Distributing Services

Dr. Brian Monger

Service Product Distribution

Some would have it that services are intangible.  That is technically right, but logically if a Service Product was completely intangible, how would we be able to transfer it?

All organisations – whether producing tangibles or intangibles – are concerned with place decisions.  That is how to make their offerings available and accessible to users.  Even where a service or other intangible is marketed there are physical problems.  All are associated, somewhere or other, with tangible elements requiring physical handling, storage and transportation

The subject of place decisions for services is confused as people grapple with the concept of a ‘distribution channel’ for items which are intangible, often inseparable from the person performing the service and perishable, in the sense that inventory cannot be carried.  The subject is further confused because the generalisations made about services (e.g. no inventory carried) do not always apply in specific situations.

Methods of distributing services

A distribution channel for services is the sequence of firms involved in moving a service from producer to consumer.  The usual generalisation made about service distribution is that direct sale is the most common method and that channels are short.

Direct sale certainly is common in some services markets (e.g. professional services); but many service channels contain one or more intermediaries.  It would be incorrect to suggest that direct sale is the only method of distribution in services markets.

Intermediaries are quite common.  Some of these intermediaries assume ownership risks; some perform roles that change ownership (e.g. purchasing); some perform roles that enable physical movement (e.g. transporting).

Like this short article on services and distribution (Place)?  Please comment.  And have a look at another article on Distribution in our sister blog http://smartamarketing.wordpress and checkout the smartamarketing posts on SlideShare.

Service Product Distribution

All organisations – whether producing tangibles or intangibles – are concerned with place decisions.  That is how to make their offerings available and accessible to users.  Even where a service or other intangible is marketed there are physical problems.  All are associated, somewhere or other, with tangible elements requiring physical handling, storage and transportation

The subject of place decisions for services is confused as people grapple with the concept of a ‘distribution channel’ for items which are intangible, often inseparable from the person performing the service and perishable, in the sense that inventory cannot be carried.  The subject is further confused because the generalisations made about services (e.g. no inventory carried) do not always apply in specific situations.

Methods of distributing services

A distribution channel for services is the sequence of firms involved in moving a service from producer to consumer.  The usual generalisation made about service distribution is that direct sale is the most common method and that channels are short.

Direct sale certainly is common in some services markets (e.g. professional services); but many service channels contain one or more intermediaries.  It would be incorrect to suggest that direct sale is the only method of distribution in services markets.

Intermediaries are quite common.  Some of these intermediaries assume ownership risks; some perform roles that change ownership (e.g. purchasing); some perform roles that enable physical movement (e.g. transporting).

Customers Are Often a Challenge

Customers Are Often a Challenge

You can learn from that challenge.  The more you learn, the more you’ll enjoy your job.

Learning to calm upset people is not easy.  There is no single technique that works with every upset person.  But there are skills that can be learned, with a positive attitude and practice.

Why is it Important to Calm Upset Customers? 

In a survey of service quality, it was discovered that twenty five percent of customers had expressed a complaint in the previous twelve months.  The survey stated, “In light of this significant percentage, everyone in the organisation-from teller to president-must become increasingly aware that he or she is either serving the customer directly or is serving someone in the organisation who serves the customer.  All positions exist because of the customer.  ”

Calming upset customers is rarely pleasant, but it must be done.  If upset people continue expressing their anger and frustration without intervention, it can upset the whole office.

Upset Customers Don’t Come Back

A recent study showed that customers stop buying from a particular business for the following reasons:

1%       die (not much you can do about that)

3%       move away

5%       form other interests

9%       for competitive reasons

14%     due to product dissatisfaction

68%     because someone was rude, indifferent or discourteous to them.

It is clear that people want and expect good service.  When they are not treated well they don’t come back.

It can be expensive for your company if your customer decides not to come back.  One study found that the average cost of acquiring a new customer was $120.00 yet to keep a current customer happy costs only $21.00. It is six times more expensive to acquire a new customer than to keep a current one.  That money could be spent improving your work environment, giving you a raise, or keeping you employed.

Word of Mouth Spreads Quickly

If your organisation has a reputation for quick, courteous responses to complaints, people will be more apt to begin their conversation with you rationally.  When customers scream and yell it’s often because that’s what their friend had to do to get some action from your organisation.

One study found that, on average, one dissatisfied customer told 11 other people, who each told 5 others.  That’s 67 (1 + 11 + 55) people spreading bad word-of mouth about your organisation.  Most organisations are going to be hurt by that much bad advertising.

You Want Customers to Complain

Yes, you do.  Because if they don’t complain they’ll just take their business elsewhere, and tell their friends not to do business with you.  Think about what happens when you are treated poorly: do you usually complain? Most people don’t.  They just say “I’m never coming here again.”

How to Define Your Brand

This is the first step in the process of developing your brand strategy. By defining who your brand is you create the foundation for all other components to build on. Your brand definition will serve as your measuring stick in evaluating any and all marketing materials and strategies.

1. What products (goods and/or services) do you offer? Define the qualities of these services and/or products.
2. What are the core values of your products (goods and services) ? What are the core values of your company?
3. What is the mission of your company?
4. What does your company specializes in?
5. Who is your target market? Who do your products (goods and services)  attract?
6. What is the tagline of your company? What message does your tagline send to your prospects?
7. Using the information from the previous steps create a personality or character for your company that represents your products. What is the character like? What qualities stand out? Is the personality of your company innovative, creative, energetic, or sophisticated?
8. Use the personality that you created in the previous step and build a relationship with your target market that you defined in Step 5. How does that personality react to target audience? What characteristics stand out? Which characteristics and qualities get the attention of your prospects.
9. Review the answers to the questions above and create a profile of your brand. Describe the personality or character with words just as if you were writing a biography or personal ad. Be creative.

Tips:

1. Focus on your target audience when answering each question.
2. Compile each answer in a journal or notebook specifically designated to the Brand Development of your company.
3. Be honest with your answers, answer each question thoroughly.

Branding Through Your Employees

Your employees are one of the most critical touch points for your customer. Here are several steps to ensure that they are representing your brand in the best light possible.

• Develop a Company Philosophy.
• A thoughtfully planned philosophy that guides how your company operates is the first step to reinforcing your brand among your workforce. The prestigious Ritz Carlton Hotel Company is an excellent example. They have created the following five “Gold Standards” for their business operations that reinforce the brand and detail an employee’s role in delivering on this brand:
  1. A vision to revolutionize hospitality in America by creating a luxury setting for guests and a credo that states the company’s commitment to the genuine care and comfort of its guests.
  2. A motto that exemplifies the level of service for its guests: We are ladies and gentlemen serving ladies and gentlemen.
  3. Three Steps of Service:
     • A warm and sincere greeting that uses the guest name, if and when possible
     • Anticipation and compliance with guest needs
     • A fond farewell that uses a guest’s name, if and when possible
  4. “20 Basics” that outline the responsibilities and expectations for how the company delivers on its service (including #13—Never Lose a Guest)
  5. The Employee Promise (“At The Ritz-Carlton, our Ladies & Gentlemen are the most important resource in our service commitment to our guests.”)

• Maintain Brand Consistency

This step is essential to building a strong brand. However, it is often one of the first steps to unravel. You must establish consistency throughout all aspects of your organisation. But setting the standards is not enough. You must constantly evaluate your actions. Establish checkpoints for each aspect of the business that interacts with customers and the general public. Ensure that each employee is empowered to identify and address inconsistencies in your brand. Fail to deliver on brand with one customer, and he or she might forget. Fail to do so for another, and he or she might not be so forgiving. It only takes a scant few to dispel the brand you are touting.

• Practice What You Preach.

The best way to lead is by example. If your brand projects your organisation as one which supports its employees and then reneges on that promise, your brand (and sales) will suffer.

• Implement Brand Guidelines.

In order to ensure brand consistency, your organisation must establish a framework or set of brand guidelines for all to follow. We’re not merely talking about logo or corporate identity guidelines, but actual brand guidelines that communicate the company’s brand positioning statement, key messages, core values, brand attributes, measures of success and processes for handling customer issues or feedback. Federal Express was an early pioneer in this idea. The international shipper utilizes an Internet-based program which outlines the company’s brand guidelines. This detailed approach provides guidance on everything from the graphic standards for use of the company logo to how cultural differences affect brand (particularly important for global companies). Establishing brand guidelines leaves no room for misinterpretation and helps maintain consistency throughout all levels of the organisation.

• Understand and Address Cultural Differences.

With advancements in technology, communications and the Internet, we are truly becoming a global economy. Considering cultural differences when building a brand is more important than ever, particularly if your business has international reach. Words and phrases in America might not translate to the same meaning in another country. What customers value and perceive as positive in the United States may be perceived radically different elsewhere

Your brand is only as good as the people behind it…and the people in front of your customer. Take the time to effectively build a corporate culture that mirrors your brand. Train your employees to represent that brand. Evaluate your consistency in delivering your brand across all aspects of your business. In doing so, you will strengthen your brand equity and position your company for greater success.

A Brand: Not just a logo or design

A Brand: Not just a logo or design

Despite what many believe, brand isn’t about your logo, tagline and glossy brochure. Instead, a strong brand integrates multiple components, all of them necessary, including customer interactions, employee communications, corporate philosophy and advertising/marketing efforts.

Your brand extends to your employees, customers, the media and even the general public as the above story illustrates. If these components don’t consistently reinforce your brand, customers will become dissatisfied. The negative impact of their perception, should they voice their opinions to other potential customers or even the media, could have a ripple effect on your business. This can erode your brand equity and create misperceptions about your company in the market, that in turn could lead prospective customers, employees and investors to pass on your organisation.

On the other hand, brand consistency throughout all levels of the organisation helps drive an organisation to grow and prosper. Strong brands can drive an increase in sales. The company is better suited to attract and retain the best employees. Vendors can see value in your brand and look to establish partnerships with your business, while investors will see the business and your brand equity as a valuable commodity.

Building Your Own (Service) Brand

A brand is a promise of the value your clients will receive. Supporting the promise of your brand is a key to building a successful business. Building support for the brand involves:

Awareness – Obviously if they don’t know you, you are not in consideration.  Even worse might be they know you but dislike you

Relevance to the Market – A brand must stand for something that is meaningful to the target segment. Your brand encompasses the total experience of doing business with you.

Consistency of Behaviour – Customers must be able to depend on the brand to deliver the same experience every time.

Performance – Users and Buyers have purchasing criteria and preferences.  The brand must meet these.

Advantage – the brand must offer meaningful advantages when compared to competitors

Preference – Buyers will add you to their list of preferred brands

Brand Loyalty – The strength of any brand is in the relationship it has between an organisation and its customers. The stronger the relationship, the more business they will do, and the more likely it is that customers will refer them to their friends and business associates. The test of a brand is, in fact, the strength of loyalty it generates.