Selling the Invisible

What makes businesses successful isn’t always their product, but the invisible service their customers perceive.

1. Services Are the Driving Force of Modern Economies

Services now dominate large parts of the economy, often overshadowing physical products in terms of importance. This shift is evident in industries like banking, legal assistance, and retail, where service is at the core of customer satisfaction.

Services also extend into product-based markets through value-adding elements. For example, a computer software purchase doesn’t end at installation—it includes features like technical support and updates to keep customers engaged and loyal. Similarly, Levi’s Personal Pair jeans offer customized service by tailoring jeans based on a customer’s individual measurements, delivered straight to their homes.

This all suggests that services today are not an optional add-on but the centerpiece of most customer interactions. Even industries traditionally dependent on products, like fast food, draw considerable strength from how well they deliver service to customers.

Examples

• More than 75% of Americans work in service-related industries.
• Software companies often include technical support and upgrade options as part of their product service.
• Levi’s Personal Pair uses custom tailoring as a competitive edge.

2. Marketing Services Is Harder Than Marketing Products

Because services are intangible, marketing them often poses a unique set of challenges. Potential customers can’t see, touch, or test services the way they would physical goods, making them harder to advertise effectively.

For instance, products like cars or smartphones lend themselves to striking visual campaigns, showcasing clear, tangible benefits. In contrast, businesses like insurance companies must rely on creating brand trust through symbols (like Travelers Insurance's umbrella logo) and emotional cues that suggest stability or safety.

Even more challenging is the variability in service quality. A customer’s experience might depend entirely on the mood or professionalism of the staff that day. For example, a single rude waiter in a restaurant can negatively impact a customer’s overall perception, undoing the best marketing efforts.

Examples

• Porsche sells ease with image-heavy advertising focusing on their cars’ visual appeal.
• Travelers Insurance uses an umbrella icon to communicate the feeling of protection.
• Untrained employees can harm a company’s brand no matter how good the campaigns are.

3. Exceeding Expectations Is Key to Customer Retention

Successful businesses ensure that their services consistently meet or exceed what customers expect. This begins with understanding what customers believe they’re paying for and going one step further to deliver memorable experiences.

McDonald’s mastery of consistent, quick service and clean facilities gave it a competitive edge in the fast food industry. Similarly, a restaurant that responds deftly to a wrong order by offering a free dish creates a pleasant surprise and goodwill. Such gestures elevate a customer’s perception of the business.

The best way to learn if your business meets customer expectations? Ask them. Gather feedback through surveys or interviews and use this information to improve. For example, a rude sales clerk identified through feedback can be retrained to prevent recurring complaints and rebuild trust.

Examples

• McDonald’s set industry standards for speed and cleanliness.
• A restaurant correcting an error with a free meal exceeds expectations.
• Inviting customer feedback reveals key areas for improving service quality.

4. Differentiation Is Essential for Standing Out

In a crowded service market, being different can set you apart. Since services are intangible, customers often expect providers to highlight bold distinctions rather than subtle nuances.

FedEx achieved success by focusing not on ordinary parcel delivery but on an entirely new promise: overnight shipping. It stood out because it offered something the market didn’t previously have. Similarly, Wal-Mart took a unique approach by targeting small towns neglected by other retailers, thus creating an untapped customer base.

Innovation is equally important for established players. During stagnant periods in the banking sector, credit unions began offering quicker, customer-focused services, filling a gap left by larger institutions.

Examples

• FedEx differentiated from USPS with overnight shipping services.
• Wal-Mart opted to serve underserved small-town communities.
• Credit unions innovated where traditional banks had stopped evolving.

5. Strategic Planning Should Be Paired With Action

Businesses often spend excessive time on strategies, trying to predict the future of their industries. But fixation on planning can backfire, making companies slow to adapt when the unexpected happens.

For example, tech companies that spend years fine-tuning a "perfect" product often lose out when competitors release simpler alternatives earlier. Similarly, wrong planning – such as publishers predicting TV’s demise of books – can lead to wasted time and resources.

Instead, balance planning with timely action. Apple’s failure with the Lisa computer didn’t stop them from quickly releasing the Macintosh, learning from their mistakes, and adapting.

Examples

• Prolonged development delays have hurt many software companies.
• Television didn’t replace books as some publishers feared.
• Apple rebounded from its initial Lisa flop to deliver the Macintosh.

6. People Make Decisions Emotionally, Not Logically

Contrary to belief, customer choices aren’t always tied to reason. Emotional factors, such as prestige or familiarity, weigh heavily in buying decisions.

Take American Express: its high fees and limited acceptance don’t deter buyers. Customers view the card as an exclusive symbol of status. Similarly, familiarity also plays a role; people are naturally drawn toward brands they see or hear often, whether in ads or news.

Visibility can encourage this familiarity effect. For instance, the IRS leverages media attention on tax-evasion cases during peak tax season to keep itself top-of-mind as April approaches.

Examples

• American Express markets exclusivity, attracting its loyal base.
• Frequent visibility builds familiarity, such as IRS news stories.
• People gravitate toward trusted logos like McDonald’s when unfamiliar with an area.

7. Specialty Trumps Generalization in Service Positioning

A business that attempts to do everything risks doing none of it well. Narrowing your focus allows you to excel in one area and become recognized for it.

Scandinavian Airlines identified this philosophy when it chose to focus solely on satisfying business-class passengers, consequently elevating its reputation among premium travelers. This strategy created a positive ripple effect: they filled expensive seats more consistently, allowing them to lower economy-class ticket prices.

The natural result of this focus is clear positioning: customers understand what your business is about. Define this positioning further with concise statements like Bloomingdale’s branding itself as an upscale shopping experience for quality-minded customers.

Examples

• Scandinavian Airlines focused on business-class customers.
• Bloomingdale’s targets upper-middle-class shoppers with premium products.
• Narrowing services often improves the perception of quality.

8. High-End Pricing Is Safer Than Low or Middle Pricing

Setting the right price communicates your service’s value. Oddly, pricing too low can backfire, as it suggests inferiority, while middle-range pricing risks being forgettable.

Wal-Mart’s aggressive low-price strategy overwhelmed competitors like Sears. On the other hand, businesses catering to top-tier customers avoid competing solely on cost by leveraging perceived quality. Even Picasso’s quick sketches command high prices due to the name’s intrinsic value.

Services priced at the high-end tend to attract quality-conscious prospects, distinguishing them from budget or mid-level options that struggle to define their market space.

Examples

• Sears suffered losses trying to compete against Wal-Mart’s low-cost model.
• Picasso’s renowned name ensures the high resale value of his art.
• High price tags signal quality, enticing premium buyers.

9. Successfully Market Your Service by Building a Brand

Establishing a brand transforms your service into something familiar and dependable in customers’ eyes. A strong brand name and visual identity ensure customers think of you first.

McDonald's and Burger King provide quality assurance for travelers seeking familiarity. FedEx’s logo cleverly mirrors postal colors for recognition but also sets itself apart with professional branding cues.

Investing in integrity and delivering consistent results also builds lasting trust, much like IBM, whose customers famously associated the brand with reliable decision-making.

Examples

• Travelers prefer McDonald’s in unfamiliar towns because of brand reliability.
• IBM gained trust through its consistent delivery of quality service.
• FedEx combines recognizable branding with innovative service offerings.

Takeaways

1. Gather customer feedback regularly to assess and improve service experiences.
2. Develop a clear focus for your service and communicate this through consistent branding.
3. Differentiate your service with bold, innovative approaches that stand out to customers.