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319 W. 2nd St., Owensboro, KY 42303

Phone: 270-903-4330

Customers Buy Intangibles, So Stop Selling Products

May 2, 2017

 

In the early part of the 21st century the airline industry suffered devastating blows. Numerous companies filed for bankruptcy while others simply faded from existence. But one company continued (and continues) to rise above the crowd and produce profits year after year. This company is increasingly becoming the market leader in the airline industry. This company is Southwest Airlines (SWA). SWA has been the most profitable airline company since 1973. What differentiates SWA from its competitors is not its products, but its service differentiation. Every airline has nice airplanes; some I would dare say are even better than SWA’s airplanes. But SWA understands that it is not a product company, but rather a service company. And because of this fundamental understanding, they have chosen for themselves a niche in the airline service industry. They are a no-frills transportation company determined to give you a fun flight at a cheap price. That is it! When I think of SWA that is what pops into my mind. The same holds true for other successful service companies. Domino’s Pizza…fast delivery. Pizza Hut…great tasting pizza. Little Caesars…Hot-n-Ready pizza. These companies have products, but they make themselves market leaders by delivering an intangible experience to the customer, and this experience is what makes the customer choose them over their competitors.

 

Many of us in the service industry want to wow our prospective customers with our “products” and “methodologies.” To quote Market Leadership Strategies for Service Companies, “The majority tends to err on the side of overemphasizing and promoting the tangibles while almost ignoring the intangibles…While methodologies are good for promoting quality, they are unhelpful and often damaging for companies pursuing differentiation…A service is an experience that customers feel and remember. The other physical senses do not come into play as they do with products.” In my industry, janitorial services, it is difficult to differentiate yourself from the thousands of competitors in the market, and so often you resort to talking about your “superior equipment, quality control measures, and products.” But at the end of the day, has there really been a perceived difference in my service and that of my competitor? And if there is no perceived difference, then the prospect is going to make a decision based upon price. In order to break away from this vicious, profit-minimizing cycle, you must BE DIFFERENT. You do not need to “get better” and “become more efficient.” This only prolongs the rat race you are in with your competitors.

 

So how can you do this? How can you set yourself apart from your competitors? How can you be different, yet wildly successful with a particular customer base? To begin this process, you must start with your customer. Identify your top customers and identify prospects that you would like to become your customers. Meet with these individuals in what I call “focus groups” to find out why these customers like your service. What is it about your company that causes them to stay with you? You might be surprised at their response. In addition to finding out what they like about your company, find out what they wish they had in a service company. What needs do they have? What could you provide to ease their pain? What would make their job easier? Ask lots of questions. Learn your prospect. The answers to these questions will be the starting point for building your organization to become a market leader.

 

You will never be successful as a service company until you know what it is that your customer wants. Find out what they want and then find a way to market and deliver that service in a way that is completely distinct from your competition. Only then will you begin to move through the uncharted waters of successful market leadership. Swallow your pride and open the door to the possibility that the way you have been doing things in the past may not be what will make you successful in the future.

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