Today, the services sector accounts for almost half of the global GDP. Services have unique characteristics which are different from those of physical goods. At the same time, many businesses today offer a blend of tangible goods and intangible services. Hence, it is said that every business is a service business. This makes it imperative for marketers to adopt a differentiated approach to services marketing. This blog suggests cues to build a strong services marketing base that can prove to be beneficial for enhancing your company’s service quality. For this, understanding the distinctive nature of services is essential.
Unique Nature of ServicesServices have unique characteristics compared to physical goods:
- Intangibility - Services cannot be seen or sensed before purchase. This leads to a perceived risk of customer dissatisfaction for the consumer as compared to tangible goods which can be physically checked before the purchase decision.
- Inseparability - Services are produced and consumed simultaneously, requiring the provider and the consumer to interact in a live environment.
- Heterogeneity - Each service experience is unique due to human involvement and thus, standardization is difficult.
- Perishability - Services cannot be inventoried or saved for consumption later. Unused service capacity is lost revenue for a business. At the same time, they do not have any shelf life for the consumers.
These traits have implications for marketing strategy. Firms must find ways to reduce uncertainty, demonstrate service quality, and align demand with variable supply. To deal with the dynamic nature of services, the following best practices can be useful:
Understanding the Marketing Mix is crucial as the 7Ps influence each other and build a strong service marketing base.
Extending the Marketing Mix to 7Ps
Due to the unique nature of services, the conventional marketing mix of 4Ps (Product, Price, Promotion, Place) must be expanded to 7Ps for services marketing. This is called the Extended Marketing Mix comprising of additional 3Ps as follows:-
- People - Customer interactions in the service industry depend heavily on staff skills and attitudes. Firms should focus on careful hiring and training, and empower their employees with incentives to maximize customer satisfaction.
- Process - Well-designed and efficient processes for service delivery are crucial to providing consistent quality and customized service.
- Physical Evidence - Customers rely on tangible cues like décor, ambiance, and staff appearance and attitude to evaluate service quality.
Getting the 7Ps right is the key to managing perceived service quality.
Measuring Perceived Service QualityHistorically, various service marketing theories have stated that consumer satisfaction while consuming services is a function of the consumer’s expectation and perception of the service quality finally delivered. The insights include the following:
- Customers have a zone of tolerance for variability in service performance by the service provider. Staying within this range satisfies them.
- Service firms must narrow the gap between client expectations and actual delivery.
- Both, the quality and the manner of service delivery matter, i.e. what is delivered and how it is delivered.
A tracking metric like a customer satisfaction score can provide actionable data to improve quality.
Understanding Consumer Behavior
- Consumer choice of services depends on the following attributes. Marketers should promote their services accordingly.
a) Search attributes - Potential customers have some idea of what they expect from a service before its purchase as they compare different factors such as availability, price, quality, etc, for example, banking services.
b) Experience attributes - The quality of service delivery cannot be anticipated till the actual service delivery has happened. However, after the delivery, consumers can measure the service quality, for example, pest control services.
c) Credence attributes - Even after the actual service delivery, customers may not be able to measure the quality of service provided by the service provider as the customers do not have the required knowledge for measuring the service quality, for example, surgery for a rare ailment. Thus, they tend to rely on brand reputation or testimonies of other consumers to make their choices.
- Brand perception of the service provider is shaped by the brand’s alignment with the consumer’s value system, reviews of other customers, and expected customer support quality. Meeting the expectations of consumers is crucial.
- Service failure and resulting consumer dissatisfaction should be preempted but quick recovery helps regain goodwill among the customers. Unconditional service guarantees are the best marketing tool to build customer trust.
- Regular surveys, focus groups, and data analysis reveal the factors influencing consumer’s decision-making process.
A holistic approach to enhancing customer experience can be beneficial for providing quality services and increasing customer retention.
Improving or Meeting Customer Experience
- Innovation in areas like personalization, customer support, and self-service improves the user experience.
- Making a service blueprint visualizes the customer journey and identifies pain points to address during service delivery.
- Physical evidence like ambient conditions and spatial layout affects customer behavior and it must align with the brand’s positioning.
- Defining and meeting customer-driven service standards is vital for customer satisfaction.
Aligning Marketing with Delivery
- Marketing communication activities by the service provider communicate the promised quality of service delivery experience across touchpoints. But, such communication must match delivery to avoid disconfirmation by the customers.
- Employees play a big role in co-creating service value. An internal marketing approach to sensitize them towards matching expected service delivery is crucial.
- Forecasting demand and managing capacity utilization to serve the customers are a must to match demand and supply. At times, stretching an organization’s resources may be necessary to cater to additional demand that is greater than the usual supply capacity.
In summary, services marketing requires a focus on the complete customer experience from promise to delivery. Grasping the unique characteristics of services allows firms to formulate an integrated marketing strategy that attracts and retains happy customers.
- Understand how services fundamentally differ from physical goods
- Apply the 7Ps of the extended marketing mix to services
- Measure and analyze customer expectations, perceptions, and satisfaction
- Innovate continually to improve service quality and delivery
- Invest in employees to deliver consistent and superior services
- Make only those promises that operations can fulfill
Adopting these best services marketing practices can help your business delight customers and outperform competitors.
A more comprehensive overview of the best practices in marketing and managing services is available in the book ‘Services Marketing Essentials You Always Wanted to Know’ by Vibrant Publishers. Unlike physical goods, services are intangible, perishable, variable, and inseparable from the provider. The author of the book, Vishal Desai, discusses strategies to address these unique characteristics. The book is an invaluable guide for marketing students and professionals to master strategic services marketing.