Products vs. Services: The Real Marketing Difference

Author: 
James Hooker, CEO, Televerde

Within the discipline of marketing, various tactics and strategies come into play for prospecting, branding, content development, social marketing, video, events and other channels. But how do these strategies and tactics vary when marketing a product vs. marketing a service?

At the top end of the funnel, they look similar enough. The messaging used to attract audiences for both can work the same way. Go beyond that, though, and you’ll see some important differences.

One reason is that services tend to involve intangible components, which can make it harder for marketing to create a defined story. Business Process Outsourcing (BPO) is a great example; marketing those offerings means marketing an ongoing relationship and strategic achievements, where products tout the features, benefits and performance.
 
And when services involve something like Software-as-a-Service (SaaS), it can get even murkier. Marketing to people transitioning from on-premises software to SaaS means selling something with components that aren’t tangible.

To hit the right note, marketers must be aware of where their product or service falls on the marketing strategy spectrum and take the below factors into account.

Knowledge

When it comes to product marketing, the desired audience often already knows a lot about you, the supplier. This is especially true if you’re operating in an established market. You may be offering a new and improved product but your audience will be familiar with existing products. For instance, if your company is offering a unique kind of hardwired storage, your target personas and audience most likely understands the evolution of storage products and can more easily make a feature and functionality comparison.

Yet if you’re marketing a service, your audience may need more education before they can understand the true value of your offering. Skip that step and they may not be able to place your service in the context of their success and how you stack up against the competition.

Confidence

Sell a prospect a new kind of technology and you’re selling that actual product – its specs, its features, its performance. When you sell a service, on the other hand, you’re marketing something different: your own credibility. You need to instill in the prospect a high degree of confidence in your ability to deliver your solution.

In other words, you are the product now. You’re not promising something tangible but a certain result. The best way to create a foundation of trust? Testimonials and case studies, particularly from organizations in markets similar to the ones you’re targeting. By sharing evidence from satisfied clients, you’re proving your ability to deliver the promised result.

Relationships

Relationships are a key part of both product and service marketing, but service-based businesses live and die by their relationships more than product-based companies. Sell a product and your prospects often feel they already have a relationship with your brand. Time is a factor as well; when your customers buy a product, the transaction may be complete, pending general support efforts.

Marketing services requires a different kind of reliability, one created by a consistent and more personal connection. Providing a service usually means continuing the relationship over a certain period, so your team will be marketing to the customer for as long as they want the relationship to renew. If you’re selling long-term relationships, your service marketing plans will need to involve a long-range vision that focuses on quality at every step of delivery

Differentiation

In a crowded marketplace, the ability to differentiate is critical. Product marketers often get a boost from consumer or industry analysts like Gartner and Forrester, who evaluate solutions based on features and help differentiate for customers.

This differs from the service arena. Often competitors will make the same promises and claims. To stand out, service marketers will need to drill down into their offerings and market the ways in which they shine. For instance, someone in the Teleservices BPO space may market their ability to scale on an international level. By promising a global company that they can expand their services into Europe and offer the same high performance they currently deliver in the U.S., Latin America or Asia Pacific, they highlight an element of their unique value.

Overcoming Obstacles

Marketers accustomed to highlighting the tangible benefits of a product can sometimes stumble when it comes to marketing services. Often, in the rush to demonstrate their ability to solve a problem, they stick with the low-hanging fruit and focus on commonality, rather than going to market with their higher value. While sticking with an easily defined offering has obvious benefits, they may miss out on the market looking for that higher value total solution approach.

Both product and service marketers can also get stuck when they market a new concept, as opposed to an established one. In this situation, the first step is identifying the right audience. Late adopters won’t be interested; early adopters are often doing their own research. As a result, marketers often speak to the wrong audience or speak to the right one in the wrong way. Before a company can begin selling a new service, they’ll need to nurture the target and help them understand the solution better. Service marketers need to identify the type of demand they’re targeting and who in the group is making the buying decisions.

This is a common mistake in the SaaS marketplace, where businesses have to be convinced to move from their current product to something that is both a product and service. If they’re not educated properly on that new paradigm, they won’t be motivated to move.

Expanding the Marketing Playbook

Marketers shifting from product to services or vice versa won’t need to throw out their entire bag of tricks. Top of funnel tactics, building trust and successful differentiation remain critical to conveying a compelling story for the buyer. As the lines blur between products and services, such as SaaS offerings that have a subscription model and ongoing renewals behind them, we must remember that building an enduring relationship is key. However, by mastering the different nuances of both the product marketing and service marketing journeys, marketers can reach the right audience faster and set the stage for stronger, longer relationships.

James Hooker is the CEO of Televerde. He can be reached at JimH@Televerde.com.