How service marketing helps businesses improve customer experiences and increase profits.
In a way, the words you are reading right now are the result of service marketing and service design.
Throughout much of their history, alumni magazines mostly published stories focused on the accomplishments of students, faculty, and alumni, without a great deal of thought given to what readers actually wanted to see. Today, they must provide what their readers demand—or request—and often feature stories written to provide a service to their audience.
“The old product mentality would be, ‘Let’s get our best and brightest together in a conference room or R&D lab to come up with the next big thing and then bring it to market and drive demand,’” according to Joan Ball, Ph.D., Associate Professor of Marketing at The Peter J. Tobin College of Business at St. John’s University. “A more service-oriented approach is to ask, ‘What do the customers—or readers—need, and how might we serve that need in a way that creates value for them and the firm?’”
Service marketing is a growing field, and two of the top scholars in this area are faculty at St. John’s. In addition to Dr. Ball, who is a founding member of the Academic Task Force for the Service Design Network, Associate Professor of Marketing Timothy Keiningham, Ph.D., holds the J. Donald Kennedy Endowed Chair in E-Commerce. In 2017, Dr. Keiningham won the top honor in the field, taking home the American Marketing Association’s award for career contributions to the services discipline. Dr. Keiningham coauthored the textbook Service Marketing, as well as other books, including The Wallet Allocation Rule, Why Loyalty Matters, and Loyalty Myths.
“Traditional marketing is about pushing products,” Dr. Keiningham noted. “In service marketing, that does not work. It is easy to get somebody to try something. But you need to keep people. And keeping people takes many different things, not just messaging and promotion.” To keep your own customers coming back, follow these tips.
The “four P’s of marketing” are price, product, promotion, and place. However, as Dr. Keiningham explained, service marketing adds three more: people, physical environment, and process. Even the most product-focused company can embrace service marketing by emphasizing these areas, he said.
“One of the big arguments that my colleagues and I make is that there is no meaningful distinction between goods and services,” according to Dr. Keiningham. “Everything is a service. The need for customer satisfaction and retention is equally important for all firms. It is just that some companies have a physical product, and some do not.” Dr. Ball offered the example of Apple. The company became one of the most valuable in the world on the back of its sleek and, in some cases, truly revolutionary, products. However, as Dr. Ball explained, even tech devices can be viewed through a “service” lens.
“We do not buy an iPad to hold an iPad,” she said. “We buy an iPad for the services the apps provide when we use it. As service researchers and practitioners, we view the entire marketplace as identifying needs and providing services to the people who need them.”
Dr. Ball noted that Apple takes great care designing not only its products, but also the in-store experiences of customers—from the way the store looks to how customers can tinker with devices to the way store employees approach shoppers.
“That does not happen by coincidence,” she said. “All of that falls under the umbrella of service design.”
Because service marketing is focused on retaining—rather than attracting—customers, it is important to learn why people are defecting from your business and patronizing your competitors.
“It forces you to look from the outside (i.e., the customers’ perspective), instead of from the business perspective out to the customer,” Dr. Keiningham noted. “In the end, the expert is not the business. The expert is the person using the product or service.”
Companies can use customer journey mapping tools to chart out the various ways that customers interact with the business and identify pain points.
“They need to find ways to get quick feedback from customers during or shortly after those interactions,” explained Dr. Ball.
As an example, Dr. Ball pointed to the satisfaction-rating kiosks, where customers tap a smile or frown button to express their level of happiness, sometimes seen in US airports and European supermarkets.
“You have to get to people while they are involved in an interaction,” according to Dr. Ball. “If you bring someone into a room two weeks later and say, ‘Why did you abandon your cart?’ they might just say, ‘I do not know.’”
Feedback from customers can be surprising. According to Gina Woodall, President of Rockbridge Associates, a marketing research firm, “Sometimes we make assumptions that turn out not to be true. It might turn out that customers do not expect everything in your store to be in perfect order, and you need to be thinking about other factors. What is most important is listening to your customers.”
To truly deliver what customers want, companies should involve them early on, according to Dr. Ball.
“We encourage people to actually prototype and test customer experiences in their organizations,” she said. “By observing actual behavior instead of presumed behavior, you identify pain points that people may not have thought about when they are sitting in a focus group.”
Dr. Ball follows her own advice when teaching a course entitled Creativity and Innovation for Business and Society at Tobin by asking her students to help create the course syllabus during the first week of class.
“I get them working on whiteboards, and I ask them, ‘If you could design a perfect class, what would it cover?’” she explained. “Then, as their first assignment, they create a website and write a blog post outlining and describing their perfect course. I use the content of those posts to create a schedule that incorporates their input and meets the learning goals of the course.”
In their zeal to satisfy customers, companies sometimes shoot for the stars on flashy initiatives, while neglecting more mundane—but vitally important—aspects of service.
“A good example that we see is when companies put all of their efforts into digital tools like mobile apps,” stated Ms. Woodall. “They are trying to make the customer experience better, and they think it is really going to drive satisfaction and behavior. But sometimes, they find that they needed to come back and focus on some basic aspects of the experience where they were underdelivering.”
According to Ms. Woodall, those basics include factors like wait times at stores and showing customers they care about their needs—seemingly simple things that can drive customers into the arms of a competitor if a company gets them wrong.
“You have to deliver the core deliverable,” Dr. Keiningham explained. “You cannot miss that. If a customer walks up and you say, ‘I do not have the product,’ you can be smiling and sweet, and they are still not going to be happy.”
Companies should not underestimate the price they will pay for inconveniencing their customers. For example, brick-and-mortar retailers sometimes believe they can save money by consolidating their stores.
As Dr. Keiningham explained, “The argument is usually, ‘We have a store in another location,’ as though people are going to drive 15 miles instead of five. If they have to pass your competitors to get to the other location, they probably will not.”
Dr. Keiningham has some contrarian advice: To make customers happy in a way that will grow your business, do not focus on improving customer satisfaction.
“A company will say, ‘I want to raise my customer satisfaction score to grow my market share.’ That sounds intuitive, right?” explained Dr. Keiningham. “It is totally wrong. There is a strong negative relationship between a company’s customer satisfaction level and its market share. Think about Walmart. Walmart appeals to a broad range of people, none of whom think, ‘This is the best store I have ever been to in my life.’” According to Dr. Keiningham, business leaders should instead view their service marketing efforts through a competitive lens—striving to learn how customers view not only their companies but also their competitors.
“Say you rate a grocery store an eight out of 10,” he said. “The problem is, that eight might be the best score you give, it might be the worst score, or it might be tied with everybody else. What really matters is not your satisfaction score. It is where you rank versus your competitors.”
Dr. Keiningham also noted that companies need to give more thought about who their most profitable customers are and spend more resources targeting that pool. When businesses focus too much on improving overall customer satisfaction without taking time to understand the full context, efforts to delight customers can turn into a “black hole” that loses money for the company.
“For me, it has always been about linking to financial outcomes,” Dr. Keiningham explained. “This is not about being nice. It is about showing people how to win by doing the right thing. Because if they cannot win, they are not going to do it.”