EVERY BUSINESS IS A
SERVICE
BUSINESS
Harry Beckwith
Marketing Guru & Best Selling Author

Peering through Harvard Business School’s catalogue of marketing case studies, I discover that only one in four cases involves a service.
Two weeks later I see the newest Fortune 500, which for the first time includes service companies. Sixty percent of the companies are referred to as services, but even that figure understates the role of services in our economy, because many of the manufacturers listed in the Fortune 500 are, on closer inspection, something different. Industrial giant General Electric actually derives 40 percent of its revenues from services, for example. Nike, presumably a running shoe manufacturer, does not make shoes. It only designs, distributes, and markets them. Nike is primarily a service company.
Almost three in four Americans work in service companies. By 2005, eight in ten will. But there is the Harvard Business School catalogue, implying something different. In short, America is a service economy with a product marketing model. But services are not products - and service marketing is not product marketing.
A product is tangible. You can see it and touch it. A service, by contrast, is intangible. In fact, a service does not even exist when you buy one. If you go to a salon, you cannot see, touch, or try out a haircut before you buy it. You order it. Then you get it.
You can use your other senses to evaluate most products, too. Take a new car: You can admire a car from dozens of angles. You can feel the smooth finish against your palm and the comfort of the leather seats against your back. You can hear the steady rumble of the engine, the faint hum of the electric windows, and that special thud of the car door - for most people, the ultimate test. You buy with your nose, too, seduced by the new-car smell the car makers cleverly sneak in.
You cannot sense much about a service, however. You cannot hear the hum of a tax return being prepared, smell a good divorce attorney, or try on a dry cleaner to see if it flatters you. In most cases, you buy a service touch, taste, feel, smell, and sight unseen.
Few services have price tags. You interview a service to redo your kitchen, revise your company’s pension plan, or cater your anniversary party. At that moment you probably do not know the cost and fear what it might be. A representative of the service promises to “go back to work up an estimate.” At that moment you are not sure you will be able or willing to pay the amount the firm eventually quotes.
As a result, you feel even more uncertain and fearful. You usually know when a product fails. The stereo stops playing, the clutch stops clutching, the milk tastes terrible. Knowing when a service fails is much harder. Was that good advice from your benefits consultant, or good painting from your house-painter-that is, was it the service you bargained for? Who knows?
Because most product failures are obvious and provable, most products can be warranted. Most services cannot be. As a result, your only recourse for most service failures is either painful negotiation or agonising litigation.
So you buy a service with no guarantees-and even more uncertainty.
Manufacturers make products using a well-tested and monitored process that ensures consistent quality. Service companies deliver their “product” through a series of acts that rarely can be routinised into a reliable process. No genius has devised a process, for example, for producing consistently good print advertisements.
And it is very hard to manage those limited “processes” through which most services are delivered. Take an advertising example again. An agency’s account supervisor goes out on a photo shoot, downs four banana daiquiris at the hotel bar afterward, and then tries to lure the female client up to his room. She fires the agency the next afternoon.
What process could possibly have prevented that service failure?
So compared to products, services are loose cannons on deck, capable of pivoting around and blowing up the ship any minute. The poor captain rarely feels in control, and the poor prospect often feels just as worried.
The products we buy are built miles away by people we have never met. So we rarely take product failures personally. The services we use, by contrast, usually are provided by people we have met or at least spoken with. When that person fails to do what she promised, we often take it personally. We ask, “How could you do this [to me]?” while the service provider explains, prays, curses, and backpedals furiously - all at the same time.
So as a service marketer - doctor or architect, dry cleaner or accounting firm, broker or house-painter - you face prospects almost shaking with worry, and sensitive to any mistake you might make. That is where your marketing must start: with a clear understanding of that worried soul.
Even if you do not consider yourself a service marketer - if your business is pace-makers, cars or software, for example - I believe the principles apply to your business too. Because chances are you are a service marketer - or should be. If you make pacemakers, you know that every time a salesperson defects to a competitive pacemaker company, the doctors served by your salesperson defect, too. Most doctors do not buy pacemakers; they buy that expert pacemaker salesperson who can go into the OR and advice the device, procedure, and programming. Pacemaker buyers buy a service.
Similarly, many people who buy Saturn automobiles actually buy the intangible services that Saturn offers: no-hassle pricing and vigilant service and maintenance. The car merely gets Saturn into the game; the service makes the sale. Saturn drivers buy a service.
If you sell software, you know that your core product is the software, but that the critical part of your product is all the augmentations: the documentation, toll-free services, publications, upgrades, support, and other services. Your users are buying a service.
Pacemakers, Saturn cars, and software remind us that we live in the age of commodities. New technologies allow manufacturers to copy products with astonishing speed. Product distinctions, the historic centrepiece of product marketing, exist only briefly - and in the prospect’s minds, often not at all. Faced with products just like their competitive products, today’s “product” marketers typically have two choices: reduce cost or add value.
And what is that added value, almost without exception? Services. Take, as a vivid example, Levi’s introduction of Personal Pair jeans. With this service, a clerk measures the female customer, then transmits the measurements over the Internet to the cutters, stitchers, and washers who then make the jeans and ship them via FedEx to the buyer. Those old Levi’s jeans of the old economy were products; these new Levi’s jeans are a service. Virtually everyone forecasting the future says that customised products like Personal Pair jeans will become even more prevalent. And with that, more and more products will become services.
So marketers in this new economy must think like service marketers. And they should understand that every business is a service business.
I am talking to all those service marketers: the 80 percent of us who do not manufacture products - and the other 20 percent who do. I am coming to India to deliver two full day seminars in March 2004 on how a growing number of successful companies think about marketing, from planning to presentations to publicity. These new marketers focus more on relationships and less on features and benefits; they focus more on reality - and on getting “better reality” - while recognising the powerful influence of perceptions; they are learning more about the seemingly irrational ways in which people think and act; they recognise the huge influence of tiny things; they understand the near possibility of being heard, and the growing difficulty of being understood, in our increasingly busy and over-communicated society. Perhaps more than anything else, these marketers recognise that in our increasingly complex world, nothing works more powerfully than simplicity.
The new marketing is more than a way of doing; it is a way of thinking. It begins with an understanding of the distinctive characteristics of services - their invisibility and intangibility - and of the unique nature of service prospects and users - their fear, their limited time, their sometimes illogical ways of making decisions, and their most important drives and needs.
On closing let me reiterate, every business is a service business. And, if you think like these new marketers - if you think more