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.

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4 thoughts on “Services Marketing is Harder Than Product Marketing

  1. John–

    A pattern I’ve seen services firms use to great effect to market themselves is to give away lots of expertise for free. Sure, not going to work for every service, but with the internet the way it is now, it works in a lot, even in ones you wouldn’t think of.

    These are the kinds of firms who I think actually can get a big marketing win from blogs, if they’re done well. Most of the time, people hiring you to perform services are buying your expertise, and they don’t know anything about your area, really. The guy from English Cut blogs about bespoke suits in insane detail, our old Big Law law firm had free conferences all the time and sent out email newsletters to firms that could be affected by new decisions all the time. That’s the kind of thing I’m thinking of.

    Like, if I was an exterminator, I’d basically tell everyone everything I know on my website. This does a few things:
    1) Positions me as a dude who knows a lot about this.
    2) Gives me more marketing “touches” with my audience, esp if they subscribe to rss or email.
    3) Really helps my SEO, which for a lot of services business, especially regional/local ones, is huge.

    I thought it was really effective the way 37Signals did this years ago when they were a services business, and I think its part of the reason they were able to transition to a products company so well.

    I’ve seen this work well for huge companies (IBM alphaWorks/Dev Center) down to very small companies (Sheldon Brown’s bike shop). I think if a local CPA put tons of easy to understand information about taxes and took questions from his audience, it would be huge. Let local businesses know about obscure tax incentives they might not know about, same for homeowners, everyone would read it. People think they are giving away advice you have to pay for, and they are, but its an effective loss-leader model.

    I think the naming business is kind of ridiculous, but Igor International is another example of what I’m talking about.

  2. Hey John,
    You’re absolutely right. It is harder. From a PR perspective, I’ve always told clients with services firms that if they act more like a product company, and “productize” some of their services, things get a little easier.

    Part of the problem with IT services is diversification. How can you become known as the experts in one thing when you’re doing hundreds? It’s not really possible to become known for hundreds of things, or desirable. Who wants to be the Sears Catalog (RIP) of IT services?

    Then you have the brand focus problem. Most people in most companies have a hard time grasping that when they NARROW their brand focus, it strengthens it, and when they WIDEN it, they weaken it. That’s because they think focus is like real estate … that when you own more waterfront, you’re more powerful. It’s counterintuitive because it’s just the opposite. And the reason is simple: if all you do is X, then claiming to be the experts on X is a lot more believable. Simple as that. David beats Goliath by being THE slingshot expert, hands down. How else could he?

    Selling based on HOW you do the services has always been hard, and these days it’s falling away quickly and seen as irrelevant. The Accentures of the world used to be able to “sell methodologies.” But this approach has always been plagued by the fact that it only works if both parties have already agreed up front on the business goals. Never happens.

    In the end I think the reason most services companies don’t do it well is they’re not willing to focus enough to agree on 3 (let alone one) main business benefit messages to rally around. And this greatly hamstrings their marketing efforts, which often are also challenged by other factors too.

  3. Jeb – good points. The client I’m working with now is getting a new web site built on WordPress to enable easy blogging and great SEO characteristics. We will be working on building their expertise profile. Thanks for the comment.

  4. Steve – it’s always a challenge to get clients to focus, as you know. I do have this challenge with my client right now — the list of services offerings they want to profile is long and the same as companies that are 100 times bigger. Their other issue is a lack of investment in marketing – another typical issue with services firms. We’ll see how it goes. Best.

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