What is Service Marketing? Definition, Strategies, Examples
Nowadays, there is a noticeable rise in service startups. Businesses of all sizes are moving towards a service-oriented marketing approach.
The presence of a vibrant service sector has led to the narrowing down of the differences between goods and services. For many businesses, goods and services are interconnected. Even for companies that focus on the production of goods, services represent an integral part of their business operations.
The easier part for businesses is to create a service, the harder part is to market the service. How do you define your service marketing strategy? How do you market your service-based business?
In this article, you will learn everything you need to know about service marketing including effective tips and tactics.
Let's get started.
What is Service Marketing?
Service marketing is an exclusive branch of marketing that sprung up in the early '80s because some specialized services required unique strategies, unlike physical marketing strategies. It centers on the business of non-physical intangible or, better said, abstract goods.
This form of marketing applies to both B2B (business to business) and B2C (business to customers) services. Examples of sectors that use service marketing to drive their businesses include:
- Telecommunications Services,
- Entertainment Services,
- Financial Services,
- Health Care Services,
- Professional Services,
- Car Rental Services,
- Trade Services, etc.
Service marketing is a high-grade type of marketing that needs you to build a considerable level of trust with your target audience. Building the trust of your customers in your services enables them to be more willing to sign the contract since they trust that you have the necessary skills to deliver the promised service value.
Unlike a one-off transaction that involves the sales of products, service marketing is a concept that requires high-level human interaction.
Characteristics of Service Marketing
Service marketing emerged as a special field of study due to some services that needed different strategies. These services must have some peculiarities before they can be studied as a separate entity. Let's take a look at some of those peculiarities.
- Heterogeneity – Services involve various processes that are subject to human variation and are delivered by certain personnel. Some clients request highly customized services because services are naturally variable in substance and quality. Variability implies that you are open to fewer opportunities to regularize the delivery of services.
- Intangibility – Services are abstract, i.e. they lack physical form. They cannot be controlled with any of our bodily senses like sight, touch, or smell. This characteristic implies that ownership cannot be changed or transferred. Value is derived from the consumption of experience of that service. You cannot evaluate the quality of service before purchase or consumption.
- Perishability – Unlike physical goods, service performances are temporal (they cannot be stored or enumerated). Perishability implies that demands are prone to wide-ranging fluctuations. No inventory acts as an intermediary between demand and supply and dormant services cannot be retained.
- Inseparability – Unlike goods, the concept of production and consumption of services cannot be dissociated. For goods, the production and consumption of physical products are two entirely different processes. An implication is that services are highly labor-intensive. Also, there are fewer opportunities to substitute capital for human labor.
- People Involvement – Service marketing is in the hands of people who provide services to need the needs and wants of their customers.
These five characteristics give rise to different problems in service marketing. Services are by nature complex, multi-dimensional, sophisticated, and multi-layered compared to standardized products. There are benefits attached to services.
Service marketing involves interactions between companies and clients, and between customers and other customers.
How to Define Your Service Marketing Strategy
The best marketing strategies all start from a simple and actionable plan and a genuine evaluation of where your business is today. You want to know how much customers value your services.
Which of your services sells the best and which sells the worst? What services offer a high profit margin? These are questions that need to be check-marked for you to build an effective marketing strategy.
Some decades ago, service companies rarely made use of marketing strategies compared to manufacturing companies. Compared to manufacturing companies, service firms:
- Often handle advertisement internally instead of going out to agencies
- Rarely come up with sales training programs
- Rarely meet marketing experts for consultations
- Do not run sales analysis in the environment around them.
There are various reasons why these service firms did not initially use marketing strategies. Some had lots of demand and did not see the need for a marketing plan. Others felt it was unprofessional to employ the use of marketing.
Later on, some of these service firms started experiencing a decline in demands for services, leading to low sales. They started using marketing agencies to boost their sales.
Service-based businesses need some elements of external marketing to be successful. It is what promotes your services to your target audience.
Defining a marketing plan for your service-based business is essential to your business' growth. Your strategy should focus on satisfying the needs of your target audience and building a long-term relationship with them through consistent interaction.
Below is a guide on how you can define a successful service marketing strategy.
1. Know the Key Elements of a Successful Strategy
One key element is for you to characterize your customers by their needs. You can do this by doing thorough market research on different customers and approaching them in a more friendly way than your rivals in the market.
The next step is to make the most of your business strengths to meet the various needs of customers. For instance, if you notice that some sets of audiences prioritize quality in service, your marketing strategy should convince them that you can provide the high-quality service they want.
2. Do a SWOT Analysis
Your business strategy must take account of your strengths, weaknesses, opportunities, and threats. Detailed research on your existing customers can say much about your SWOT.
After doing your analysis, look at the potential effects that each element of the SWOT analysis can have on your strategy.
3. Develop your Marketing Strategy
With insight into your strengths, weaknesses, opportunities, and threats, you can maximize the positive information and minimize the effects of the negative information.
You can also write out some questions that your marketing actions will answer. Review these questions regularly and tick whenever you have completely answered them.
How to Market a Service-Based Business
Service-based businesses offer services to its target audience. Before you begin to market your service to customers, you need to understand some concepts.
You need to study and understand your customer's personalities, the dynamics of your target audience, their reaction when they are satisfied with your service, and their reaction when you do not meet their expectations.
Also, you can study how your existing customers knew about your service and how they were convinced to patronize you. It helps you in knowing the right points to hit when marketing your business.
After understanding your customers, there are some proven methods you can apply when marketing your business. They include email marketing, SEO, performance marketing, webinars, direct outreach, and referral marketing.
1. Email Marketing
The use of emails is one of the best ways to market your service-based business. After identifying your target audience, you can use email marketing to build and automate your email campaigns. You can set that up using email marketing software such as ConvertKit, MailChimp, and other MailChimp alternatives.
The welcome email is what you send to your customers when they join your email list. You can personalize your emails based on the user's preference.
Provide social proofs in your emails, people love it when there are proofs to back up the efficiency of service. Also, ensure your emails are reader-friendly. Do not employ the use of sophisticated words with the mindset of impressing your clients. You can miss out on passing the message you intend to pass to your target audience.
SEO (Search Engine Optimization) is a great way of promoting your service business. There is no doubt that if a random customer goes on the web to search for a service, he or she is most likely to click on any of the first five websites that appear on Google SERP (Search Engine Results Page).
If you want your website or blog to rank high, you need to do some SEO optimization. People still find it hard to understand how the Google search algorithm works on the internet. Here are some SEO tips to help you market your business.
- Use quality content
- Use search keywords in your content, and
- Use SEO-optimized titles, headers, and URLs.
- Use SEO tools to improve your rankings including keyword research tools.
3. Performance Marketing
Performance marketing is another good way of up-scaling your service business. It is the combination of brand marketing and paid advertising to achieve one goal.
This type of marketing involves an affiliate and a retailer. It is a win-win for both parties because the retailer only pays when the desired action has taken place.
Performance marketing is an umbrella that houses affiliate marketing and other types of marketing. The affiliate helps you market your service. Once they can convert a large audience, you pay them for their service and in turn, get a large number of people to offer your services to.
You can also leverage webinars to boost your services and amass a large audience. To use webinars, you first identify a topic that interests your target market.
Here are ways to find a topic:
- Define your target audience
- Understand their pain points
- Use irresistible titles to capture their attention
The next step is to prepare your webinar. Ensure you are the person that hosts it. For this step, here are a few things to do.
- Use the best webinar software platforms
- Create your content
- Test run the devices you want to use to host the webinar
Promote Your Webinar
No matter how resourceful your webinar is, it needs promotions for it to get to a larger audience. Here are a few tips on how to promote your webinar.
- Add call-to-action clicks on your website
- Send promotional emails
- Post blog contents emphasizing the webinar
- Use social media platforms and possibly run Facebook Ads.
After a wonderful promotion, convert your webinar attendees into sales. The best way to do that is to:
- Focus on delivering valued content
- Showcase your expertise level
- Advertise your service at the end of the webinar.
5. Direct Outreach
Direct outreach is another great marketing tool. Customers patronize services based on emotions and justify them with logic. It involves reaching out to your customers via email or phone, including cold calling.
6. Referral Marketing
In the business world today, there is no doubt that referrals boost market sales. Referral marketing is a process where existing customers refer other people to your services.
Unlike other types of marketing that you directly contact a large audience, your existing customers do the work for you. Referral marketing helps your business gain more customers through word-of-mount testimonials from people who used your services.
One thing you need to do as a brand for referral marketing to work out is to offer quality and satisfactory services. Once you do that, the rest is easy. Customers are always naturally eager to talk to a friend or two about the service they enjoyed from a business.
Service Marketing Tips and Tactics
Some of the best service marketing tips and tactics you can use to attract more customers, generate more sales and Return on Investment (ROI) include:
1. Entice Your Audience with Incentives
No matter the services you offer as a business, you have lots of competitors out there trying to gain the attention of the same customers you are targeting.
How do you want to attract these customers to your service? How do you want to convince them that you offer services better than your competitors?
Incentives, promos, and add-ons are ways you can use to win customers to your side. Everyone appreciates extra efforts that service-based businesses add without charging extra costs. Incentives also attract new customers to your service.
2. Prioritize Your Value Over Prices
Most businesses always want to compete over prices in a bid to attract customers. However, if you want to reduce your prices, it might hurt you in the end because the lower you go, the lower your rivals will go just to snatch the market. Will you keep going lower? Will you reduce quality because you want to cut costs?
Smart service-based businesses compete based on values. Although there might be ranges in price, the one with the best values always wins. Once the standard of your business is offering high-quality services, you do not have to cut costs to attract customers. Intentional customers will take you as their ‘go-to' brand for your type of service.
3. Communicate Effectively
Communicating the results of services involves more personal interactions than delivering details concerning the sales of a product. Customers enjoy it when you constantly update them on your services other than just keeping them waiting for the final results. You need to keep an efficient communication funnel with customers.
You can effectively communicate via emails, phone numbers, CRM software, or social media. With social media, a single message can travel as fast as the speed of light within the blink of an eye. You can also schedule messages. It will save you the stress of sitting down all day forwarding messages to various customers.
4. Earn the Trust of Your Audience
Trust is one of the major building blocks of service-based marketing. When marketing your service, your main reference is the service itself. But what is more important is what other people (existing customers) have to say about you.
When marketing yourself, all you have to convince people is words. But when one or two people can testify about your services, it saves you the stress of proving your efficacy to each customer.
One good way to earn the trust of your audience is to deliver as expected, or more than expected. Once your customers are satisfied with your service, they will naturally tell others that need your service about their fruitful experience with your brand. Your brand gains new customers in the process.
Deliver quality services to the new customers and they will in return keep spreading glowing reviews about your brand. Reviews from your customers are very effective for attracting new customers.
5. Leverage Social Networking
Social media accounts help you to communicate effectively. The importance of social networking cannot be overemphasized. Most successful businesses have multiple social media accounts to reach out to a larger audience easily and quickly.
As a business, you need to create a website that has information about your services. You can use website builder tools like Wix and Squarespace to create the website. Then create accounts on social media like Facebook, LinkedIn, Twitter, Instagram, etc.
Provide links to your media accounts on your website. Market your service business on these accounts regularly. You can even hire social media managers on freelance job websites like Upwork and Fiverr to manage your social media accounts on your behalf.
Service Marketing Types
The term ‘marketing' talks about creating awareness about your business, what you have to offer, and how your solution can benefit lots of people.
Here are the three types of service marketing: internal marketing, external marketing, and interactive marketing.
1. Internal Marketing
This is the type of marketing done by the company to its employees. Your employees need to be aware of what your service offers. It is done through empowerment programs and training. Your employees should be ambassadors of your service.
2. External Marketing
External marketing is the most common type of marketing. It is done by the company to its customers.
This type of marketing is the one that drags sales into your business because you are directly reaching out to the target audience. External marketing is done through advertisements, promotions, online PR.
3. Interactive Marketing
This type of marketing is between the employees and customers. In a marketing funnel, different employees have where they directly interact with customers.
Interactive marketing is done through customer support, interactions on social media, and personal employees. An example is when the customer service department of a service-based business attends to the welfare of customers.
Examples of Service Marketing
There are two classes of service marketing examples. We have B2B (Business to Business) service marketing examples and B2C (Business to Customer) service marketing examples.
B2B Services Marketing Examples
1. JBarrows Sales Training
JBarrows Sales Training is one of the best service providers that provides consultancy and sales training services to some of the world’s leading service establishments like G2 Crowd, Slack, etc.
These companies use JB services to ensure that their teams hold high-quality meetings with the target markets. The sales training offered by JBarrows also helps to improve the quality of interactions during the sales process.
JBarrows Sales Training employs actionable strategies to help small and large-scale companies achieve desirable results.
Cience is a B2B service provider that uses multi-channel prospecting to help companies grow. With highly accurate research, they provide outbound sales processes that enable qualified meetings with your target audiences. Clients are assured of positive results.
Cience is among the top 10 fastest-growing marketing companies in the US. They have been able to serve different clients in hundreds of industries.
B2C Service Marketing Examples
Uber is a transportation business that connects available drivers with customers via mobile apps. For customers, it is a fast and convenient service compared to commercial transit buses. For the drivers, they get to earn an income while transporting people to their desired destination.
The online transport giant builds credibility by in-app reviews dropped by customers after each ride. Its primary value is flexibility for both parties.
Airbnb is an online market where people can find nearby accommodations. The company can sort customers' needs such as duration, costs, accommodation, location, etc. Customers enjoy a quality user experience when they use Airbnb and this boosts the company's reviews in return.
What are the 7 P's of Service Marketing?
There are 7 P's of service marketing. They include product, price, place, promotion, people, process, and physical evidence.
Product is what the word ‘marketing' centers on. It is whatever you have to offer as a solution to meet your customers' needs. In this case, it could be information, your blog, or even a consulting service. The perks of your service and its advantage over other rival service providers should be obvious to your target audience.
Your product has to be well defined in terms of its primary attributes and its extended attributes. The attributes of your service are the building block of your marketing strategy.
If your service design is faulty, no amount of marketing strategy can earn you a large audience. Products can include technology, UI/UX design, securities, transportation medium, and more.
Regardless of the value that you offer, pricing is a key determiner in acquiring customers and their final satisfaction. Before placing a price tag on your service, it would be best if you know the audience's price expectation range (and what your rivals are charging for the same service). It would help you know if you are charging far above the average or far below their expectations.
Talking about services, the price might not correctly indicate the quality. It is like putting a price on an abstract feeling.
There are several price strategies used in service marketing. They include:
For this type of pricing, you start with low charges to acquire a large audience. As your brand begins to grow, you increase your charges.
In this way, you are slowly increasing your price rate on your audience. It may not have a one-time effect on them, compared to when you go from a low price to a ridiculously high price at once. An example of a company that adopted this strategy is Sky TV.
Economy pricing means setting a low price that is difficult for your competitors in the market to beat. But take note that this low price must still be profitable for your business. As long as it remains profitable, it is a good pricing strategy.
Premium pricing refers to when you place high prices on your service. You have to justify the reason why you are pricing at a premium or else competitors will look the other way at your competitors. One easy way to justify premium pricing is to deliver a unique, top-notch, and quality service.
Product Line Pricing
This pricing strategy refers to when you break down your services into small tiers or categories with specific prices per category. It means that your prices increase as you offer a higher number of services with higher value.
An example is a car washing company for different categories of car cleaning. They can have different price tags for basic wash, wash with wax, and full package.
This pricing strategy depends on the location of the company in any part of the world. Variations in prices can arise from the location of a company. Countries that place more value on your services or where there are higher tax rates would offer services for higher prices.
For offline services such as legal services, healthcare, household upkeep, etc, proximity is an important factor to consider. The closer you are to your target audience, the higher the chances of increasing sales. Accessibility is not an excuse for your audience when marketing your services to them once you are situated close to them.
For online services where sales and purchases are made virtually, there are still some determining factors for high purchase probability. The common ones include:
- Security status of payment
- Ease of payment
- Account management
- Type of transaction
- Variety of payment methods
Promotion refers to the mediums through which you advertise your services to your intended target audience. It plays a major role in whatever perspective the target audience has when they look at your service. Your positioning has to complement your promotion. Promotion leads to brand recognition and evaluation of your services.
Positioning (where exactly you are promoting your service) has a major role in the perception of your service. For example, where do you want to promote your service? Is it on Facebook Ads? Is it on Adwords? Also, what contents will they contain?
People refer to the target audience you are promoting and marketing your services to. The success and credibility of your service depend on how you can develop a good relationship with your target markets. It is essential to develop and manage customer relationships efficiently.
You need to pay close attention to what your customers want. It is one of the determining factors for the success of your service marketing campaign.
Unlike physical products, service marketing is not only about the results. The process is an important concept to consider when rendering services.
When you can define your process clearly and properly, customers will perceive your service as a credible and dependable one. It will assure them that their expectations will be met.
Having an effective process for handling your customer support is essential. It is very important to swiftly attend to any issues your customers have. Poor customer support processes will affect the satisfaction level of your customer with your service.
As a service business, solving your customer's issues is not the only important (result) factor but how quickly, efficiently, and gently you attend to it (process) matters.
7. Physical Evidence
Physical evidence affects a customer's satisfaction with abstract services. Since these services are intangible (cannot be seen, felt, or touched), customers depend on stories from existing customers to put their trust in you.
Reviews, accreditations, and stamps are what build a customer's trust in a service provider. Trust is built when you prove the promises you make when marketing your services to your target audience. Also, if no claims are negating your promises, it is easier to build trust in your customers' minds.