Sales Tactics for Service-Based Businesses

July 6


Sales Tactics for Service-Based Businesses: Selling Intangible Offerings

By Hanson Cheng

July 6, 2023

  • minute read
  • In this article, we’ll take a deep dive into the intricacies of selling intangible services – a task that comes with its unique set of challenges. From understanding the specific characteristics of services such as their inseparability and perishability, to the hurdles that salespeople often encounter when trying to convey benefits and build trust with clients, you’ll garner a comprehensive understanding of the terrain.

    But it doesn’t stop there, we’ll also be exploring effective sales strategies for service-based businesses, such as storytelling, guarantees, and the use of digital tools like content marketing and email campaigns. In the end, we’ll also touch on the importance of cultivating personal relationships and assessing sales performance to ensure continuous growth and improvement.

    Understanding the Challenge of Selling Intangible Offerings

    Understanding the intricacies associated with selling intangible products or services is critical for businesses in the service industry. These products encompass all items that are not physical or tangible and thus cannot be seen, tasted, or touched. Like other product offerings, intangible goods come with their unique challenges due to certain inherent features that differentiate them from tangible goods.

    Unique Characteristics of Services

    Services are characterized by four primary features which include inseparability, heterogeneity, perishability, and intangibility. In terms of inseparability, unlike tangible goods, services cannot be separated from their providers. This implies that the customer’s experience is directly affected by the skills, attitude, and behavior of the service provider. In regard to heterogeneity, services are not standardized unlike tangible goods, and thus their quality may vary depending on the provider.

    Services are perishability in that if not consumed, they cannot be stored for future use as it would be the case for physical goods. Finally, services are characteristically intangible, meaning they possess no physical form and cannot be seen or touched, making their evaluation confusing and complex for prospective buyers.

    Common Obstacles In Selling Services

    Some of the challenges in selling services include the difficulty in conveying benefits. Since services can’t be physically demonstrated or experienced before purchase, potential customers often find it hard to understand the exact benefits they will receive from the service.

    Another challenge is building trust with prospective clients. Ensuring customers of consistent service quality and making the intangible tangible for the client can help build trust, which is critical to the sales process. Understanding these challenges is pivotal in identifying effective sales tactics for service-based businesses.

    Essential Sales Tactics for Service-Based Businesses

    Crafting successful sales strategies can be a considerable challenge for service-based businesses. Still, if implemented correctly, these businesses can overcome the challenges posed by the intangible nature of services.

    Utilization of Storytelling

    Storytelling has emerged as an impactful tool for selling services by creating an emotional connection with the prospective buyer. Businesses can leverage customer testimonials and case studies to paint a vivid picture of how their services can solve a client’s problem. By leveraging emotions in stories, service providers can evoke empathy and create a memorable impression, connecting potential customers personally with a service.

    Visibility and Demonstrability

    Just as it is in successful storytelling, making the service visible and demonstrable alleviates the challenge of intangibility. Businesses can simulate the service experience by allowing potential customers to beta test their services or through detailed demos. Visual aid, such as videos or infographics, can also help in enhancing service perception by illustrating service processes and benefits.

    Offering a Guarantee

    Offering a service guarantee can significantly reduce perceived risks, thereby making clients feel confident about their investment.

    Harnessing the Power of Digital Tools in Selling Services

    With the proliferation of digital media, businesses now have access to valuable tools to bolster their sales strategies.

    The Role of Content Marketing

    Content marketing allows businesses to build credibility with prospective customers by sharing educational content that is relevant and of value to their target audience.

    Social Media for Service Promotion

    Social media platforms provide a robust avenue to promote services, connect with potential customers, and engage existing clients.

    Leveraging Email Marketing

    Email marketing presents a cost-effective opportunity to nurture leads with informational content and convert them through targeted email campaigns.

    Cultivating Relationships and Personal Selling

    In the realm of service-based businesses, nurturing strong customer relationships and utilizing personal selling strategies can be the decisive factors that set a company apart from its rivals, ultimately driving success. By delivering superior value and crafting a memorable service experience, businesses not only win customer loyalty but also inspire word-of-mouth recommendations, contributing significantly to long-term profitability.

    Importance of Customer Retention

    Customer retention plays a pivotal role in the business model of service-based companies. The concept of repeat business is the key to profitability in the long run. Instead of constantly seeking new customers, which could be cost and time-intensive, companies can focus on retaining their existing customer base. By offering exemplary service and maintaining consistent customer contact, businesses can encourage repeat business and foster an enduring year-long customer relationship.

    Another effective strategy to enhance customer retention is implementing customer loyalty programs. They provide tangible incentives, such as discounts or member-only privileges, to encourage customers to return and utilize the company’s services more frequently. Member loyalty programs also enhance customer feeling of ‘exclusivity,’ enhancing their overall satisfaction with the company’s services.

    Role of Personal Selling

    In the competitive market of intangible product offerings, personal selling emerges as an instrumental sales tactic. Unlike tangible goods, services cannot be evaluated prior to purchase, rendering personal trust and rapport even more critical in the selling process. Through one-to-one communication, sales professionals can build meaningful relationships with customers, develop a precise understanding of their needs, and deliver custom-made solutions that cater to their unique requirements.

    Prospecting and closing strategies form the backbone of personal selling. Prospecting involves identifying potential customers who might require the services that a company offers. The sales professional then initiates contact, assesses the needs of the prospect, and proposes the company’s service as an efficient, effective solution. At the same time, an array of closing techniques – from addressing withdrawal signs promptly to proposing irresistible final offers – are employed to secure the service contract.

    Personal selling doesn’t end at the closing of the sale. After-service follow-ups and check-ins ensure customer satisfaction and enable businesses to identify potential up- and cross-selling opportunities.

    To summarise, cultivating relationships and personal selling are the engines that power a service-based company’s sales machinery. Customer retention strategies, loyalty programs, and personal selling through effective prospecting and closing techniques work in harmony to create a loyal customer base. These loyal followers will not only frequent the services offered by the company but also advocate for the brand enthusiastically, contributing substantially to the business’ profitability and reputation.

    Understanding the Importance of Customer Retention

    Having a strong customer base is a critical indicator of a business’s success and plays a huge role in promoting intangible offerings in service-based industries. One of the key factors that contributes to strengthening this base is customer retention.

    Repeat Business as a key to profitability

    In a world where businesses are consistently vying for customer attention, retaining a client is as important as, if not more important than, acquiring a new one. It’s a well-documented fact that acquiring a new customer costs five times as much as retaining an existing one. Therefore, it is safe to say that repeat business is a key to profitability.

    Repeat customers tend to spend more, buy more frequently, and are more likely to recommend the business to others. This can result in a higher volume of sales without significant investments in marketing and customer acquisition. Customer retention directly impacts a company’s profitability. Repeat business from returning customers can significantly decrease the cost of sales—the effort, time, and resources required to convert repeat customers are much lower compared to new ones.

    Using companies like Amazon as a prime example, the online giant heavily benefits from repeat customers that have developed buying habits wrapped around its Prime service, resulting in a drastically smaller cost-per-sale and increased volume of transactions.

    Customer Loyalty Programs and their Benefits

    In order to incentivize repeat business, companies often employ customer loyalty programs. These programs offer benefits that can make a customer’s experience with a product or service more enjoyable and offer rewards that encourage repeat business. These benefits can range from discounts on future purchases, early access to new products, members-only sales, and more.

    Several businesses that offer intangible services have seen an uptick in customer retention from loyalty programs. Take, for instance, airline frequent flyer programs. These reward loyal customers with free flights, priority boarding, better seats, and other perks, which encourage repeat bookings with the same airline.

    Customer loyalty programs are an investment, but they can pay off significantly. They not only encourage repeat business but can also turn customers into brand advocates who can bring in new customers through word-of-mouth.

    In summary, customer retention and loyalty can drive a service-based business. With it costing significantly less to keep an existing customer than to attract a new one and the potential increase in profits from repeat business, prioritizing customer retention strategies like loyalty programs can bring about sustained success and profitability. These tactics are essential for selling intangible offerings in a service-based industry since they provide added value to the customers, deepening their connection with the business and incentivizing repeat engagement.

    Analyzing and Evaluating Sales Performance

    Assessing the performance of sales strategies and tactics is crucial in service-based enterprises. Every entrepreneur or business manager must familiarize themselves with key performance indicators (KPIs) and the significance of continuous improvement through client feedback.

    Key Performance Indicators (KPIs) for Service Sales

    Key Performance Indicators are vital metrics that assist businesses in monitoring their performance and progress towards their set goals. When it comes to service-based businesses, they are instrumental in providing insights into sales growth and customer acquisition costs.

    Tracking Sales Growth : A business must monitor its sales growth to determine if it is achieving its revenue goals. For instance, a law firm in Chicago should keep track of the number of cases it’s winning and revenue it’s generating. Noticing a consistent incline in sales figures would generally suggest the effectiveness of implemented sales tactics.

    Monitoring Customer Acquisition Cost : This is the amount a business spends to acquire a new customer, calculated by dividing the total sales and marketing cost by the number of new customers over a specific period. For example, if a London-based marketing agency spends $1000 on marketing and acquires ten new clients, the customer acquisition cost would be $100. This KPI is crucial to gauge the business’s profitability concerning its marketing efforts.

    To summarize, utilizing KPIs like sales growth and customer acquisition cost can provide vital insights into the performance of sales strategies for service-based businesses. They offer actionable data, allowing the management to make informed decisions in course-correcting or optimizing their methods, ultimately aiding in achieving business goals.

    Continuous Improvement Through Feedback

    In a service industry, customer feedback is a treasure trove of insights for the continuous improvement of sales performance.

    Importance of Customer Reviews and Feedback : Customer reviews and feedback offer a wealth of information about a business’s service delivery. By evaluating customer reviews, a service-based business like a home cleaning company in New York can gain insights into clients’ satisfaction level, their preferences, and any areas requiring improvement.

    Implementing Changes Based on Feedback : Feedback allows the business to modify its service as per the customer requirements. For example, an IT consultancy service in Berlin may discover from customer feedback that clients prefer more comprehensive monthly reports rather than weekly ones. Acting upon such feedback improves service delivery, customer satisfaction, and ultimately, sales.

    In brief, accepting and implementing the feedback not only helps a business align its services better with customer expectations but also drives loyalty and repeat business, impacting the sales performance positively. Every piece of feedback serves as a stepping stone towards service improvement and optimization of sales strategies. Therefore, customer feedback should be treated as a crucial element for the continuous enhancement of sales performance within service-based businesses.

    Understanding the Challenge of Selling Intangible Offerings

    Services pose unique challenges in sales due to their inherently intangible nature. Unlike physical products, clients can neither see nor touch services prior to purchase, making the selling process significantly more challenging.

    Unique Characteristics of Services

    Four defining features differentiate services from tangible goods:

    • Inseparability: Service delivery often occurs simultaneously with its consumption.

    For instance, salon services or consulting services require the presence of both the provider and the client.

    • Heterogeneity: Services vary greatly in quality and output as they depend heavily on who provides them and under what conditions.

    For example, a flight experience may be significantly different depending on the crew’s mood, the weather, and many other factors.

    • Perishability: Unsellable services cannot be stored for future use.

    This characteristic is evident in industries like hospitality, where untouched hotel rooms can’t be sold the next night.

    • Intangibility: As mentioned previously, services can’t be touched or seen before purchase, which often increases perceived risk in the customer’s mind.

    Often, restaurant goers rely on online photos and reviews without actually being able to taste the food.

    Common Obstacles In Selling Services

    Service providers face unique obstacles in selling their offerings:

    • Difficulty in conveying benefits: Unlike physical products, which can be demonstrated, explaining abstract benefits can prove challenging.

    A cloud storage provider, for instance, may struggle to illustrate the abstract benefits of enhanced security or increased storage space.

    • Building trust with prospective clients: Prospective clients often perceive services as risky due to their intangible nature. Therefore, building trust is essential to alleviate concerns.

    For instance, a law firm may offer initial free consultation to diminish potential clients’ perceived risks.

    Essential Sales Tactics for Service-Based Businesses

    To overcome the aforementioned challenges, certain tactics are recommended for businesses selling services.

    Utilization of Storytelling

    Storytelling can be an effective means to lessen the abstract nature of services:

    • The power of customer testimonials and case studies: Past clients’ experiences can enhance credibility.

    For instance, a wedding photographer might use testimonials of satisfied couples to illustrate the emotional impact of their work.

    • Leveraging emotions in stories: Emotionally engaging potential clients can bring the benefits of services to life.

    A life insurance company could tell the story of a family who felt secure due to their programs, making the abstract concept of financial security more relatable.

    Visibility and Demonstrability

    To enhance a service’s perceived tangibility, effective ways are:

    • Simulating the service experience: Showing prospective clients what they may expect.

    A spa might offer a virtual tour of its facilities, revealing the relaxing atmosphere patrons can expect.

    • Using visual aids to enhance service perception: Images or infographics bring concepts to life.

    For example, a financial planner might use pie charts or graphs to illustrate potential client financial gains.

    Offering a Guarantee

    Guaranties can be an efficient method of creating trust and reducing perceived risk:

    • Reducing perceived risks for the clients: When businesses guarantee their services, clients perceive less financial risk.

    This could range from a “satisfaction or money-back guarantee” to a software company promising to rectify issues in a specific timeframe.

    • Increasing buyer’s confidence: Guarantees assure clients that the business stands by its offering.

    A hair salon, for instance, might offer a free redo if a client isn’t completely satisfied with their new style.

    Harnessing the Power of Digital Tools in Selling Services

    In the digital era, businesses can leverage online channels to enhance their service sales.

    The Role of Content Marketing

    Content marketing can help service businesses establish trust and illustrate complex concepts:

    • Building credibility with educational content: Sharing industry insights and how-to guides showcases expertise, building consumer trust.

    For instance, a digital marketing agency might share recent industry trends through insightful blog posts, showcasing their industry knowledge and capabilities.

    • Sharing customer success stories: Demonstrating real-world results builds credibility.

    A consulting firm might detail how their service helped a client increase profitability, illustrating potential results for prospective clients.

    Social Media for Service Promotion

    Social media platforms offer businesses a venue to demonstrate and discuss their offerings:

    • Using relevant social media platforms: Each platform has a different user demographic, choose the platform wisely based on target market.

    For example, LinkedIn might be best for B2B service providers, while Instagram may be more suitable for visually-oriented services like event planning.

    • Influencer marketing, an effective strategy: Collaborating with influencers who have a large following can increase visibility.

    A fitness trainer might collaborate with a lifestyle influencer to showcase their workout plans and build social proof.

    Leveraging Email Marketing

    Email marketing is an efficient way to nurture leads and drive conversions:

    • Nurturing leads with informational content: Frequent, value-added content can keep businesses top of mind.

    A dentist office might send monthly newsletters on oral health tips, continually offering value to potential clients.

    • Conversion optimization through targeted email campaigns: Personalized promotional offers can entice subscribers to take action.

    A software training provider might send discount offers to subscribers who’ve shown interest in certain courses, sparking action.

    Cultivating Relationships and Personal Selling

    Customer retention and relationship building are key for any service-based business.

    Importance of Customer Retention

    Customer retention can lead to higher profitability:

    • Repeat business as a key to profitability: Retaining customers is often cheaper than acquiring new ones and repeat customers often buy more.

    For instance, a web design agency might encourage subscription to a website maintenance package, ensuring ongoing revenue.

    • Implementing customer loyalty programs: Offering rewards for continued patronage encourages repeat business.

    A yoga studio might offer every tenth class free, encouraging ongoing attendance.

    Role of Personal Selling

    Personal selling remains crucial, particularly in high-stake service sales:

    • Building meaningful relationships: Personal touch often can’t be replaced and can lead to long-term client relationships.

    For instance, a real estate agent building relationships with home buyers might secure future business when they decide to upgrade.

    • Prospecting and closing strategies: As services can’t “sell themselves,” successful prospecting and closing are key.

    An architectural firm might focus on showcasing past designs and discussing client visions for effective closing.

    Analyzing and Evaluating Sales Performance

    To ensure continuous growth, service businesses must regularly evaluate sales performance.

    Key Performance Indicators (KPIs) for Service Sales

    Key performance indicators help businesses monitor success:

    • Tracking sales growth: This shows whether sales efforts are fruitful.

    A landscaping business might track number of new contracts month-on-month to measure growth.

    • Monitoring customer acquisition cost: This helps businesses evaluate the success of their acquisition efforts.

    A digital advertising agency might monitor this to ensure the client’s ad spend isn’t exceeding the value they provide.

    Continuous Improvement Through Feedback

    Constant feedback helps identify areas of improvement:

    • Emphasizing the importance of customer reviews and feedback: This provides firsthand insights on what’s working and what isn’t.

    For instance, a cleaning service might ask for reviews post-service to identify areas of improvement.

    • Implementing changes based on feedback: Acting on customer feedback is crucial for continuous improvement.

    A private tutoring agency might reinforce the teaching areas cited in feedback to ensure student success.

    In summary, selling intangible services requires strategic planning, unique sales tactics, and regular performance evaluation. By understanding the distinctive aspects of services, leveraging effective sales tactics, and continuously fine-tuning approach, service businesses can successfully navigate the sales process and drive sustained growth.

    Continuous Improvement Through Feedback

    Importance of Customer Reviews and Feedback

    Renowned companies like Apple, Gucci, and Tesla all value customer opinion. Their central focus revolves around accommodating customers’ needs and giving them top priority. Their success speaks about the importance of customer reviews and feedback in the overall development of a service-based business.

    Firstly, it is essential that a business comprehends that every customer is different, and their perspectives and expectations need individual attention. Detailed customer feedback can help in catering to these specific requirements. For instance, development in the Uber app resulting from feedback led to features like the ‘Split Fare’ and easier access to ‘Uber Pool’.

    Secondly, customer feedback can also lead to innovation. A successful service-based business is one that evolves with the demand and needs of its customers. For example, Amazon’s feedback system was instrumental in the creation of ‘Amazon Prime’. This subscription model, based on customer’s need for quicker deliveries and a one-time payment method, rapidly became a tremendous success and now boasts more than 100 million subscribers.

    Finally, service-based businesses should understand and respect the role of customer feedback in enhancing credibility. Businesses such as TripAdvisor and Yelp firmly believe that nothing beats word of mouth. Good reviews can lead to a higher conversion rate, with more prospective customers becoming actual users of the service.

    In summary, feedback is pivotal in understanding customer requirements, driving service innovation, and enhancing credibility. Investing time and resources in a mechanism that procures and analyzes customer feedback can undoubtedly boost service sales.

    Implementing Changes Based on Feedback

    Acquiring feedback is an extensive process, but it is not useful until changes are implemented based on the suggestions provided. Businesses with a customer-centric approach like Google and Microsoft prioritize the implementation of changes based on feedback.

    The primary step in this process is to analyze the feedback. One significant example of this is the ‘Windows Insider Program’ by Microsoft. Before launching an update, Microsoft invites users to provide their feedback. This feedback is collected, structured, and analyzed to make essential changes in the service, which leads to a more polished final product.

    Next is confirming the viability and relevance of the changes. It is critical to ensure the suggested changes are feasible and align with the company goals before implementation. A well-known instance of this is when Rakuten, a major e-commerce company, acquired customer feedback suggesting improvements in their delivery system. Rakuten then modified its delivery services accordingly, which led to increased customer satisfaction and higher sales.

    Lastly, the implementation of these changes is monitored to ensure effective execution. The aim is to meet the customer’s expectations as closely as possible. When Netflix received feedback about the complexity of cancelling their service, they implemented smoother cancellation processes, and the effectiveness of this action was reflected in a decrease in customer complaints.

    To conclude, acquisition, analysis, and implementation of customer feedback form the backbone of customer-driven change. Firms that value their customers empower feedback, making it a catalyst for enhanced service sales. By not fearing criticism but taking it as a zone of development, service-based businesses can thrive in their sales growth.

    Sales Tactics for Service-Based Businesses: FAQs

    1. What Are the Best Sales Tactics for Service-Based Businesses?

    Personalized customer relationships, demonstration of expertise, leveraging referrals, and offering free consultations trials to show tangible value are some of the most effective sales strategies for service-based businesses.

    2. Why Should Service-Based Businesses Emphasize Personal Relationships in Their Sales Tactics?

    In service-based businesses, personal relationships promote repeat sales and word-of-mouth, contributing to long-term sustainable success. Customers value personal attention and are more likely to remain loyal when they experience it.

    3. How Can a Service-Based Business Provide Tangible Evidence of Their Intangible Offerings?

    Service-based businesses can demonstrate their offerings through case studies, client testimonials, and free trials. These methods allow potential customers to see the value and results of the offerings.

    4. How Can Service-Based Businesses Increase Related Sales or Upselling?

    Service-based businesses increase related sales or upselling by identifying customer needs during consultations, showing how added or premium services can benefit the customer, or bundle services together for an attractive price.

    5. Why Is Offering Free Trials an Effective Sales Tactic for Service-Based Businesses?

    Receiving free trials reduces prospects’ perceived risks and reservations, allowing them to understand the quality and importance of the service, making them more likely to make a purchase.

    6. How Do Referrals Contribute to Sales for Service-Based Businesses?

    Referrals serve as powerful endorsements from satisfied customers, driving potential clients to the business. The trust established by a referral often leads to a quicker sales decision.

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    Hanson Cheng

    About the author

    Living in Portugal with my wife and puppies.
    Scaling online businesses and sharing lessons learned on this website and in our email newsletter.

    Always happy to hear from you, so find me on Instagram if you want to say hi!

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