rooms, wellness, entertainment, massage, grooming, and other services.  

Professional services industry 

This industry includes skills-based professionals such as:

  • Accountants
  • Lawyers
  • Teachers
  • Writers
  • Masons
  • Carpenters
  • Chefs
  • Electricians
  • Plumbers

These professionals offer multiple services to their clients, which vary from profession to profession. 

Transportation and personal mobility 

Mass rapid transport and personal mobility solutions are very popular in cities. These transportation services use unique approaches to market their service.

A fine example is Uber. Even air and rail travel focus on service marketing, and talk about the facilities and passenger experiences.  

E-commerce and retail industry 

Today, retail services are provided to customers worldwide via e-commerce channels. Such services include payment and delivery. 

What are the 3 Rs of service quality?

Customers will always value the quality of a service. If you can deliver quality, they will keep coming back for more, and word about your services will spread virally.

Here are 3 R’s that can ensure quality of service. 

  • Reliability: The foundation for building a strong service business is reliability and dependability. When availing a service or interacting with a brand, customers want to be sure of the reliability of the service. A service-based brand will survive only on the basis of its reliable offerings. Ensure reliable services through quality processes, standards, measurement, and certifications.
  • Responsiveness: In a service-based business, responsiveness is a key customer expectation. For instance, in a restaurant, customers expect quick delivery of meals regardless of how many diners are present. And the service levels should be consistent. If a service brand does not meet this expectation, customers will doubt the reliability of the service and may go to the competition for similar services. 
  • Respect: After addressing reliability and responsiveness, the brand must focus on respecting its customers. A customer that feels respected will be more loyal to the brand. 

Image by: Fancycrave on Unsplash