Service is the New Marketing

Share Button

serviceThe disconnect between marketing and service delivery must end A sea-change is under way as profitability shifts from first sale of goods to long-term provision of services. Profits from an initial sales pale beside the revenue and profit potential of warranties, maintenance contracts, automatic upgrades, consumables, repairs, and spare parts.

One speaker claimed “an intellectually honest forensic analysis of revenue and profitability” increased the influence of service on the budgets and activities of R&D, engineering, marketing, and sales.

Sales can no longer “bundle in free service” to close a deal when closing a service contract offers higher margins. Marketing can no longer over-promise and expect a service team to cover the gap. Today, the quality of a customer’s service experience determines the success of future sales. Service is the new marketing.

Good sales people have a great relationship with service people Some sales people try to keep customers away from the service department during the selling process. They fear losing the sale of new equipment to an extended service agreement on a customer’s existing equipment. Or they are trapped in an internal dispute about how revenue will be recognized; as a new sale to an existing customer, or an extension of service to retain a customer.

One company resolves this tension by giving both sides a financial incentive to help the other, but they keep the roles of sales and service personnel very clear. A conference delegate said “Our service staff do not make sales proposals, they make recommendations to customers. By the time these recommendations are passed to sales, the customer is already in agreement.”

It makes sense to include your service people in the selling process and the rewards. After all, service personnel have more ongoing contact with your existing customers and equipment than your sales people ever will.

I don’t compete on price, compete on the experience the customer receives One panelist said “There are no products anymore. I only buy a product to serve me.” Another replied, “We are no longer service providers, we are all experience providers.”

Self-service may cannibalize your service revenue Enabling customers to self-serve can reduce service revenues. Customers can service themselves with internet connected equipment, embedded machine diagnostics, self-adjusting supplies, user-enabled updates, and easily available remote support. There’s no need to send a technician in a truck when a remote device (a washing machine, photocopier, or surgical pump) can diagnose and regulate itself.

“The Internet of Things” is creating a huge wave of smarter devices and savvy customers. This can lowers costs, but may lower service revenue, too. The good news is that better connected customers enjoy a “stickier” relationship with suppliers. And that’s a win-win for both parties. Find the right balance of your service and self-service to create the ideal customer experience.

Trying to be great at everything leads to exhausted mediocrity Francis Frei, Harvard Business School professor and author of Uncommon Trend – Customer service Service, made an impassioned plea to “Be Bad to Be Good.” She said “In order to be great at something we have to be bad at something, and be equally unapologetic about both.”

Southwest Airlines is budget priced and takes off right on time (good), but they will not serve you food on board (bad). MBNA bank offers the worst savings and loan rates in town (bad), but they hire the friendliest people in town (good) and stay open very late (good).

“Stop using red, yellow, and green management reports,” Frei insists, “because they drive everyone to focus on fixing the reds. Some things need to be red!”

Sometimes you need to keep quiet in social media One manufacturer shared what happened when his technical team answered questions in a User’s Forum. As soon as the users saw that the company was participating in the Forum, the user community went silent. He said “Our customers wanted contact with each other, not with us. Now we have clear guideline for our own participation. And in certain user forums, that means: ‘Observe but do not intervene.’

It’s no longer work-life balance. It’s all life now The idea of doing your work and then having a life is obsolete. People want work to infuse their lives with meaning, not suck the life out of them before the weekend.

Over dinner we heard from a police officer who was shot during the Boston marathon bombing. As he shared the incredible medical efforts to save his life, the man next to me whispered that his wife is a nurse and said “that’s why nurses get paid so little and still do what they do”.

Work-life balance is becoming worklife integration. This doesn’t mean showering with your smart phone, but it does mean things you care about are part of your daily work. If the work itself is not inspiring, then your customer connections and company culture must fill the gap.