Ever wondered how to make your intangible services tangible to your audience? Are you curious about the secrets behind the success of marketing giants like McDonald's and Nike? How did brands like Federal Express and Prudential use symbols and stories to connect with their customers? Dive into the world of service marketing and discover how you can conquer the market with the right strategies, captivating storytelling, and the power of perception.

Selling the Invisible: A Field Guide to Modern Marketing

Imagine scrolling through Harvard Business School’s marketing case studies, only to find that a mere one in four cases involves a service. Meanwhile, the latest Fortune 500 is dominated by service companies, including unexpected ones like General Electric and Nike, which derive significant revenue from services. This highlights a crucial point: America is primarily a service economy, yet we approach it with a product marketing mentality.

Unlike tangible products, services are intangible and can’t be evaluated before purchase. For example, you can’t preview a haircut at a salon. This intangibility makes service marketing distinct and challenging. You often don’t know the cost upfront, and identifying service failures is tricky. Unlike products, most services don’t come with warranties, leaving customers to negotiate or litigate when things go wrong.

Manufacturers ensure consistent quality through tested processes, but services rely on human interaction, which is unpredictable. For instance, an advertising agency may falter if an employee behaves inappropriately, causing client dissatisfaction. Because services are delivered by people, failures often feel personal.

Service marketers must understand their customers' anxieties and work to alleviate them. Even businesses that sell products, like pacemakers or cars, often rely on the service aspect to differentiate themselves in a competitive market. For instance, Saturn cars sell not just because of their features but the added value of no-hassle pricing and vigilant service.

In today's economy, product distinctions are fleeting. Companies must either reduce costs or add value through services. Innovations like Levi’s Personal Pair jeans, which are custom-made based on customer measurements, illustrate this shift. Successful marketers now focus on relationships, simplicity, and understanding customer behavior.

Improving service quality is essential. Companies often overestimate their service levels, a phenomenon known as the Lake Wobegon Effect. Yet, even with above-average service, there’s room for improvement. Exceptional service can create loyalty and positive word-of-mouth, as seen in the story of Roger Azzam, a Dayton’s clerk who went above and beyond to satisfy a customer, resulting in a significant sale.

Service failures should be seen as opportunities. Handling mistakes well can enhance customer loyalty. For instance, Delta Airlines once excelled in customer service but faltered due to poor marketing and communication. Balancing excellent service with effective marketing is crucial for survival.

To thrive, service companies must innovate. Instead of incremental improvements, they should seek radical changes, like McDonald’s efficient processes or Federal Express’s logistics. Great services often emerge from rethinking the business model entirely. Companies should start their marketing plans from scratch, questioning their current relevance and exploring new opportunities.

In the evolution of industries, companies must progress from meeting basic standards to surprising customers with imaginative offerings. Services should aim for stage three, where they create what customers would love, not just what they need. This approach leads to glory, fame, and market share.

In essence, the future of marketing lies in understanding services deeply, innovating boldly, and always striving to exceed customer expectations.

Is Harvard Business School Missing the Service Economy Revolution Dominating the Fortune 500?

One day, Harry Beckwith, the author, received a call from a salesman who had a valuable service but completely missed the mark by condescendingly explaining marketing basics to Harry. He repeated the same phrase multiple times, and it was a total turn-off. Did Harry tell him his sales pitch was bad? No. Harry didn't want to offend him and figured it wasn't worth the effort. This reminded Harry that people rarely tell you what you’re doing wrong. Your prospects, clients, and even close friends might not give you the honest feedback you need.

So, what should you do to improve? Ask. Survey your clients, but make sure it’s done by an independent third party to ensure candid responses. This principle is crucial because even your best friends won’t tell you directly, but they might talk behind your back. When clients know their feedback is anonymous, they are more likely to be honest.

Why survey? It shows your customers that you care about improving your service. You can use positive feedback in your marketing materials and identify areas needing improvement. Surveys also help maintain contact with clients and understand what business you’re truly in.

However, be cautious with written surveys. Ambiguous questions can lead to misunderstandings, as illustrated by David Letterman’s interview with Helen Thomas. Oral surveys are often more effective because they allow for clarification and more detailed responses. For instance, when Harry conducted phone surveys, people were surprisingly open and talkative, providing much more information than written surveys.

Avoid asking negative questions like “What don’t you like about our service?” as it forces clients to admit they made a bad decision. Instead, focus on understanding their experiences and improving from there.

Marketing is not just a department; it’s everyone’s responsibility. Every interaction with a client is a marketing act. Understanding what you’re good at and what clients are really buying can set you apart. For example, McDonald’s realized they were selling an experience, not just hamburgers. Similarly, in professional services, clients often value the relationship over the expertise itself.

In service marketing, it’s essential to understand your clients on a personal level. Knowing their preferences and making them feel appreciated can significantly impact your business. Often, your biggest competitor is the prospect’s decision to do nothing or handle it themselves.

A successful strategy is to “go where they ain’t,” as exemplified by Sam Walton’s Wal-Mart and McGladrey & Pullen. They avoided direct competition by targeting less obvious markets. Adapting to new technologies can also give you a competitive edge.

Study every point of contact with your clients and make a phenomenal impression at each one. Remember, life is like high school; it’s a popularity contest. Being competent and likable is crucial. Relationships are about feelings, and winning in service marketing often comes down to chemistry and personality. Be professional, but more importantly, be personable.

David Letterman's Secret to Honest Client Feedback

Planning is a challenging endeavor riddled with fallacies. One such fallacy is the belief that we can predict the future. History is replete with failed predictions, such as the expected unemployment boom with the influx of baby boomers and women into the workforce—which instead led to a surge in jobs. The unpredictability of the future is also evident in technological advancements and societal trends that defy expert forecasts, like the enduring popularity of cinemas despite the rise of VCRs.

Another fallacy is the assumption that businesses know what they want in the future. Goals often shift as companies grow and market realities change. Planning should therefore be flexible, focusing on the process rather than a fixed outcome. The value lies in the thinking and adaptability, not in a rigid plan.

The supremacy of strategy over tactics is another misconception. In practice, tactics often shape strategy. Apple’s Macintosh, born out of the failed Lisa, exemplifies this. Businesses succeed by adapting their tactics based on real-world feedback.

The belief in building a perfect product is also flawed. Execution with passion often trumps perfection. Apple’s success with the mouse and icons, initially developed by Xerox, underscores the importance of passionate execution.

Patience is not always a virtue in business. Delaying action can lead to missed opportunities, as illustrated by the Bedrock Wheel Company fable. Companies should act decisively, like sharks that need to keep moving to survive.

Smart thinking is valuable, but sometimes lateral or seemingly stupid ideas lead to breakthroughs. Planning should encourage wild ideas, which often turn out to be the most innovative.

Science and data in planning carry an aura of certainty, but they can be misleading. Research often serves as insurance rather than a true guide. The fallibility of social sciences and the overconfidence in numbers can lead to poor decisions.

Focus groups, often used to predict consumer behavior, are limited. They focus on current preferences and may miss innovative ideas, as shown by the numerous service marketing innovations that did not originate from focus groups.

Memory and experience are unreliable guides. People’s recollections are often flawed, and overgeneralizing from limited experiences can lead to erroneous conclusions. Confidence in one’s knowledge can also be misplaced, as studies show experts are often wrong even when certain.

Perfectionism can paralyze decision-making. Pursuing the best plan can lead to procrastination. Good plans executed well are better than perfect plans never implemented.

Failure should not be feared but embraced as a part of the process. Many successful ventures have numerous failures behind them. Expertise and authority in planning should be questioned, as experts can be wrong and authority can stifle innovation.

Common sense, while valuable, is not sufficient for innovative planning. Leaps of imagination and inspiration are necessary for groundbreaking ideas. Fatalism can also hinder planning. Belief in success is crucial, as demonstrated by the New York Mets’ unexpected World Series win.

In essence, planning should be dynamic, flexible, and open to unconventional ideas, recognizing the limitations of predictions, expertise, and overconfidence.

Can Apple's Macintosh Success Teach Us the True Art of Planning?

Why do people buy what they buy? Service marketers often think decisions are logical, but reality tells a different story. Consider the case of Visa vs. American Express. Visa is accepted at more locations and offers flexible payment options at a lower cost. Yet, 25 million Americans choose American Express for the prestige of "membership." This choice is not purely rational.

People often decide based on familiarity. Steve Edleman’s telemarketing company thrived because he invested in constant advertising, making his brand more familiar. Familiarity breeds business, even if the information is negative—a phenomenon known as attribute forgetting.

Another key factor is the Recency Effect. The IRS uses this by publicizing tax evasion cases in March, influencing people to avoid risky deductions. Companies use this by aiming to be the last presenter in competitive pitches.

People also tend to choose "good enough" rather than the best option, as seen in President Clinton's Supreme Court pick, Stephen Breyer. Eliminate perceived risks to make yourself a safe choice.

First impressions matter greatly due to the Anchoring Principle. Once an impression is formed, it sticks. Therefore, making a strong initial impact is crucial.

Last impressions are equally important. Advertisers pay more for front and back magazine ads, and KinderCare ensures children end their day happily to influence their return.

Risk aversion drives decisions. People choose familiar options like Burger King over unknown, potentially better choices to avoid bad experiences. Thus, reducing perceived risks is essential.

Prospects like Peggy are often fearful of new services. Offering trial periods or small projects can alleviate this fear.

Showing imperfections can build trust. A study showed that job candidates with minor criticisms in their references were preferred over those with flawless records. Honesty can enhance credibility.

Details matter, especially in industries with similar services. Prospects will look for minor differences to justify their choices, making every detail count.

In short, understanding how prospects think—through familiarity, recency, risk aversion, and first and last impressions—can significantly influence their buying decisions.

Visa vs. American Express: The Psychology Behind Consumer Choices

Successful marketing hinges on the concept of positioning, which means carving out a unique spot in your prospect's mind. Al Ries and Jack Trout emphasize this in their book, "Positioning." They argue you should focus on a singular message that sets you apart from competitors, even if it means sacrificing other opportunities. Domino's Pizza exemplifies this with its relentless focus on speedy delivery, encapsulated in their "30 Minutes or It's On Us" campaign.

However, many service marketers fear positioning because it involves narrowing their focus and potentially excluding some business opportunities. Yet, a narrow focus can create new opportunities. For example, Scandinavian Airlines (SAS) positioned itself as "the business traveler’s airline," leading to a revival and significant profit increase, even attracting more tourist customers because of their ability to lower fares.

Skadden, Arps, Slate, Meagher & Flom, a New York City law firm, similarly focused on mergers and acquisitions (M&A), leading to dramatic growth and success. This focus demonstrated their ability to handle complex cases, which in turn attracted clients with less complex problems.

The Halo Effect explains why focusing on one positive attribute can enhance overall perceptions. Long Island Bank and Trust, for instance, became positively associated with many facets by simply stressing their local roots.

Even if services seem identical, minute differences can be highlighted and marketed. For instance, companies like Heinz and Gold Medal turned commodities into distinctive brands.

Positioning is about leveraging how prospects already perceive you. Avis Rent A Car famously turned their second-place position to their advantage with the slogan "We’re Number Two. We try harder."

Creating an effective positioning statement involves answering key questions about who you are, what you do, and what makes you unique. For example, Bloomingdale’s focused on the shopping experience rather than just high-end products.

Repositioning competitors and leveraging your current position can be key strategies. Michael Graves, an architect, used his unique style to stand out and reposition his competition.

Sears struggled due to a lack of focus but began to recover by concentrating on its "softer side" and improving women's clothing sales.

In politics, Bill Clinton’s 1992 campaign turnaround came from a focused message on the economy, demonstrating the power of focus in winning campaigns.

Citicorp's near downfall was due to overreaching and losing focus, a cautionary tale for any company.

Ultimately, clear positioning and focus can enhance word of mouth, unify marketing communications, and rally employees, making your company's message more powerful and consistent.

Can a Singular Focus Like Domino's, Avis, and SAS Propel Your Business to Unmatched Success?

In Denver, a woman sold her cats by marketing them as "Ugly Cats" for $100 each, attracting over eighty callers. Meanwhile, Timberland, struggling in the 1980s, boosted sales by raising their boat shoe prices above Topsiders. In Arizona, a jewelry store owner mistakenly doubled the price of unsold turquoise jewelry, which then sold out. These anecdotes reveal pricing's illogical nature; higher prices often imply better quality.

A young entrepreneur noted that if no one complains about your price, it's too low, while if everyone complains, it's too high. The sweet spot is where about 15-20% raise objections. Pricing should avoid the "Deadly Middle"—not too high to suggest luxury, nor too low to imply poor quality. Companies that compete solely on low cost often struggle to sustain profits, as seen with retailers like J.C. Penney and Sears.

Picasso once charged a hefty fee for a quick sketch, explaining it took him a lifetime to master his craft. Pricing should reflect expertise, not just time. Like a carpenter charging more for knowing where to hammer, services should charge for expertise.

Brands shape perceptions and streamline decision-making. For instance, a lawyer lost business to branded firms despite superior skills. Brands act as warranties, promising reliability. They are crucial, especially in services without warranties, as they build trust and credibility.

Distinctive names make services memorable, like Federal Express, which cleverly communicates speed and nationwide reach. A unique name can set a service apart, signaling quality and individuality.

Kate Thurman, a high school freshman, turned babysitting into a brand by creatively marketing her service, "KATE loves KIDS," using signs and partnerships. Her strategy earned her recognition and a thriving business, proving that effective branding doesn't require millions—just imagination. Brands offer shortcuts in a fast-paced world, making decisions easier for time-strapped consumers. Embrace branding to stand out and capture market share.

Picasso, Timberland, and the Art of Pricing: Lessons in Perception and Branding

Marketing services isn't just about selling a promise; it's about making the intangible tangible and relatable. Unlike products, services don't speak for themselves. Imagine trying to sell a weight-loss program when the last three didn't work, or convincing someone your auto repair won't break their bank. The trick? Make your service visible and soothe the prospect's worries.

Fran Lebowitz quips that people aren't interested in you; they're interested in themselves. Marketing is no different. Your biggest competitor isn't the rival company—it's indifference. To break through, focus on what the prospect cares about, not what you want to tell them.

Psychologists describe the Cocktail Party Phenomenon: you hear your name across the room and suddenly, that's all you can focus on. In marketing, it's called cutting through the noise. Say one thing, and repeat it until it sticks. Like a catchy song on the radio, familiarity breeds comfort and recognition.

Stories captivate and persuade. Trial lawyer Gerry Spence knows a story about injustice is worth more than a dozen adjectives. Attack stereotypes head-on, and instead of claiming greatness, prove it with evidence. Independent surveys or vivid customer stories lend credibility.

David Ogilvy once remarked that emphasizing superiority isn't necessary. Being "positively good" is often enough. Most people don't seek the best—they seek comfort and reliability. Remember, comfort often trumps superiority.

Visual clues speak volumes. Insurance companies use symbols like Prudential’s Rock of Gibraltar to make themselves relatable. Restaurants know it’s not just about the food; it’s the atmosphere and experience. Make sure your visuals convey the right message.

Words matter immensely. Lincoln's Gettysburg Address transformed a battlefield into a symbol of heroism with just 276 words. Your service needs the right words to create its reality. Avoid clichés. Instead, use vivid, fresh language to captivate and retain attention.

Publicity isn’t just about getting noticed; it’s about being interesting. The best stories aren’t about your service’s greatness but about what makes it intriguing. Be like William F. Buckley—see the interest in everything. And remember, prospects buy hope and happiness as much as they buy solutions. Make them smile, and you’re halfway there.

Can You Master Marketing Like Fran Lebowitz and David Ogilvy?

In the world of advertising, agencies like Smith & Smith often find themselves blindsided when clients suddenly leave, despite assurances of satisfaction. This common scenario highlights the fragile nature of service relationships. 

From the moment an agency wins an account, it operates at a deficit, constantly striving to prove its worth as the client bears the initial risk. To bridge this gap, service providers must continuously exceed client expectations and manage relationship deficits with consistent communication and gratitude.

For instance, service providers often make the mistake of overpromising and under-delivering, leading to disappointed clients. This phenomenon is prevalent in industries such as collections, where unrealistic promises result in a high churn rate. Clients' dissatisfaction stems from unmet expectations rather than absolute service quality. Therefore, managing expectations is crucial to maintaining long-term client satisfaction.

One effective strategy is to consistently thank clients and show appreciation. Simple gestures, such as thank-you notes and prompt responses, can significantly impact client perception. For example, the advertising firm Fallon McElligott impressed clients with its swift phone answering system, reinforcing a sense of respect and efficiency.

Service industries also face the challenge of making their successes visible to clients. Unlike products that offer constant reinforcement of satisfaction, services are fleeting. To counter this, service providers should actively communicate their achievements and maintain a presence in clients' minds through regular updates and advertising.

Taking personal risks in selling services is another essential aspect. Engaging with potential clients, even at the risk of rejection, can lead to substantial rewards. As illustrated by Gail Sheehy's research, those who take significant personal risks often experience high well-being and success.

Ultimately, the key to nurturing and retaining clients lies in managing the small details, maintaining clear communication, and consistently demonstrating gratitude and reliability. By staying present and actively promoting their successes, service providers can build stronger, more resilient client relationships.

How Fallon McElligott's Gratitude Strategy Redefines Client Retention in Advertising

Imagine browsing through Harvard Business School’s marketing case studies and discovering that only one in four involves a service. Yet, service companies dominate the Fortune 500, including giants like General Electric and Nike. This discrepancy underscores the fact that America is primarily a service economy approached with a product marketing mentality.

Services are intangible and cannot be evaluated before purchase, such as a haircut. This makes service marketing distinct and challenging, with issues like unpredictable quality due to human interaction. Service marketers need to understand and alleviate customer anxieties, as Saturn did with their no-hassle pricing and vigilant service for their cars.

In today's economy, product distinctions are fleeting. Companies must innovate by adding value through services, like Levi’s Personal Pair jeans, custom-made for customers. Exceptional service creates loyalty and positive word-of-mouth, exemplified by Roger Azzam, a Dayton’s clerk whose dedication led to a significant sale.

Service failures should be viewed as opportunities to enhance customer loyalty. Delta Airlines' decline due to poor marketing and communication illustrates the importance of balancing excellent service with effective marketing.

Innovative services often emerge from rethinking the business model entirely. Companies should question their current relevance and explore new opportunities, aiming to surprise customers with imaginative offerings, as demonstrated by McDonald’s efficient processes or Federal Express’s logistics.

Marketing services involves making the intangible tangible. Service marketers must understand their clients on a personal level and build relationships based on feelings. Every interaction is a marketing act, as McDonald’s realized they were selling an experience, not just hamburgers.

Pricing can be illogical, as seen with the "Ugly Cats" or the jewelry store owner who sold out by doubling prices. Brands shape perceptions and streamline decision-making, acting as warranties in the absence of tangible products. A distinctive name can set a service apart, signaling quality and individuality, like Federal Express.

Effective branding doesn't require millions—just imagination. Kate Thurman turned babysitting into a brand, "KATE ♥ KIDS," using creative marketing to build a thriving business. Embracing branding helps stand out and capture market share.

Marketing services isn't just about selling a promise; it's about making the intangible relatable. Stories captivate and persuade, attacking stereotypes with evidence. Visual clues, the right words, and interesting publicity can make your service memorable.

To thrive, service providers must continuously exceed client expectations, manage relationship deficits, and show appreciation. Simple gestures like thank-you notes can significantly impact client perception. Fallon McElligott impressed clients with its swift phone answering system, reinforcing respect and efficiency.

Service industries must actively communicate their achievements and maintain a presence in clients' minds. Taking personal risks in selling services can lead to substantial rewards. By managing small details, maintaining clear communication, and consistently demonstrating gratitude and reliability, service providers can build stronger, more resilient client relationships.

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Selling the Invisible: A Field Guide to Modern Marketing

Harry Beckwith

9 Key ideas

25 MINS

4.5 (1k)

Ever wondered how to make your intangible services tangible to your audience?

Are you curious about the secrets behind the success of marketing giants like McDonald's and Nike?

How did brands like Federal Express and Prudential use symbols and stories to connect with their customers?

Dive into the world of service marketing and discover how you can conquer the market with the right strategies, captivating storytelling, and the power of perception.

Key Ideas

#1