Getting your services marketing efforts “up to the nines,” may be easier than you think. The following proven maxims are aimed at helping you reach the highest degree in services marketing. They’ll show you how to identify your value, better use your resources, and determine project outcomes. These nine principles create a philosophical framework in which services marketing leaders can operate, and will guide you to innovation and the realization of your goals.

1. Value is what the customer says it is. No matter how elegantly designed your service offering, how massive the research effort that defined it, or how expensive the development, the customer doesn’t care. The customer only cares about what the benefits are to him. The customer defines value.

A useful exercise in helping an organization discover where it currently adds the most value is to identify your most profitable customers. Profit is a strong indicator of value. Analyzing what these select customers find unique and most beneficial in your offering helps you understand differentiation possibilities that can be applied elsewhere.

2. Staff is for support. Marketing staff professionals may be responsible for developing and leading the implementation of many marketing activities, but marketing must be ‘owned by the line’ to be effective. Berry and Parasuraman sum it up nicely: “In service businesses, the least effective marketing department executives strive to be clever marketers; the most effective executives strive to turn everyone else in the organization into clever marketers.”

Everyone whose work touches the customer has marketing responsibility. They should have goals and measures that add accountability to their responsibility. If people’s tasks aren’t contributing to getting or keeping customers (adding value), they are contributing waste.

3. A fast “no” is better than a slow “yes.” We don’t have the luxury of doing things 100 percent, because windows of opportunity are only open so long. All cycle times must be reduced. Decision points must be created and failures quickly dropped. We must make our mistakes faster and use speed as a tool to create competitive advantage.

In services marketing, speed is applied most dramatically in the rapid prototyping of new offerings. Rapid prototyping means more iteration, more tests, and more milestones to evaluate and make decisions. Doing this impacts long-term product and services profitability.

4. You can only do a few things really well. All organizations have limited resources. We only have so much time and so many opportunities. The concept of core competencies is to do what you do best--develop a few critical capabilities to world-class levels and outsource everything else.

This focus on core competencies is bringing about significant changes in business attitudes. Where once the world was black and white--you were either a supplier or a customer to a business--now everything is a shade of gray, and the boundaries are blurred. The connectivity between supplier-customer-competitor-partners comes from the specific realities of the situation. Arch rivals may compete in one area, sell/buy in another, and create an alliance in a third and different opportunity. One of marketing’s functions is to create, develop, and manage these relationships. Most organizations should strive to make this “alliance-building capability” a core competency.

5. If you think you know what the customer really needs, you are probably wrong. In some industries such as high-tech, customer expectations change within a six-to 12-month time frame. Firms are always in the process of losing touch with their customers. So most of the time, when executives say they know their customers’ issues and needs in-depth, they are starting down the path of serious trouble.

Issues, expectations, wants, and needs of key customers are too complex to be learned about from standard surveys. Do not take things for granted; instead, gather new information on a regular basis. One proven way to keep in touch with the voice of the customer is to systematically employ a program of customer visits with cross-functional teams.

6. Everyone is a stakeholder. Customers, suppliers, and employees are all stakeholders of the marketing process. Everyone should be clearly aware of the marketing strategy and understand their roles and responsibilities in achieving marketing objectives.

Marketing to people inside the organization is just as important as marketing to people outside the organization.(7) Just like customers, they must see the value of marketing initiatives for themselves personally. In fact, it may be more important in the high-tech world, where many service organizations must educate and persuade a sometimes-reluctant product management team to re-think its business model.

7. Innovation is not an accident. For organizations that strive to create competitive advantage in the marketplace, innovation must be heralded. Rather than the “luck meeting opportunity” of a few creative people in the organization, or ideas based on personality traits, innovation is the rigorous application of a methodology. Innovation is a function of the company’s management system that plans, monitors, and rewards performance for accomplishing innovation goals.

In some fields, as much as 80 percent of innovation comes from customers. This demonstrates how critical it is to work closely with the lead-users in your market segment, whether they are your customers or not.(8) Know what both your customers and non-customers are thinking and doing.

8. Fire and retire. If you are green, you are growing; if you are ripe, you rot. Or in other words, if you are not moving ahead, you are going backward--you never stay in the same place. As your services organization constantly learns new and better ways to meet the ever-evolving issues, trends, and expectations of the marketplace, start doing old things before doing something new. A good rule of thumb is to fire the bottom 20 percent of your customers and retire 20 percent of your services offerings each year. Make it mandatory that no new services offerings are launched without eliminating an existing one.

9. What gets measured gets done. This is the marketing principle that turns the other principles into a reality. If people have clear personal expectations of these principles and know that consequences are attached, the probability of them happening goes up immensely.

For example, some organizations are changing their measuring systems’ focus from customer satisfaction to customer retention. The results demonstrate that a five percent increase in customer retention yields an average of 50 percent improvement in profitability.(9) Positive results like these capture everyone’s attention and can focus an entire organization on the relationship-building and loyalty-building behaviors that yield the greatest return. For the best return, expectations, feedback, and rewards must align directly with the marketing mission of getting and keeping customers.

These nine principles form a framework in which effective services marketing can operate. In summary: Value must be defined for both key customers and the organization. Everyone must be responsible and accountable for marketing. Cycle times must be understood and shortened. Core competencies must be operational and non-critical functions outsourced. Research “systems” must be put in place to truly understand the most important customers within specific niches. Stakeholders must be identified and actions laid out to inform and influence them. Innovation goals and definitions must be established, tracked, and rewarded.

Live by these principles and your company will market your services to the nines.

Quick Analysis: If you strongly agree with these nine principals (rated your company a 4 or 5), you’re well on your way to a services marketing coo. If most of your responses were on the other end (1 or 2), you’ve got some work to do. Somewhere in between? Find ways to get your organization on board for the remaining principles.


Note: This column is an excerpt from Alexander and Hordes’ upcoming book, S-Business: Reinventing the Services Organization.


References

1. Whiteley, Richard and Diane Hessan. 1996. Customer-centered growth: Five proven strategies for building competitive advantage. Reading: Addison-Wesley.

2. Berry, Leonard L. and A. Parasuraman. 1991. Marketing services: Competing through quality. New York: Free Press.

3. Alexander, James A. and Michael C. Lyons. 1995. The knowledge-based organization: Four steps to increasing sales, profits, and market share. Chicago: Irwin Professional Publishing.

4. Peters, Tom. 1995. Do it now, stupid! Forbes ASAP (August 28).

5. Quinn, J.B. 1992. Intelligent enterprise: A knowledge and service based paradigm for industry. New York: Free Press.

6. McQuarrie, Edward F. and Shelby H. McIntyre. 1990. Implementing the marketing concept through a program of customer visits. Marketing Science Institute. pp. 90-107.

7. See reference 2 above.

8. Drucker, Peter F. 1995. Managing in a time of great change. New York: NAL Dutton.

9. Reichheld, Frederick F. and W. Earl Sasser. 1990. Zero defections: Quality comes to services. Harvard Business Review (September-October).

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Jim Alexander is the founder of Alexander Consulting, a management consultancy that helps product companies create and implement professional services strategies. For more information, visit http://www.alexanderstrategists.com or call 239-283-7400 or e-mail alex@alexanderstrategists.com