How to communicate perceived value in services: Positioning
Services are more difficult than products to explain to customers, yet are simple to differentiate. This conundrum results in frequent mutterings of “our customers choose on price” and the wide disparities in competitor results.
In B2B sales it is rare that customers are expert in the services they seek. Its more likely the services have been chosen because at some time in the past the customer has learned that similar services solved the problem they currently have. The buyer comes to the supplier expecting an expert who will both understand and resolve their problem, whilst building the buyer’s confidence, by demonstrating that the buyer will have no regrets in choosing the supplier’s solution. This reality applies regardless of whether the problem is straight forward or complex. Each client wants their problem solved and wants to be proud that they chose you.
When customers choose price as the decision criteria they are acting in accord with the supplier’s instruction. Whether its an intentional strategy like Coles “Down Down” message or a result of failure to explain value in a way that resonates, it is the supplier who is educating the customer on the value being offered by the provider’s specific offering. If there is value being missed, then the loss lies at the foot of the vendor not customer. The message has not been appropriate in some way.
Explaining perceived value – positioning
Positioning is a short hand method of bringing the customer in tune with the value being offered. You will likely know that Dove Soap is a toilet bar that moisturises as it washes. At its essence Dove is a soap. It makes people clean. But to make the product competitive it needs to stand apart, to be more than just a soap – hence its focus on moisturising.
Unilever’s marketers understand that cleanliness can be achieved in a myriad of ways, some more desirable (valuable) than others. The soap could have been launched as a cleaner for men with dirty hands, but by understanding its market and the capabilities of the organisation itself, Dove was launched as a moisturising toilet bar for women. Gentleness sets its product apart in the niche it targets. The soap has remained true to its message, in promise and solution allowing it to succeed for more than 60 years.
The services sector has the same need as Unilever to explain value beyond essential features. Grant Thornton the international accounting firm, has evaluated its market, its own capabilities, and explored its competition to find a position on the edge of the Big 4. It is aided and impeded by the reality that all services are influenced by the relationship built between adviser and client.
At its core Grant Thornton must fulfil the needs of its clients in helping them meet their regulatory and business responsibilities. To do it successfully, its services delivery must add something more that feels right for each client. Its “Instinct for growth” and services offerings target companies which don’t yet need support that cost $tens of millions but do need global expertise. Its language suggests innovation and dynamism and is worded to meet the specific profile of its target segment.
University of Notre Dame in Fremantle and Broome uses spiritual development as a differentiator. Its students expect to have an internationally recognised qualification that gives easy access to jobs. In 2017 its employment rate was 12.2% above the average of WA’s Universities and 8.5% above the national average. The University positions itself as an institution that cares about the individual’s spirit as well as career. The backing of the Catholic Church makes its offering clearly different, but not all students are followers of the Catholic religion. That market is too small to rely on. UNDA found a gap that would attract enough non Catholics to make the University sustainable.
Positioning maps are a simple way to find such gaps. Generally many maps are completed before a position is found. Below is an example of a courier company. Its using speed of delivery and expense as desirable attributes. Determination of the appropriate attributes comes from a combination of market research and supplier imagination. Using a graph makes it easier to see opportunities. Below are 6 companies which have been ranked, through customer surveys and competitor research, against the two attributes. The coloured circles represent the results. Look now to the lower left hand corner. There is a gap in the market for a high speed delivery service, at a moderate price. If the market is large enough this may be an opportunity to test.
Figure 1: Current competitors assessed against the attributes of price and speed of delivery
Once the opportunity is noted, the next steps are creating and trialling a model to test that the assumptions are correct, and to smooth any issues before going to the market proper. It’s not enough to have a position that works. The position needs focus to make it shine, and have enough volume to make the effort worth it.
Positioning opens innovation opportunities
Developing new services is costly and risky. Yet new services are required for a firm to remain relevant and respond to competitor tactics. This is where positioning has significant power. At the time of first meeting, new clients won’t know the full extent of the supplier’s offering so the initial contract will cover the most obvious items. As trust and knowledge deepen the supplier will begin to offer more nuanced solutions. For professional services firms this is the golden chalice.
Success is a numbers game. Its about making small changes to services where clients are resistant to change and trialling big changes with the clients where trust is deep. The more clearly the firm explains the value it offers the more comfortable the clients will be to remain. Longevity and trust are inextricably linked. The greater the number of deep trust clients the more big changes that can be trialled.
Having permission to trial big service changes makes it easier to remain distinct.
Your firm is but a peripheral noise in the course of the lives of your clients. To cut through the din is your responsibility not theirs, thus your message needs to be simple, coherent, relevant, and most importantly clear about the value offered. Your customers are human and just like your firm have limited resources to invest. Just like you, they want the best return for their money and to look back on the purchase with pride. If customers were experts in your services they would be competitors not revenue so it is your role to educate them not their role to learn.
As Steve Jobs said:
This is what customers pay us for – to sweat all these details so it’s easy and pleasant for them to use our computers. We’re supposed to be really good at this. That doesn’t mean we don’t listen to customers, but it’s hard for them to tell you what they want when they’ve never seen anything remotely like it.
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