Understanding Service Marketing (Definition and Tips)

By Indeed Editorial Team

Published May 16, 2022

The Indeed Editorial Team comprises a diverse and talented team of writers, researchers and subject matter experts equipped with Indeed's data and insights to deliver useful tips to help guide your career journey.

Businesses that are service-centric allow customers to purchase the skills and services of their employees. Service-based companies sell intangible products, so the marketing strategies for such cases differ from those for physical, tangible products. If you work in advertising, understanding services marketing may help you increase sales, generate more leads, and improve your brand awareness. In this article, we discuss service marketing, who requires them, explore how it differs from product marketing, and share tips to help you create an effective service marketing strategy.

What is service marketing?

Service marketing is a type of marketing that companies that provide services to customers use to increase sales and brand awareness. It focuses on the value of the products and services a company provides to customers rather than tangible features. Advertisers use effective services marketing strategies to build trust with customers and show them how the services available can benefit them. Companies may base their services marketing strategies on promoting ideas, benefits and promises to help sell their services.

For example, if a business provides wellness coaching, you may promote the benefits of adopting a healthier lifestyle and promise to help customers achieve their fitness goals. You can also share the idea that it's easier to incorporate an effective wellness routine with a coach with valid certifications.

Related: What is Strategic Marketing? (With 3 Phases and Tips)

Who uses services marketing?

Companies that provide a service utilize services marketing strategies to reach their potential customers. Common examples of service industries that use this type of marketing include:

  • Restaurants

  • Trade industries

  • Education

  • Design, marketing and sales

  • Management

  • Consulting

  • Hospitality

  • Transportation

  • Tourism, leisure and entertainment

  • Financial

  • Health and wellness

  • Telecommunications

The type of marketing a company uses may include business to consumer (B2C) and business to business (B2B) advertising, depending on the target customers. Marketing and sales professionals who work in the industries can use services marketing strategies to increase brand awareness, generate leads and acquire new customers.

Read more: A Guide To Marketing As a Career

How does services marketing differ from product marketing?

Although companies can use both services marketing and product marketing to obtain new customers, marketing services differ from marketing products in several ways. Some of the key differences between the two types of marketing strategies include:

Tangible products versus intangible services

Tangible products may be easier to market than intangible products because advertisers can demonstrate how they work and show customers how they look. Customers assign value to tangible products easier than intangible services. Advertisers often focus their marketing on the people who provide the service and develop relationships with potential customers. This strategy can build trust and generate sales.

Customization

Unlike products or services that are often available to customers which remain the same irrespective of the individual, companies can customize their services to meet each customer's specific needs. For example, a company that offers digital marketing services may customize which platforms it chooses to focus on fitting the needs of each customer. As an advertiser, your services marketing strategy can highlight the business' ability to customize to show how it can adapt its services to better suit a wide range of different customers.

Ownership

When a customer purchases a product, they can continue to use it for as long as they see fit or resell the product if they want to. Product marketing may focus on why a customer wants to own an item. Services marketing focuses on building the brand and personality of the service provider. For example, a business that provides personal counselling services may highlight quality education, professional and empathetic approach of their employees to encourage potential clients to schedule a session with them.

Trust

If a customer is unhappy with a product, it's possible to return or exchange it. When customers aren't happy with a service, they can't return it after using them. The inability to return or exchange service is why services marketing strategies focus on building trust with customers and providing an excellent customer experience at every interaction with the audience for their ads.

Service providing businesses want to ensure that customers are happy with the service. This will make sure the customers come back for more services in the future. For example, a hair salon that hires personable, professional hairdressers can increase the number of repeat customers and referrals they receive because customers trust them to provide outstanding service.

Time

Businesses provide services to customers at a specific time or for a set duration. When customers purchase a product, they do it once and can continue to use it indefinitely. When a customer purchases a service, renewal is necessary to avail of the service again.

The difference in the nature of a service-centric business encourages services marketing strategies that focus on selling subscriptions and promoting referrals and retaining customers instead of selling a product once. For example, a hotel may offer customers who book a stay with them a free night they can use on a future reservation. The offer can encourage customers to come back to the hotel on their next vacation.

Market size

The market size for a service providing business may be smaller than that of a product-centric business. Most product-centric companies can ship products internationally, while service-based businesses cater to specific locations. For example, a landscaping company may only serve customers within a 50-kilometre radius of its location. As a result of the size of the market, advertisers that market services may put a heavier emphasis on creating strong relationships with customers so that they can earn referrals and repeat business. They may choose to focus on promoting upgrades to their services to increase the amount of revenue they can collect per customer.

Tips for creating effective services marketing strategies

Here are some tips to help you create effective service marketing strategies for your next advertising campaign:

Incentivize potential customers

A technique you may use to market your service-centric business is to provide customers with an extra incentive to make a purchase. Consider making a one-time discount to new customers or providing a free gift as part of a special promotion. For example, if you're creating an advertisement for a window cleaning company, you can offer a 10% discount for new customers. The deal encourages new customers to try your service, increasing your overall customer base.

Implement a referral program

You can encourage current customers to tell their friends, family and colleagues about your business by offering a discount, upgrade or another incentive for each person they refer that purchases a service. For example, suppose you were creating an advertisement for a telecommunications company. In that case, an excellent offer may be giving current customers 15% off their next phone bill for each new customer they refer that signs up for a phone plan. A referral program helps you quickly build trust with new customers since they hear positive reviews about the service from people they know in real life.

Nurture existing customer relationships

Stay in touch with your current customers regularly, ensuring that they're happy with the service and identify any needs or concerns they may have. You can reach out via phone, email, survey or by providing exclusive discounts to current customers. For example, a restaurant may ask its patrons to complete an online survey to tell management about the experience. Nurturing customer relationships can help a business increase the customer retention rate and find opportunities to upgrade services for existing customers.

Related: How to Get Customer Feedback to Improve Your Business

Embrace digital marketing

In addition to creating a professional website to promote services, a business may consider making business pages and profiles on popular social media platforms. Having a presence on social media makes it easier for potential customers to connect with you and learn more about your services. Social media provides you with a space to authentically showcase your services, team and business.

It can help you build trust and build strong relationships with existing and potential customers. Social media can make it easy to provide customers with quick updates that address common inquiries and provide additional value. For example, if you own a coffee shop, you can use social media profiles to post regular updates about what food specials and featured drinks are available each week.

Engage with the local community

You can engage with your local community by attending networking events, trade shows and seeking volunteer opportunities. It's a great way to showcase your values from the perspective of a service-centric business, meet potential customers and increase referrals. It also provides you with the opportunity to form valuable partnerships with other companies in your area that may provide you with a steady stream of referrals in the future. For example, if you join your local chamber of commerce, you may find local businesses that are happy to exchange referrals with you.

Highlight your people

If you have a team of people who deliver your business's services, you can show the people behind the services by highlighting team members in marketing materials. You can use professional photos of the team, video interviews, or quotes from employees to give potential customers an idea of the people who may provide the service they want. For example, you might film a video with team members sharing their favourite part of their job. You can make the business seem more authentic and personable, which helps you build stronger relationships with your customers.

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