May 9th 2009. By Alex Romanovich
I recently sat down with my friend, Pete Karinik, the founder of The CMO Club (www.thecmoclub.com), to have a frank discussion about crisis and how marketers should handle it. Here is what we’ve discussed.
1 – How is Marketing of “Services” Different From Marketing Tangible Products?
Selling ‘services’ was always a fascinating topic for many companies – product and services firms alike. The reason for that is simple – when you sell services, you sell value, and selling value is always more difficult than selling a tangible product, like the iPhone, an automobile, or a piece of clothing. Any services business, from a neighborhood beauty salon to a giant accounting firm, such as KPMG, knows that clients value quality, consistency, transparency (honesty), and innovation. I also think that at times of peril, meaning now, we have to look at selling the ‘basic idea’ – if you do your work well, and you are passionate about your clients, you will do fine. The other basic idea we often overlook is that when you are selling a ‘service’, you are selling a relationship with your client, and trust, not just an offering or an innovative idea. That relationship is built on numerous nuances, from a simple greeting to a major overhaul of the client’s financial system, and is backed by months and years of proven experience, trust and history. And that’s what defines your brand.
2 – What is Different About the Marketing of Services Based on the Economic Downturn?
We are faced with one of the biggest economic downturns of our century (counting the 20th as well) – almost all of the traditional rules of business are either erased or redefined. We are not just losing jobs, but entire industry segments, and perhaps service professions, as we know them. With these extensive changes in business, and in our society, marketing of services continues to be very challenging, if not impossible, in some cases. Innovation is threatened by myopic thinking of ‘cost-cutting’ and business progress can only be made through ‘cost justification’, not passion, creative reasoning, or risk taking. In these times service marketers are challenged the most, and yet by now, they also have a greater opportunity and toolsets at their fingertips. Yes, they still need to prove the value of their respective companies, and listen to their clients, and improve their services; however they have an easier time doing it, surrounded by new advances in social media, communication approaches, and client interactions. At times like these, it seems that all traditional ‘bets are off’ when it comes to communicating to your clients, yet difficult decision still need to be made when an important customer, for example, is asking you to lower your cost, or provide your service free of charge for a period of time. That’s when the relationship will be tested. Face to face. And that’s when service marketers and their CEOs will need courage, most of all. I still think that going back to basics is important. Services executives need to communicate more and better – to clients, employees, partners, and competitors. I do see many progressive companies doing just that.
3 – Who Does a Great Job of Marketing Services and Why?
First, let’s agree on a definition of a ‘services’ company, in contrast to a company selling or manufacturing a product. I think there are numerous examples of traditional services companies, such as airlines, financial services institutions, healthcare and education institutions, technology services companies, and government agencies. We have seen the service levels of many improve, and some have disappointed us. I will talk about some examples of where we have seen progress and consistency, and the ones that have lowered their bar. And many companies will continue to prove their mettle in times like these, so the judgment is out for at least the next 2-3 years.
I was always impressed by Federal Express, yet I have to say that United Parcel Service (UPS) has come a long way and proved to be a worthy competitor, and in many cases, a leader in the Logistics and Delivery category. UPS’ basic delivery service has improved tremendously, yet there were also many improvements on the interaction side, via Internet and face-to-face. And, yes the United States Post Office is not doing badly either.
We are experiencing a tremendous shift in the travel and hospitality industry – the ‘frequent flyers’ are being replaced by ‘empty runways and underutilized hotel lobbies’, yet some airlines and hotel chains are trying to go out of their way to please, and yet some take an attitude of ‘hey, we are in a crisis mode, what do you expect?’. I have always been pleased with the international airlines, such as Lufthansa (for their consistency), Asiana Airlines (for their superb service), and Virgin Atlantic (for their innovative ideas and spunk). I am impressed with how well Continental is doing in times of crisis, and somewhat disappointed with American, for their ‘apathy in service’.
There are other numerous examples of companies continuing to do well, even at times of peril and cost cutting, and yes, layoffs. Goldman Sachs, Medco Health Solutions, American Express, Whole Foods Market, Nordstrom, and others are glaring examples of great services companies, continuing to earn their trust and innovating. And I am sure many of us can also add a number of thousands of small and medium size businesses, who love their clients and live for their satisfaction.
4 – What Should a Marketer Do in a Time of Crisis?
Analyze first, and then act. And go back to basics.
Before doing anything, know your service well. Know every nuance, every quark, and every issue that can potentially embarrass you or lower the level of the service. Analyze what you can do better to improve your service levels and innovate with that in mind.
Then, know your clients, your partners, and your competitors well. Dig deep into the surveys (if you don’t, conduct them) and analyze data from promotions, client engagements, and competitive wins and losses. In our new and brave world of marketing analytics, you have plenty of help.
Talk to your clients with an open mind, realistic expectations, and a set of new ideas on how to improve your service, their business, and your overall relationship. Especially now, get to know their business better, dig deeper into their operations and learn more about their challenges.
Once you are armed with information, act and act quickly. This is not the time to sit back and contemplate on the past performance and the fear of the future – you have to execute now! Execute by promoting your best and brightest – remember that the services business is all about people – your clients and your employees. Review and eliminate the worst performing service categories or offerings – if they were doing badly during good times, they will be completely dead now. Corral the rest of the company around the ‘centralized minimalist’ strategy – if we have to cut cost, let’s do it together, in a well balanced approach, and keeping our clients at the forefront of our minds. Marketers have an opportunity to continue to be the ‘cheerleaders’ during the times of struggle – but it has to be done with data in hand and a set of specific, concrete, and justifiable actions.
Once you have the data, you have the support of others, and you have your clients in plain view – execute. Go out to your clients and talk to them, emphasize, pre-empt any difficult conversations by frank and open communications, and listen. Listen and act. Act with conviction, passion and empathy. And that becomes your every day ‘routine’.
And finally, innovate. Use the latest Social Marketing techniques, build client communities, and partner with others. It may sound all too logical, but executing the above takes discipline.