Service-based businesses are fundamentally different to product-based businesses. Service providers experience different sales and marketing problems (or challenges), and often have more complex relationships with clients.
However, if you want to boost your service business revenues consider these ways to improve customer loyalty and generate more sales – without investing in expensive advertising campaigns.
1. Focus on improving customer retention.
You’ve probably heard statistics about how much extra it costs to attract new customers rather than keeping existing ones. Are they true? You bet they are! At a minimum, studies have shown that it costs 5 to 6 times more to attract new customers than it does to implement strategies to retain existing customers.
The key here is to “implement strategies” to keep your existing customers. These strategies can be in the form of either switching barriers or relationship marketing. Switching barriers can create a sense of familiarity with your business and discourage customers from trying competitors. Relationship marketing tactics increase the degree of loyalty customers have towards your business.
With many customers now being well educated in sales and marketing gimmicks, they are usually loyal to the value they receive, so look at your ‘value offer’ and make sure it meets the grade.
2. Understand your customers value equation.
These days customers are loyal to the concept of value, not necessarily to one brand (or business). So it’s important to understand your customers value equation in order to present your services in the best possible way.
What’s a value equation? It’s simply the difference between the costs a customer incurs in using your service and the benefits they derive from it.
For example, costs include such things as inconvenience, time, risk, even sometimes personal pain, and of course the monetary price they pay.
Benefits include not only the obvious outcome of the service, but also personally-oriented aspects like confidence, social benefits and a feeling of special treatment.
It’s important to recognise this equation may vary depending upon the type of service provided and the unique mix of client/service provider that is an essential element of service encounters.
3. Create opportunities to cross-sell.
Have you ever gone into your bank to use a teller and upon completion of the transaction had the teller suddenly ask “Can I help you with insurance today?” Like most people you probably say “No” and simply walk away.
The teller is trying to cross-sell the banks insurance services to you. But it fails. You know the teller has no understanding of your situation and is simply trying to sell you insurance.
Don’t just promote your other services to every client you have. Your customers want you to understand their needs so you can recommend what will suit them. First build the relationshipthen offer suggestions on how they can improve their situation by using your other services. To be successful you must develop an effective selling process.
In some cases you may find it helpful to develop alliances with complementary service providers so you can recommend their services when it is in the best interest of your client.
4. Don’t concentrate on your price.
“All customers buy on price!” Work to this philosophy and you’ll miss many opportunities to build your business. Price is important, as it is often a major factor in the value equation (see point 2 above). But don’t assume you must always offer the lowest price. Various studies have shown the top criteria by which clients choose service providers is often competence, courtesy and understanding of the clients needs.
Also, price has been shown to be only third important in reasons for clients leaving a firm. Core service failures and service encounter failures are the main reasons for customers to defect from service firms.
5. Don’t have a USP!
For many years the mantra has been to develop a single Unique Selling Proposition (USP) that will position your business in its own niche. For many service businesses this approach can be very limiting. Often the same service can be offered to numerous segments of the market, with each segment having its own reasons for using the service.
But don’t abandon the USP concept. Use it to develop a meaningful position focused on the needs of each of the segments you wish to target. This may mean having a slightly different emphasis on your sales and marketing message for each of the different target audiences.
For example, I have a client in the employment services market. Her firms services can be used either in ‘recruitment’, ‘staff development’ or ‘career transition’ situations. Whilst the underlying benefits may be very similar, from the clients perspective they are looking for different types of results. Tailor your message to the recipient.
If you want to boost your service business revenues consider these ways to improve customer loyalty and generate more sales – without investing in expensive advertising campaigns.
6. Evaluate your customer portfolio to identify high-value segments.
It may not sound nice to say, but not all clients are equal. So it is important to assess which clients are profitable for you.
Identify the characteristics that make your good clients valuable to you. Review your sales records, data on previous clients and other sources to determine the profile of your ideal client. This enables you to define a segment that you can consequently target with your marketing efforts. Consider:
The nature of your clients buying process (e.g. do you have more success with entrepreneurial style clients, or with more structured buying-decision processes.)
The idea is to focus on your A category prospects. Don’t get side-tracked by chasing lower value prospects, but we wont forget about them either. By focusing on your A category prospects you will also generate additional interest from other prospects. Todays C category prospect may evolve into tomorrows A category client.
Now you can efficiently target your ‘ideal’ prospects by selecting relevant media and promotional opportunities, developing an appropriate benefit message, and by implementing suitable sales practices tailored for this type of prospect.
7. Involve your ‘back-office’ personnel.
In a service business there can be a lot of client contact, and not always by the front-office person (or service provider) in the business. Think about the potential impact of client contact with your accounting/administrative staff, service technicians, maintenance staff, and support personnel.
Identify the “moments of truth” in your business and focus on improving these brief encounters. Also consider possible breakdowns in the delivery of your service and train staff on how to handle these critical incidents.
So try to think of all back-office staff as part-time marketers. Use their customer contact to enhance the image of your firm by improving their skills, involving them in training, and obtaining regular feedback from them on issues affecting clients.
8. Use the Internet to be available when you are not.
The Internet never sleeps, gets caught up on phone calls, has sick days, or is out to lunch. When designed correctly, a web site for a service business can substantially enhance the provision of great customer service.
It is also an excellent tool for generating qualified leads. Your web site is the modern “silent salesman”. Use your web site to add “tangibility” to your service business, explain your processes, and to reassure your prospective clients of your ability to satisfy their needs.
Don’t get confused by the array of technological options – keep it simple for your clients. A web site will add a 24-hour-a-day element to your business, and can incorporate online systems to automate business processes such as bookings and appointments, payments and the provision of information.
Importantly, by structuring the contact process correctly on your web site, you can help prospects to qualify themselves, and in doing so minimise the time you spend dealing with low value enquiries.
Lastly, always respond promptly to any enquiries generated via your web site. Prospects and customers will judge the quality and reliability of your services by the manner in which you respond to their initial request.
Stuart Ayling runs Marketing Nous, an Australasian marketing consultancy that specialises in marketing for service businesses. He helps clients to improve their marketing tactics, attract more clients, and increase revenue. For additional marketing resources, including Stuart’s popular monthly newsletter, visit his web site at www.marketingnous.com.au