The Second Commandment of Selling Services

Communicate the invisible
by James “Alex” Alexander, Ed.D.

This is the second in a 10-part series on the 10 commandments of selling services.

For over 30 years, marketers have understood that the degree of product intangibility impacts both how to best market offerings and how to support these offerings.¹ Furthermore, experience also has proven that the more “invisible” the offering, the more challenging the task of communicating both the problem and the solution side of the equation.

Here is where the premise that “a good salesperson can sell anything” meets its demise — The majority of product salespeople are ineffective at selling services of any type. In fact, my experience shows that even with a thorough realignment of sales objectives and compensation coupled with intensive training and supportive coaching, only about one out of three product salespeople (including the very best) successfully make the transition to selling services. This is a sad but true reality.

Figure 1 adds some supportive data to my claim. My research shows that well over one-half of all executives feel that their salespeople do a poor job of selling services.

Invisibility plays a big role in this poor selling services performance. However, along with the intangibility factor, other major differences between products and services, as shown in Figure 2, are worth noting. These distinctions have a fundamental impact not only on how one sells, but also on how one markets, delivers, supports and measures performance. What may work extremely well in managing a traditional product-based organization is ineffective in the services world.

Here are five fundamental differences that help explain what makes selling the invisible such a challenge.

Production

Manufacturers build products. The computers and printers that the computer reseller offers are all manufactured and assembled on the production lines of hardware manufacturers in highly controlled environments. The products are physically molded, soldered, inserted, welded, glued, assembled and boxed. Customers can directly experience and test products prior to usage. They can see features and observe functions. The customers own an object.

Service providers perform services. Firms deliver services live, in real time, often at the customer location. In many instances, products are involved, but the service provider is the one “on-stage.” The customer’s perceptions are based on the service provider’s actual actions. When the computer reseller personnel go out to a customer location to install a computer network, the customer sees a performance and owns an experience.

Goals

The production goal of products is uniformity. Companies must control variation. The manufacturers of the computer resellers’ hardware strive to have all of their equipment perform in exactly the same way. The computer reseller depends and hopes that all models work the same way. The reseller assumes that parts from one model number work on another unit of the same model number. The product is generic.

The goal of performing services is more complicated. Although the process of delivering the service, such as on-site equipment repair or systems integration, may be the same, the successful service provider makes the experience unique to the specific customer.

The actual process of performing the service may (and probably should) stay the same; variation is required to meet the uniqueness of the customer and the situation. The service provider personalizes the services offering to the uniqueness of the customer and the customer situation.

Customer involvement

With products, the company rarely involves the customer in production. Production could occur in the next county or the next country. For the most part, the customer doesn’t care. The product purchasers don’t know or are rarely concerned whether the computers were manufactured in Texas or Brazil. The computer reseller may have been involved in production merely through a visit to the manufacturer with a tour of the production facility.

With services, the provider often involves the customer in the service performance. In many cases, the services provider performs the service up close and personal, sitting at a computer or standing by a production line. Because of this, the customer is often involved in the actual performance, sharing real-time information, pointing out problems, explaining past attempts to fix an issue.

Each customer interprets things differently. Since the performer is right there, on-stage, he or she is often subject to special requests that may not be a part of the original agreement, and the provider has to deal with them professionally, whether the response is a yes or a no.

Quality control

In product production, quality control is straightforward. The manufacturer compares production process outputs to standardized specifications. Smart manufacturers build robust practices to build quality in, and to check quality at each point in the production process. The manufacturer defines quality based on its reality.

The computer reseller looks at the quality of the goods it buys and sells by performance vs. manufacturer claims, and reliability, such as mean time between failures (MTBF)  and the number of dead on arrivals (DOAs). When manufacturers improperly produce products, they identify these products through inspection or recall them from the field. For instance, the manufacturer of defective printers could substitute a printer with the same, similar or greater capabilities.

However, in the world of services, the customer conducts quality control. The customer keeps or creates the specifications of how he or she defines “goodness” in his or her head. The customer compares the current service experience to the expectations developed prior to the performance.

Unlike the producers of products that rarely change specifications, customers’ expectations are much more fluid. In fact, customer expectations often change during the performance, adding to the performance’s complexity. Although the computer reseller may sell exactly the same service to two businesses in the same field that appear similar, each will define quality differently.

When providers improperly perform services, their apologies and reparation are the only means of recourse. Customers usually discover a poor performance right away. For example, a computer reseller customer knows immediately after the training session “whether the training was any good.” Although the reseller refunds the money or offers to provide the training again, the reseller has already done the damage and may never repair the negative impact to the brand.

Morale and skills

The morale and skills of production workers are important. Qualified workers with good attitudes improve efficiency and increase the likelihood of producing high-quality products.

The morale and skill of service performers are critical. They perform during moments of truth, in real time, at the customer location. They must be willing and able to bend the rules where appropriate and be creative to meet varying customer situations while being accountable (at least to some degree) and profitable.

Hence, service providers must seek different characteristics and competencies in people, create different management support systems and evaluate different metrics to reward performance and guide the enterprise. All of this is further complicated, because in many cases, services businesses still produce and sell products, adding to the complexity and the challenge.

The implications of these distinctions are that service providers require different sales skills, knowledge and mindsets to sell each type of offering. An attribute that might be a strength in one of these selling environments could be a weakness in another. Different strokes for different folks, as they say.

Best practices for communicating the invisible

Here are some proven selling actions to address this critical challenge:

• Remember that everybody sells services. Since effectively selling services is difficult, it makes perfect sense that everyone who touches the customer (e.g., implementation consultants, field services engineers, front-line support) has a role in getting new services business. Thus, service providers must define roles and responsibilities, and put new objectives and incentives in place, backed by solid training.

Figure 3 shows that a growing trend in the technology industry is to actively involve technical talent in getting new business either through working alone or making the sale themselves.

• Create dedicated sales forces responsible for services sales. If you are transitioning from free to fee, it is critical to have a services-savvy group of sellers to demonstrate to the product sales force and the rest of the organization that customers will actually pay for services that add value to their business. After this group gains credibility, it can team with product sellers.
• Make intangibles tangible by turning feelings into facts and concepts into cash. Use analogies and stories to help accounts grasp your meanings. Smart sellers of services contracts have long positioned their contracts to insurance, eliminating risk and creating peace of mind.

Every services seller should be ready to tell stories of other customers in similar situations who saved themselves embarrassment or large financial loss or even saved their job by purchasing your services. Even better is the sharing of customer testimonials that proclaim the personal value to them delivered by the purchase and the use of your services offerings.

Financial worksheets that compute return on investment, total cost of ownership or whatever financial metrics are in fashion are another powerful way to “tangibilize” the intangible. Putting hard numbers to soft concepts also helps your customers sell the value internally.

It is important, though, to make sure that whatever tools you use, the customer is active in providing both the inputs and calculating value. For example, one powerful tool is the Value Evaluation Matrix, as Figure 4 shows. You can use it in a variety of ways, but I’ve seen it best applied when talking with a prospect or an existing customer about services contracts.

When customers are familiar with the attributes of each level of offering (say three offerings of Bronze, Silver, Gold), they map out where each offering would land on the graph, based on their personal situation. Naturally, your Gold contract will have the most potential value to them at the least perceived risk — This is a powerful persuader!

• Create feature-benefit-results profiles for all services offerings. You must tailor all solutions to the situation (which I will cover in the next issue’s third commandment); however, 80 percent of what is appropriate in that situation will be relevant in others. The important consideration is to look not only at business issues, but also the personal drivers so important in decision-making.
• Develop a proposal-writing template complete with examples of well-written prose. Designate (and reward) proposal writers with strong communications skills. These proposals, statement of works or talking papers should emphasize the value-communicating approaches outlined the above.
• Forget about off-the-shelf, generic training packages or the $99 ballroom extravaganzas. Use high-quality, services-specific sales training systems tailored to your industry and customized to your organization. It is tough enough making progress, why jeopardize success further by using less than the best tools?

When integrating product sales personnel into the services selling equation:

• Adjust the sales management support system to reflect new expectations and shift compensation.
• Heavily incent the desired services sales behavior for at least the first six months.
• Make it mandatory that to max-out product commission and bonuses, salespeople must meet all services quotas.
• When selling “solutions” (both products and services), use team selling. This is especially true in the early years when product sellers are either unwilling or unable to effectively sell services on their own. Define team member roles and responsibilities.
• Train and coach, train and coach, train and coach.
• Realize from the outset that many product salespeople will not successfully make the transition to services selling. Provide everyone the opportunity to succeed, but address this issue head-on, and help find those unsuited for services selling positions elsewhere inside or outside your organization.

Services are something that can be bought and sold but can’t be dropped on your foot (Evert Gummeson).

1. Levitt, Theodore. 1981. Marketing intangible products and product intangibles. Harvard Business Review (May-June).

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About James “Alex” Alexander

Alexander is founder of Alexander Consulting, a management consultancy that helps companies create and implement professional services strategies for product companies. Contact him at 239-671-0740, alex@alexanderstrategists.com or visit www.alexanderstrategists.com.

© Alexander Consulting