Businesses selling services have several unique challenges and opportunities, especially when it comes to growth strategies, positioning, value proposition, and marketing. In other words, the step you need to take to grow a service business is very different from a product company.
Before we go any further, let's look at a few service firms/businesses that we typically help with growth strategies and that this blog post is relevant to:
- Design firms
- Law firms
- Digital Agencies
- Business Consulting firms
- Software development companies
- Real Estate Brokerages
- Medical offices
- Construction companies
While many of these service companies are very different, they do have many similarities, especially when it comes to identifying core customers, finding the right niche, and communicating their value proposition - all essential components of any growing business.
Getting Through The Noise (USP)
If you've read any of our previous posts or white papers, you will understand how much value we place on a unique selling proposition (USP). Understanding what is unique about your business and then communicating it to your customers is of the utmost importance because it is the only way to escape the "me-too" trap.
Competing in a crowded market with a strong USP is difficult enough; trying to compete without it, it's almost impossible.
If you don't offer something unique that customers find valuable, you have to revisit your service offering(s). Analyze your market, customers, and competitors - to identify the unique benefits that you can provide and your customers will find valuable.
If you are having issues finding your unique selling proposition, then it may be time to pivot. Changing the direction of your service offering or a market niche is difficult but often necessary to get through the noise (crowded market).
Sell The Desired Outcome (Not Your Expertise or Services)
This is one of the most important concepts that every service firm/business should grasp. You are in the business of selling the desired outcome and not your expertise or a specific task. Here are a few examples:
- Design Firm (e.g., don't sell a logo, sell a new brand experience)
- Digital Agency (e.g., don't sell a website, sell an online lead generation channel to attract more leads)
- Law Firm (e.g., don't sell "business entity" formation, sell the entrepreneurial dream)
- Consulting Firm (e.g., don't sell your MBA credentials, sell a transformation the client is looking for)
- Real Estate Firm (e.g., don't sell an investment property, sell the financial freedom that real estate investing can provide)
You are in the business of selling the desired outcome. Everything else (experience, expertise, process, etc.) just supports the outcome and your ability to deliver it.
Your customer will want to know that you are qualified, have the experience, and keep a good process, but these are not the core reasons why most customers buy a service. It's all about the desired outcome, and if can you help them to reach it.
The tricky part is figuring out what exactly that desired outcome is? This is why market research, asking good questions, and listening to your customers is vital.
How Valuable Is Your Service?
Service businesses typically overcomplicate their value proposition, because in many ways selling services is more difficult than selling physical products and with many services, you don't see the results/outcome/benefits right away.
However, this doesn't mean you should overcomplicate your value proposition and list every possible benefit you think a customer will find valuable. In fact, most consumers are not looking for a sophisticated value or ROI. For example, GEICO's tagline "In just 15 minutes, you could save $500 or more on car insurance" is extremely effective because the message and value proposition is simple and clear. If you invest 15 minutes of your time, you will likely save $500 or more.
To effectively communicate value (tangible or perceived), you have to understand the real reason why someone is buying a service from you. And more importantly, what value do they expect to get in return. For example, if you hire a personal trainer for $720/mo (12 sessions a month at $60/hr), then the value you are getting out of your personal trainer has to be more than $720/mo. In most cases, this is over ten times your average gym membership. Therefore, the value a personal trainer brings to the table has to be much higher than a gym membership. For example, to a well-paid attorney working 60+ hours a week, saving them time is much more important than saving them money.
In this specific example, focusing all marketing on fitness and health is a mistake because the real value is convenience and time-savings.
In summary, for any business transaction to occur, the customer has to believe that the value they receive is greater than the cost of the service/product. Every business understands this concept. However, what is often unknown is the real reason the customer is buying a service and the primary outcome (value) they are looking for.
Most customers want to buy from people and companies they are familiar with, or someone their business connections, family, or friends are familiar with. This is how we've always been buying services and how we will continue to buy over the next 100 years.
We buy from people that we like and trust.
Just because you developed a better service or offering, it doesn't mean that a client/customer will buy it from you. We have seen countless startups fail because they spent all their efforts building a great offering, with zero time spent building relationships.
Young entrepreneurs usually make this mistake because they haven't spent enough time around sales and marketing to grasp this reality - we buy from people that we like and trust. Of course, desired outcome, benefits, cost, and customer service all play an important role in a sale, but they will all be trumped by a strong relationship.
It's almost impossible to persuade a client to leave a service company if he/she likes and trusts them. Your company can be cheaper, better, and faster. It won't matter.
If you come across this type of situation, you have two options. 1) Walk away, and focus on deals you can actually win. 2) Start building a relationship and wait for a change in their relationship, leadership, or strategy.
Hard-selling is something we only like to associate with a few professions (e.g., car salesmen), but many companies do it without even realizing it. For instance, if most of your online content has the sole purpose of converting a lead into a customer, then you are hard selling. Also, if most of your social media posts ask a follower/customer to buy or sign-up, you are hard selling.
On the other hand, if 90% of your content is useful and helpful, and 10% is intended to convert, then you are "soft-selling." Today, services are bought and not sold. In other words, most consumers will do some level of research (online) before engaging with a service firm. Therefore, hard selling is no longer effective. Of course, hard-selling can result in short-term gains, but you cannot build a great business by hard selling.
The bottom line is, no one wants to feel like they've been "sold to," so most of your marketing (90% or more) needs to come across as helpful, useful, and informative. Only 10% should have the sole purpose of converting/selling.
99% of service companies we analyzed over the years will use one of these phrases to describe their business: "Customer service," "Attention to detail," "Personal Touch," "We care," or "We go the extra mile."
All are implying that they offer better customer service. However, as soon as you start testing this "better" customer service with challenging requests, it falls apart immediately.
Irrespective of how good your "customer service" strategy is, execution is crucial, and execution cannot be faked. For example, no matter how great your customer service process is, your customers will detect it right away if your employees are unhappy. In today's world, bad customer experiences spread like a virus. Furthermore, can you teach an employee to be passionate, happy, or have empathy? No, these qualities come out naturally when companies treat their employees well. If you need an example, visit Trader Joe's or talk with someone at Zappos.
Lastly, it is unrealistic to expect a minimum wage employee to go the extra mile for customers. Also, an unsupportive work environment is not conducive to great customer service.
You cannot grow a business without marketing. Some people are skeptical when we say this, but having worked with over 100 companies, we are yet to find a growing company that doesn't do any marketing. Yes, you don't need to advertise to grow a business, but advertising is only one aspect of marketing. Branding, networking, organizing events, content writing, mailing flyers, and posting on social media - these are all marketing activities.
Marketing is the fuel (lead generation) that the sales team cannot function without.
For many service companies, content marketing is how customers first discover their service; for example, blog posts, social media, YouTube videos, podcasts, etc.
The importance of this first interaction (first impression) cannot be overstated. If your blog post demonstrates expertise, then you will come across as an expert. However, if your content comes across as generic or lacking depth, then that is how you will be perceived.
Also, creating a great first impression with your content will certainly make your sales team's job easier. If a potential customer is impressed by your online content, then your sales team doesn't have to waste time on generic conversations like "We are..." and "We serve x customers...".
Instead, they can focus on the actual need. For example, uncovering the problem the customer is trying to resolve or an opportunity they are trying to capitalize on.
Additionally, to grow a service firm, you need to have a deep understanding of your lead generation efforts. For example, knowing which marketing tactics are growing your business versus just consuming your precious marketing resources (time, money, people, tools, etc.)
Website, SEO, Email Marketing, Social Media, Paid Advertising - what kind of impact do they have on your business? Should you allocate equal resources to your website and social media? Do they bring you the same amount of business (sales)? You should be able to answer these types of questions.
Also, marketing is not a faucet that you can quickly turn on and off. For example, you can't ignore social media for months and then come back, post vigorously, and expect great results. Your newsletter, website, SEO, and any other digital marketing channel are no different.
If you stop your marketing for only a few weeks, you will lose momentum, and when you lose momentum, you have to work a lot harder to get back to the same place, let alone gain more ground. In other words, by stopping or pausing your marketing efforts, you lose more than a few weeks. You lose momentum.
Related: Making Big Marketing Bets
Marketing is the fuel that the sales team cannot operate without, so effective marketing is essential to growing your service business.
In our experience, service firms/businesses are typically easier to start but harder to grow. This is why growing a service company without a growth strategy and tactics is extremely difficult.
Growth (sales, revenue, profits, capacity, etc.) don't happen by chance, especially for service companies - where the barrier to entry is often lower, and market segments are typically crowded with competition.
That being said, if you separate yourself from the competition with a great USP and value proposition, and you promote/market your company effectively, then the sky is the limit of what your business can achieve.
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