How to overcome intangibility of services

When marketing your business offerings, it’s critical to understand the problems your consumers are facing and specify how you’re the right company to help solve them. However, things begin to get more challenging when you’re dealing with intangible products and services like life insurance policies and car repair. The difference between tangible and intangible products is that customers cannot hold these items in their hands and see for themselves what they will be getting in return for their hard-earned money. As a result, your marketing and sales tactics have to show customers the real value of your offerings.

Knowing your customer is vital regardless of whether you sell a tangible or intangible product. However, when you’re selling something that is difficult for customers to understand or conceptualize, knowing their needs is increasingly important. Business.com suggests that personalization is the key to selling intangible products and services. This involves tailoring your marketing messaging and sales pitch to the customer’s needs.

Market segmentation is critical so you can group different types of customers based on specific demographic, geographic, psychographic and behavioral criteria. While your business may cater to different kinds of customers, not all of them will have the same challenges and desires. Segmenting them helps you understand more fully what they need, and what type of messaging they will respond to.

Once you’ve segmented your audience, build an audience persona. This is a reference document that details traits of your ideal customer, the challenges they are experiencing and what kind of results they are looking for. Teach your sales and marketing teams to use the audience persona whenever they are developing messaging for customers so they can personalize their content. For example, if your target audience is stressed about their car breaking down and confused about the process to fix it, this language can go in your sales pitch to help them self-identify as your customer.

It can be difficult for customers to understand what they are getting when they buy an intangible product or service. For example, when they buy life insurance, the only thing they may see is a contract on a piece of paper. In return for thousands of dollars, there is no concrete item they can hold. To counter this, businesses should focus on the results the customers get with the intangible items.

An intangible product example is a career counseling service that helps people figure out their ideal job. In the marketing and sales materials, the business should focus on what happens when the candidate finds their ideal job. The result is meaningful work, being satisfied in your career, having a stable paycheck and loving your job. Those are results that the target customer can understand because it is what they have been looking for. Focusing on results helps to make the intangible items more real.

Business.com notes that one of the reasons customers fear buying intangible products and services is because they don’t understand how they work. When buying something they cannot see, hear, taste, smell or touch, customers aren’t sure what goes into that offering and how it provides them with the results they are after. As a result, businesses need to focus on communicating a clear and easy-to-understand process.

Don’t tell customers about each detailed step you take in your cleaning service or what goes on behind the scenes at your event planning company. Instead, distill the process down into three to five simple steps that helps customers understand what to expect. For example, the cleaning business’ process can include tidying the surfaces, washing the floors and doing a deep clean of the bathroom and kitchen. This way, the customer can see exactly what will be done in order to get them the squeaky-clean house they want to come home to.

Communicate the process in your marketing and sales materials to help customers more clearly understand what the intangible service or product is and how it works. In some businesses, the process may be customizable based on what the consumer is getting. You can say the process is tailored to their needs, but provide a few examples so they know what their options are.

When trying to bring life to a service or intangible product, put emphasis on the emotional benefits. Forbes notes that consumers often have a lot of challenges, worries and fears they are dealing with on a day-to-day basis. If your business can help alleviate even one of those negative emotions, then customers will be more interested in what you have to say. Use your audience persona to determine what emotions your customers are going through.

For example, your customer may be anxious, worried, confused, overwhelmed, frustrated or devastated about something specific. If your intangible product or service offering can fix that problem, use emotional language to help your customers identify with you. What you’re selling is comfort and peace of mind so that your customers don’t have to worry about that specific thing.

Intangible services examples include tax preparation and personal finance consulting. Money makes people feel stressed and worried, so focus on taking those negative emotions away in your marketing and sales pitch. Use terms like "peace of mind," "relaxed," "calm," "at ease," "fulfilled" and "satisfied" to show the emotional benefits customers will receive when they work with you.

Green Biz suggests that using success stories is an effective way to show customers why they need the intangible product or service. Use case studies and testimonials to help create social proof. Customers want to know that your intangible offering works before they spend their money. By proving this point with results other customers have achieved, you help to alleviate any fears and distrust.

Your case studies should cover a range of customers who faced different types of problems, so that you can appeal to all segments of your market. For testimonials, ask key accounts who are pleased with your business to talk about specific things like results, process, benefits and timeline. This helps prospects to imagine themselves as your customers seeing the same positive outcomes.

An effective way to bring life to a service or intangible product is by helping customers humanize your business. Instead of just a corporate entity, they can build relationships with staff and management and learn more about what you do. This relationship helps create a sense of trust in the business. With new prospects, businesses can spend time to fully understand their needs, walk them through the process, show them case studies or testimonials and answer any questions.

In order to retain existing customers and get repeat sales, Quickbooks suggests keeping in touch on a regular basis. This can be through social media, email marketing, direct mail marketing or phone follow-ups depending on your business. For example, a massage therapist may call her existing patients every six weeks to see if they want to book their next appointment. The interaction doesn’t need to be intrusive. Businesses can simply remind customers of the results they received last time and ask whether they want to see those results again. When customers trust the business and have a long-standing relationship with the staff, they are more inclined to buy an intangible product or service.

The Services sector in India is growing at a rapid clip and many businesses that sell products are introducing services for consistent revenue. While the global economy thrived on manufacturing and products in the last century, it is highly dependent on services today. India’s services sector contributed 61% to its gross domestic product in 2015-16 and is growing at 10 percent. According to Statistics Times, Services is the largest sector in India. The Services sector accounts for 53.66% of India’s GVA (Gross Value Added) of 137.51 lakh crore Indian rupees. GVA is the measure of the value of goods and services produced in an area, industry or sector of an economy.

Some of the Services led industries in India are: Information technology (IT), Telecom, Travel & Tourism, Media & Entertainment, Education, and Healthcare. But one should not limit it only to those sectors as almost every industry offers services. Customers are becoming a key focus for business. Delivering better customer experiences through services is now a top priority for businesses.

As more businesses turn towards services, they face new challenges on the Marketing front. Marketing a service to consumers or other businesses is completely different from marketing a product. In this article I shall explain the concept of Service Marketing.

Product vs Service

The service companies or service providers must use service marketing to reach out to consumers. But the challenges of marketing services are different from the challenges of marketing products.

There are four characteristics that distinguish services from products:

Intangibility: It is easier to sell a product than a service. A product is tangible or physical. When customers can see a product and examine its shape, colour, features, size, the quality of materials used – they can immediately make a purchase decision. Indian consumers like to ‘feel’ the product before they buy, especially if it is clothing or personalised products.

However, a service is intangible – consumers cannot feel or own it like a product. So it takes longer to convince them. As they say in marketing, the entry point to the ‘funnel’ takes longer. You are not selling something that a customer can own – it is about selling something that a customer consumes. Take Tourism for instance. That industry sells experiences. The only way a customer can preview it is by seeing photographs, reading reviews online or by listening to other people who have travelled to those destinations.

Education is also a service. The various utilities you consume – electricity, gas, telecom, internet – are all services. Apart from pricing, customers choose a service provider based on quality of service.

Challenge: How does one sell or market a service that cannot be shown to or owned by customers?

Recommendation: There are special approaches to overcome the challenge of selling a service. One is customer testimonials. You can take written testimonials from your existing customers and put these on your business website and in your brochures. Use customer photos. Customer reviews on established websites also work well. An example is reviews on the TripAdvisor website. These days I see a lot of video testimonials. If they are well made with slick production values, these will receive a lot of views and go viral. Also use social media and social media influencers who have followers that are your potential customers.

Inseparability: A product can be bought from different channels: online, in a mall, in a convenience store etc. But a service has one point of purchase. You deal directly with the seller or his distributor. And you go to that same point every time you need that service. For example, when you need a haircut, it’s highly likely that you go to the same salon every month. You may go a step further and demand that the same person does your hair (because he/she knows your preferred style). Hence the relationship between the consumer and the service provider is inseparable.

Challenge: How can the service provider offer the best service, in the most customised manner, for thousands or millions of customers?

Recommendation:  When you are dealing with a few customers, it is possible to get to know them well. You will know their preferences and their level of satisfaction with your services. But that may not be possible when there are thousands of customers. So how do you still achieve this? The Marriott Group of Hotels, for instance, knows the preferences and tastes of all its customers, worldwide. So if you are a regular customer, chances are they will give you the same kind of room, or have your favourite cigars and flowers in your room, no matter which Marriott hotel you stay in, anywhere in the world! How does the Marriott Group know? The answer is systems and processes. Customers preferences and transactions are recorded in a master data base that is accessible to any hotel in the Marriott chain, anywhere in the world. So when you make a reservation, they already know you, and set your room up accordingly! And their customers love that. But just don’t overdo it, as it may be an invasion of privacy.

Perishability: There are perishable and non-perishable products. Food items are perishable and have a shorter shelf life, vendors know they must sell these items within a few hours or days so they offer discounts to clear stocks. If they are unable to sell their stocks, there is wastage and revenue loss.

Services are perishable. The service provider needs to sell maximum capacity in order to be profitable. Let’s take the example of an airline. If a flight is going half empty, the revenue collected from ticket prices will not suffice to cover the operational costs. So airlines use different strategies for filling their airplanes. They might club flights for a particular route or use code sharing arrangements with partner airlines or join an airline alliance like Star Alliance. So it is a matter of balancing demand with supply. If you can do that, then you minimise your business losses and increase your profitability. Of course, you may not always be able to do this. There are periods of demand (like the holiday season) and then there are periods when sales dip due to low demand.

Challenge: How can the service provider create maximum utilisation for its service?

Recommendation:  There are a couple of marketing strategies to counter periods where there is less demand. Some of the approaches are aggressive promotion, discounts, loyalty programs with points, and sales. Marketers create a sense of false urgency and false demand, causing people to rush out to buy services. They do this by offering discounted pricing for a limited period.

Variability: A product might have little variability, because every unit of that particular model is built to a specification or design created by a manufacturer. If you buy a particular model of a car, and your friend buys the same model, it is likely that the two will be similar in most aspects. Of course, the colours may be different and there will be differences in the customised options, like the material used for the seating upholstery.

But with a service, there is a lot of variability. There will be variations depending on who offers the service, and at what location.

Challenge: How can a service be standardised so that the customer gets the same quality, regardless of location or point of sale?

Recommendation:  This can be achieved through standard processes and frequent audits. Customer surveys and feedback provide inputs. Frequent improvements, in response to customer feedback, can lead to increased customer satisfaction. A good example is McDonalds. A Big Mac burger tastes the same at any McDonalds outlet, anywhere in the world (I experienced it). McDonalds uses the same equipment in all their kitchens and the same processes and recipes for making their burgers – at all their global outlets.

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Takeaways and Summary

We have seen that the challenges presented by service marketing are quite different from product marketing. The core challenges for service marketing are Intangibility, Inseparability,  Perishability and Variability. It is difficult to sell something a consumer can’t own or see. And there tends to be a lot of variability in a service.

The key to solving these four challenges is good systems and processes. Pay attention to customer feedback, online reviews and conversations on social media. And act quickly.

The main thing for you, as a service marketer, is customer satisfaction, and then profitability.

If your customers are happy, they will tell others about your service.

And the profits will come!

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