Services Marketing is Harder Than Product Marketing

I have recently done work for a couple of IT services firms.  One in NY and the other in Cambridge, MA.  As a guy who has primarily been involved in product organizations over the years, the marketing challenges of services businesses were harder than I expected.  Really – products are way easier to market than services.

The explanation is fairly simple – competition and differentiation

First, the competition for services is way more intense than for products.  How many vendors of a specific type of technology can you find?  In some product markets there are less than ten viable competitors.  Like CRM or DBMS or Internet Banking – there are not that many credible vendors.  Same is true for any goods you buy — be it electronics, autos, etc.   But services – wow!  There are hundreds of Web development shops in Greater Boston, and tens of thousands nationally.   IT outsourcing may have some big names like Infosys, Accenture and Wipro.  But there are several hundred firms of reasonable size outsourcing to India.  Think of all of the law firms, doctors, dentists, advertising agencies and the like.   So, I think you can make the point that services are, to a great extent, more competitively intense than products.  That’s because it’s fundamentally easier to launch a services company.  Just start signing up clients and you’re in business.  Products take time to develop and bring to market.  That means capital, which means fewer entrants.

The next issue is differentiation.  Now, I can differentiate myself from the next guy.  But when there are a hundred or thousand people in a firm with widely diverse backgrounds and capabilities, how can you differentiate them from the other companies with their merged hoards of people?  Some firms, liked Goldman Sachs, are known to attract the very best and brightest.  But in your average Indian outsourcing shop, how can you – the buyer – really understand how one group of people may be better for you than the next?  And what about in two years when some of those people are at another shop and you’re working with new people?

That’s where you have to start thinking more like a consumer branding guru than a product person.  Now you’re into the realm of true marketeers – where it’s not the feeds and speeds, features and wizbangs that get you noticed.  Positioning must, by definition, be far more emotional and conceptual.

Look at Accenture – their brand is all about “performance.”  Sure, you don’t have millions to put Tiger Woods into your ads, but Tiger’s just an image that goes with the positioning statement.  What you don’t see them leading with is anything about their people being the smartest or most capable.  In reality, they are not.  Accenture has plenty of good people, but they are not on par with the tech folks at Google or the folks that worked at CTP and Sapient in their haydays.

Marketing of services is really about marketing the outcome.  With Accenture the outcome is business performance.  With IBM it’s innovation.  With Infosys it’s about winning in the “flat world” – which means being global to win globally.

Most services companies don’t do this well.  They describe what they do – not what they cause.