Professional services marketing : strategy and tactics 9781315863924, 1315863928, 9781560242406, 156024240X

Table of contents :
Content: ContentsUnderstanding the Marketing Concept Professional Services Marketing The Anatomy of a Professional Services Marketing Plan Client Management--A Critical Tool Promoting Professional Services Managing in a Professional Services Environment Trade Area Analysis, Site Selection, and Facility Design Communication--The Key to Success in Professional Services Marketing Professional Services Marketing in the Future Index

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Professional Services Marketing Strategy and Tactics

F. G. Crane, PhD

Professional Services Marketing Strategy and Tactics

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Professional Services Marketing Strategy and Tactics

F. G. Crane, PhD

R

Routledge Taylor & Francis Croup

(D 1993 by The Haworth Press, Inc. All rights reserved. No part of this work may be reproduced or utilized in any form or by any means, electronic or mechanical, including photocopying, microfilm and recording, or by any information storage and retrieval system, without permission in writing from the publisher.

First published by The Haworth Press, Inc., 10 Alice Street, Binghamton, NY 13904-1580 This edition published 2012 by Routledge Routledge Taylor & Francis Group 711 Third Avenue N ew York, N Y 10017

Routledge Taylor & Francis Group 2 Park Square, M ilton Park Abingdon, Oxon OX 14 4RN

Library o f Congress Cataloglng-ln-Publicatlon Data Crane, F. G. (Frederick Gerard) Professional services marketing : strategy and tactics / F. G. Crane, p. cm. Includes bibliographical references and index. ISBN 1-56024*240-X (acid free paper). 1. Professions-M arketing. I. Title. IID8038.A1C73 1992 6 5 8 .8 '0 2 -d c 2 0

91-36043 CIP

To My Family

ABOUT THE AUTHOR

F . G . C rane, P hD , is Professor of M arketing at Dalhousie U ni­ versity in Nova Scotia. He is also President o f QM A Consulting G roup Lim ited and has com pleted over 300 consulting assign­ m ents for service organizations w orldw ide. Dr. Crane is the au­ thor o f over 70 publications including three books. He is currently the Editor o f the Journal o f Promotion Management published by The Haworth Press, Inc.

CONTENTS Preface Chapter One: Understanding the Marketing Concept

xi 1

Defining Marketing The Production, Sales, and Marketing Eras The Six Key Steps in the Marketing Process The Marketing Mix The Marketing Environment Target Marketing vs. Mass Marketing Market Segmentation Summary

1 2 3 4 4 5 6 8

Chapter Two: Professional Services M arketing

11

Defining Professional Services Characteristics of Professional Services The Marketing Mix for Professional Services — The Seven P ’s Preface for Professional Services Marketing Summary

11 12

Chapter Three: The Anatomy o f a Professional Services M arketing Plan Why a Marketing Plan? The Internal Marketing Audit The Environmental Scan SW OT Analysis

15 17 19

21 21 22 25 25

M arketing O bjectives U nderstanding M arketing Strategy T he M arketing Program Effectively Im plem enting M arketing Program s M arketing Planning vs. Execution Sales/Profit Forecasts and M arketing Budget Control and Evaluation M easures An Effective M arketing Plan Sum m ary

27 28 34 36 37 37 38 38 39

C hapter Four: C lient M anagem ent —A C ritical Tool

41

Im pression M anagem ent Internal M arketing Relationship M arketing Synchrom arketing Using Research to D evelop and M aintain a Client M anagem ent Program W hat Clients Really W ant from Professional Services Providers Sum m ary

42 46 51 54 55 57 60

C hapter Five: Prom oting Professional Services

63

The Prom otional Mix Product (Service) vs. C orporate A dvertising G uidelines for T elevision A dvertising G uidelines for Radio A dvertising G uidelines for Print A dvertising G uidelines for D irect M ail Preparing the Prom otional Mix Sum m ary

64 72 73 75 75 76 78 79

C hapter Six: M anaging in a Professional Services Environm ent M arketing as a M anagem ent Tool The Fundam entals o f M anaging in a Professional Services Environm ent Tim e M anagem ent Sum m ary

81 81

86 88 92

C hapter Seven: T rade Area A n alysis, Site Selection, and F acility Design T rade A rea A nalysis Site Selection Facility Design Relocation S um m ary C hapter Eight: C om m unication —The K ey to Success in P rofessional Services M arketing B arriers to Com m unication C haracteristics o f Good C om m unicators N onverbal Com m unication C om m unication by Type o f Personnel in Professional Services M arketing Internal C om m unications C lient C om plaints Sum m ary

93 93 98 100 103 104

107 108 109 111 114 117 118 120

C h apter Nine: Professional Services M arketing in the Future

123

Index

129

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Preface

The days w hen professionals could sim ply hang a shingle and w ait for clients to beat a path to their door are long gone. Profes­ sionals m ust realize that their services, regardless o f how good they are, sim ply do not sell them selves. M erely having the tech­ nical talent to supply a professional service does not m ean that clients will patronize them . To m any professionals, m arketing is still a dirty w ord and the notion o f m arketing professional ser­ vices is quickly dism issed. O thers have reluctantly em braced som e aspects o f m arketing, notably prom otion, as a w ay to o b ­ tain a foothold in the m arket. Som e professionals, how ever, have truly adopted a m arketing orientation and have achieved rew ard­ ing results. T hey have also found that to be m arket driven is to be client driven. In essence, m arketing is a business philosophy, a state o f m ind. It revolves around the central concepts o f equitable exchange and client satisfaction. It begins w ith an understanding of the needs o f the client, the developm ent o f services to meet those needs, pricing the services effectively, inform ing clients about the availability o f the services, delivering them efficiently, and ensuring satisfaction during and after the exchange process. Follow ing this six-step m arketing process religiously and m e­ thodically should bring survival and growth in a dynam ic and often turbulent m arketplace. W hat are the objectives o f this book? The first objective is to educate the reader about what constitutes m arketing. T here is m uch confusion and m isinform ation about what m arketing is or ought to be; this book will attem pt to set the record straight. Second, a case will be built for w hy professional services pro­

viders need to market their services. Third, this book provides xi

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practical guidance to professionals w ho w ant to m arket their ser­ vices in a thoughtful and progressive m anner. W ho will benefit from this book? W hile the term “ profes­ sional” has been bastardized quite badly over the past decade, there is a distinct and readily identifiable group o f true profes­ sionals who are the intended audience. T hey share the com m on­ alities o f professional training, codes o f ethics, and professional conduct. T hey include (but are not exclusive to) accountants, architects, attorneys, dentists, engineers, pharm acists, physi­ cians, optom etrists, and veterinarians. This book w ould also be a valuable addition to the m aterial currently being used in courses given by trainers, instructors, or professors involved in services m arketing. T his is m y third book and every time I finish one I w onder w hether or not it will structurally do the job. In this case I m ake a deliberate attem pt to discuss concepts early in the book that will put everyone on an equal footing for the m aterial that is pre­ sented later. The first chapter offers what I believe to be a suc­ cinct and realistic depiction o f what m arketing is or should be. M any readers will find this chapter a good review or a refresher while others w ill find it a novel or new perspective on m arketing. Chapter Tw o offers a basic foundation for understanding profes­ sional services m arketing and som e basic propositions that any professional must accept if he or she truly w ants to be m arketing oriented. Failure to accept the basic premise found in Chapter Tw o m ay preclude the reader from em bracing the m arketing con­ cept. Chapter T hree offers a reasonable fram ework for the devel­ opm ent o f a m arketing plan. M any o f m y professional services clients say they really appreciate this sim ple “ cookbook” ap­ proach to m arketing plan developm ent. Chapter Four offers what I believe to be the essence o f professional services m arketing: client m anagem ent. Client m anagem ent is both a survival and a growth tool for professional services providers. If nothing else is gained from this book except an appreciation for the importance

Preface

x iii

o f this concept, then I will be happy. Chapter Five discusses the prom otion o f professional services and offers very practical ad­ vice for professionals w ho want to and must prom ote their ser­ vices. M any w ill find Chapter Six a little difficult to accept since it is not necessarily conventional thinking —m arketing as a m anage­ m ent tool? A fter reading it, how ever, I hope the reader will agree that it is a sim ple and adroitly obvious solution to the problem s encountered w hen m anaging in a professional services environ­ m ent. Chapter Seven offers a tangible and pragm atic approach to trade area and site analysis as w ell as physical facility evaluation. C hapter Eight focuses on one o f the most critical aspects o f profes­ sional services: com m unication. U nfortunately, research show s that m any professionals have poor interpersonal and com m unica­ tion skills; this chapter provides som e m eaningful inform ation on this topic and w ays one can im prove in this area. Chapter Nine provides an overview on w hat I believe the future holds for pro­ fessional services m arketing and how professionals can ensure that they will be able to survive and grow in the years ahead. I think professional services providers will find this book en­ joyable to read and I trust each and every one o f them will find som ething o f value w ithin these pages. A s a m arketer I will not be satisfied unless my intended audience is satisfied. I truly hope this book will prom pt them to action; to em brace the m arketing philosophy as their w ay o f doing business.

F. G. Crane, PhD

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Chapter One

Understanding the Marketing Concept

DEFINING MARKETING Most people, including professional services providers, have a narrow view o f m arketing. Y et, in a competitive environm ent, em bracing the m arketing concept may be the edge required not only to survive but to prosper. W hy is m arketing so important? First, it is the only business function that can generate revenue for an organization. More importantly, m arketing is not just a business function, it is a philosophy, a state of m ind, a way of doing business. M arketing puts the needs o f the consum er ahead of the producer. In other w ords, what differentiates m arketing from selling is the focus on consum er needs. Many professionals believe that when they complete their professional training a de­ m and will exist for their services; after all, they are now qualified to deliver those services. If people do not know about the service or do not need the service, however, consum ers will not beat a path to the door of the newly minted professional. The American M arketing Association (1985) defines m arket­ ing as “ the process of planning and executing the conception, pricing, prom otion, and distribution of ideas, goods, and ser­ vices to create exchanges that satisfy individual and organiza­ tional objectives.” Two key words must be highlighted from this definition: exchange and satisfaction. Simply put, m arketing is about exchange and achieving satisfaction during and after the exchange process. i

2

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In any exchange process, two people are required. In m arket­ ing this consists o f buyer and seller. For satisfactory exchanges to occur, both parties must receive som ething o f value; there m ust be equity in the exchange process. During and after the exchange process, both parties must be satisfied. If not, this will negate the prospects o f continued and ongoing exchanges. For professional services m arketers, as we will see, the concept o f consum er satisfaction is central to long-term success.

,

THE PRODUCTION, SALES AND MARKETING ERAS The m arketing concept is actually a relatively recent phenom e­ non. It has been argued that business has evolved from a produc­ tion era, to a sales era, to the m arketing era. Early in North Am erican history, goods were scarce so buyers w ere w illing to accept any goods that were produced. Essentially, production created its own dem and. Em phasis w as placed on production since the assum ption w as that products would sell them selves. By the 1920s, how ever, m any businesses were producing more goods than buyers could consum e. Com petition increased and consum ers had greater availability and choice o f products. Busi­ ness then entered the sales era. Salespeople were em ployed to find m arkets and consum ers for products. T his period lasted until 1960 for many organizations. M any are still in the sales era; they continue to produce what they produce best and hope to sell it. The m arketing era w as and is characterized by a consum er orientation. O rganizations em bracing the m arketing concept fo­ cused on satisfying the needs o f consum ers w hile sim ultaneously achieving organizational objectives. In the m arketing era, selling is just one elem ent o f m arketing. A lso, instead o f sim ply produc­ ing products and attem pting to sell them , organizations actually consider what the m arket needs before production begins.

F. G. Crane

3

THE SIX KEY STEPS IN THE MARKETING PROCESS In the m arketing era, m arketing is viewed as a process and as a way o f integrating a broad range o f activities. The six key steps in the m arketing process are seen in Figure 1-1.

FIGU RE 1-1. The Six Steps in the M arketing Process 1. 2. 3. 4. 5. 6.

Identifying and com prehending consum er needs. D eveloping products to meet those needs. Pricing products effectively. Inform ing consum ers that the products exist. D elivering the products efficiently. Ensuring satisfaction during and after the exchange process.

The m arketing concept holds that custom er needs are central. Thus, marketing-oriented organizations start at step one of the process seen in Figure 1-1. Others, including professional ser­ vices providers, often start at step two, or from a production orientation. Unfortunately, this is often a fatal m istake. Organi­ zations using a production orientation find them selves falling into a subsequent sales orientation; they have produced a product and now must sell it. Some m arketing theorists suggest that if an organization embraces a true m arketing orientation, selling may be superfluous. The m arketing philosophy holds that the consum er is a seeker o f solutions to his or her needs. The m arketer then takes on the position o f problem solver. Effective marketers offer appropriate solutions to the consum ers’ problem s. Thus, proper identifica­

PROFESSIONAL SERVICES M ARKETING

4

tion and com prehension o f consum ers’ needs is the appropriate starting point for effective m arketing to occur.

THE MARKETING MIX M arketers have a great deal o f control over w hat products to offer the consum er, w hat price to charge, w here to distribute the products, and how to inform the consum er o f the products’ avail­ ability. T his is often referred to as the m anagem ent o f the m ar­ keting m ix. T he controllable m arketing m ix factors have been term ed the Four P ’s by M cC arthy (1964). Figure 1-2 depicts the Four P ’s or m arketing m ix.

FIG U R E 1-2. T he M arketing M ix —Four P ’s Product:

good o r service designed to satisfy a c o n su m e r’s needs

Pricc:

w hat is exchanged for the product

Prom otion

a w ay o f inform ing the buyer about the product

Place:

how to deliver (distribute) the product to the co nsum er

In C hapter T w o we will see how the traditional Four P ’s have been expanded for professional services m arketing to the Seven P ’s.

THE MARKETING ENVIRONMENT M arketers do not operate in a vacuum . W hile m arketers can exert a great deal o f control over the developm ent and execution o f the m arketing m ix, there is an external environm ent that the

F. G. Crane

5

m arketer m ust consider and contend w ith on a continual basis. T he factors that are beyond the control o f the m arketer are co m ­ m only referred to as environm ental or uncontrollable factors. T hese factors can be placed into five broad categories as seen in Figure 1-3.

FIGU RE 1-3. Five Broad Environmental Factors Affecting M arketing 1. 2. 3. 4. 5.

S o cial/D em o g rap h ic E conom ic T ech n o lo g ical C om petitive L egal/R egulatory

T hese environm ental factors affect m arketers and their dccision-m aking processes. T hese factors can serve as opportunities or hurdles to the m arketer, but either w ay they m ust alw ays be considered w hen planning the m arketing m ix and a m arketing p rogram . In C hapter T hree w e w ill see the im portance o f a proper environm ental scan w hen attem pting to develop and e x e ­ cute a professional services m arketing plan.

TARGET MARKETING VS. MASS MARKETING T he m anipulation and synchronization o f the elem ents o f the m arketing m ix (the Four P ’s) is dependent on the m arket to be served. In general, a m arket is m ade up o f people w ith the need and ability to buy a specific product. Since m arketers cannot satisfy all consum ers, they m ust select a specific group o f co n ­ sum ers and direct their m arketing effort tow ard them . W hen an organization selects a segm ent o f the entire m arket to serve, this

6

PROFESSIONAL SERVICES MARKETING

is the organization’s target m arket. All too often organizations attempt to be all things to all people; they attempt a m ass m arket­ ing approach. It is virtually im possible to be successful in busi­ ness today with a m ass m arketing m entality. Target m arketing is a m ust in today’s m arketplace. M arketers must select the target m arket or segm ent o f the market they feel they can best serve. This is w here the m atching process o f m ar­ keting com es into play. M arketers m ust match the needs o f the selected target market with an appropriate m arketing m ix.

MARKET SEGMENTATION Through m arket segm entation a professional services firm can select a target m arket. This process involves dividing the mass m arket into subm arkets or segm ents containing potential cus­ tom ers. The key to successful segm entation is to group together those consum ers w ho have com m on needs and who will respond sim ilarly to the m arketing mix w hich will be executed. This is probably one o f the most difficult tasks facing a m arketer today. M any m arketers do not segm ent the m arket enough and fail to see the differences betw een groups o f potential custom ers. On the other hand, there is also the possibility o f oversegm enting. Taken to its extrem e, segm enting too much can be just as bad as m ass m arketing. For any m arket segm ent to be operationalized it must meet four basic criteria. Figure 1-4 show s the four specific criteria for segm entation.

FIGURE 1-4. Criteria for Market Segmentation 1. 2. 3. 4.

Similarity o f potential buyers’ needs within a segment Differences in needs o f buyers between segments Potential for profitability Ability to reach the segment

F. G. Crane

7

Market segm entation should be seen as only a means to an end. It is carried out to allow a firm to design an appropriate m arketing m ix and m arketing program that will satisfy the target m arket’s needs. There are a number of variables that can be used to segm ent a m arket. Generally, those variables can be grouped into two broad categories: 1. Custom er Characteristics —including geographies (where custom ers live), demographics (age, gender, incom e, fam ­ ily size) and psychographics (personality and lifestyle). 2. Buying Situations —including benefits sought by consum ers and usage rates. Often m arketers focus on demographics as a segmentation variable. W hile demographics is a useful starting point to profile potential segm ents, it usually tells us the least about the con­ sum ers’ buying behavior. Dem ographics will tell us who is buy­ ing and what they buy but certainly will not tell us why. Thus marketers must try to use several segmentation variables to pro­ file a target m arket. Essentially, a combination o f segmentation variables should answer the following questions: 1. 2. 3. 4.

W ho How How W hy

buys and where? do they buy? much do they buy? do they buy?

If market segm entation and target market profiling is done cor­ rectly, answers to the above questions should be provided. Pro­ fessional service firms often fail to recognize that there are dif­ ferences between potential consum ers in the m arket. This creates a problem in adequately designing a m arketing mix and m arket­ ing program to appeal to a target m arket. Figure 1-5 illustrates how a professional services client may be profiled using several segm entation variables.

PROFESSIO NAL SERVICES MARKETING

FIGURE 1-5. Profile o f a Possible Professional Services Client Geographies:

City Center —M etropolitan Boston

Demographics:

Male, 35-44 years o f age, single or married, no children, earning $50,000 or m ore, college graduate

Psychographics

A ggressive, extroverted, values time, heavy magazine and new spaper readership

Benefits Sought:

Seeks high quality, personal service; not price-sensitive

Usage Rate:

Moderate to heavy user

Segm entation is an integral part o f the m arketing process. By segm enting m arkets effectively, m arketers can assess the extent of m arketing opportunities that m ay exist in given m arkets. It also enables the m arketer to tailor the product offering w ith pre­ cision given the nature o f the m arket segm ent. Finally, segm en­ tation also allow s for an effective and efficient m arketing pro­ gram to be developed.

SUMMARY 1. Professional services providers m ust em brace m arketing in order to be successful in to d ay ’s m arketplace. 2. C entral to the m arketing concept are the needs o f the c li­ ent. M arketing is about equitable exchange and client satisfac­ tion. 3. The six steps in the m arketing process are: (1) identifying and com prehending consum ers’ needs; (2) developing products (services) to m eet their needs; (3) pricing products effectively; (4) inform ing consum ers about the products; (5) delivering the

F. G. Crane

9

products efficiently; and (6) ensuring client satisfaction during and after the exchange process. 4. The m arketing m ix (Four P ’s) or factors controlled by the m arketer. T hey include product, price, prom otion, and place (distribution). 5. The uncontrollable or environm ental factors that influ­ ence m arketing activities include: (1) social/dem ographic fac­ tors; (2) econom ic factors; (3) technological factors; (4) com peti­ tive factors; and (5) legal/regulatory factors. 6. Target m arketing is a must for professional services pro­ viders. A target m arket, or segm ent o f the entire m arket, m ust be selected to be served by the professional services m arketer. 7. Any m arket segm ent m ust m eet four criteria: (1) potential buyers w ithin the segm ent need to be sim ilar; (2) potential buyers w ithin the segm ent m ust be different from other segm ents; (3) the segm ent m ust be profitable; and (4) the m arketer must be able to rcach the segm ent. 8. V ariables used to segm ent a m arket include: (1) custo­ mer characteristics (e .g ., geographies, dem ographics, and psy­ chographics) and (2) buying situations (e .g ., benefits sought by the consum er and usage rates). 9. It is critical that segm entation variables answ er the follow ­ ing questions about clients in a segm ent: (1) w ho buys and where? (2) how do they buy? (3) how m uch do they buy? and (4) w hy do they buy? 10. Professional services providers need to design an appropri­ ate m arketing m ix and m arketing program to reach a w ell-defined target m arket or segm ent.

REFEREN CES “ AMA Board Approves New Marketing Definition,” Marketing News, March 1, 1985, p. 1. McCarthy, E. Jerome. Basic Marketing, 2nd Ed., Homewood: Irwin, 1964.

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Chapter T w o

Professional Services Marketing

DEFINING PROFESSIONAL SERVICES T here is no generally accepted definition o f w hat constitutes a professional or a professional service. In fact, the w ord profes­ sional is often so bastardized in the m arketplace it is difficult to find any occupation that has not added the term professional to their title. H ow ever, there is one excellent definition proposed by G um m esson. The definition states: A professional service is qualified, it is advisory and prob­ lem -solving, even though it m ay encom pass som e routine w ork for clients. The professionals involved have a com ­ mon identity, like physicians, law yers, accountants or engi­ neers, and are regulated by traditions and codes o f ethics. The service offered, if accepted, involves the professional in taking on assignm ents for the client and those assign­ m ents are them selves the lim it o f the professional’s involve­ m ent. Such assignm ents are not undertaken to m erely sell hardw are or other services. (1981, p. 108) The key operational concepts o f this definition are the problem ­ solving and advisory roles that must be played by professional services m arketers. M any m arketers believe that the m arketing o f services m ay be com pletely different from the m arketing o f 11

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goods. H ow ever, m arketing as a process and as a functional area of business can be applied to both. The sam e six-step process discussed in C hapter O ne can be applied to m arketing professional services. But a different ap­ proach or shift in em phasis in m arketing m anagem ent and strat­ egy is required for professional services. Professional services m arketing is different than goods m arketing for tw o reasons. First, there are generic differences betw een goods and profes­ sional services. Second, there is a difference in the m anagem ent environm ent or context w ithin w hich m arketing tasks m ust be planned and executed in the professional services arena. P rofes­ sional services, then, is a unique product that has to be under­ stood, m anaged, and m arketed differently from a packaged good.

CHARACTERISTICS OF PROFESSIONAL SERVICES The key characteristics o f professional services w hich are the m ain source o f difficulty in m anaging and m arketing profes­ sional services are seen in Figure 2-1. T hese characteristics have been referred to as the Four P s (B erkow itz et a l., 1991). W e will discuss each o f these elem ents o f professional services in som e detail.

FIGURE 2-1. The Four I’s o f Professional Services 1. 2. 3. 4.

Intangibility Inventory Inconsistency Inseparability

F. G. Crane

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Intangibility O ne o f the basic and m ost cited characteristics o f professional services is intangibility. Intangibility pertains to the inability o f professional services to be seen, felt, tasted, or touched in the sam e m anner in w hich goods can be sensed. For the m ost part, professional services cannot be displayed, physically dem on­ strated or illustrated. The concept o f intangibility presents a chal­ lenge to professional services m arketers. The professional ser­ vices m arketer m ust tell a consum er what the service will do and this m ay have to be accom plished w ithout the benefit o f illustra­ tion, dem onstration, or display. T his creates difficulty in pro­ m oting a professional service. Often professional services m ar­ keters are forced to use tangible surrogates as a m eans to prom ote an intangible product. In other w ords, because o f intangibility, professional services m arketers need to m ake their services more tangible and to show benefits o f using their service. In Chapter Four we will discuss how this can be accom plished through the use o f im pression m anagem ent.

Inventory The ability to inventory professional services capacity is v irtu­ ally im possible. Professional services are perishable and dem and for professional services tends to fluctuate by season, by week or even by day, or tim e o f day. Unused capacity to serve cannot be stored and saved. Service storage inability and dem and fluctua­ tions create m any problem s for professional services m arketers. Often professional services m arketers find it difficult to handle peak load dem ands (too m uch dem and and too little capacity to serve), w hile at other tim es service facilities remain idle. Often consum er satisfaction with professional services m arketers is in­ fluenced by w hether or not the service firm can cope w ith de­

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m and. On the other hand, idle capacity is a problem for profes­ sional services m arketers. If a physician is paid to see patients but no one schedules an appointm ent, the fixed cost o f the idle physician’s salary is a high inventory carrying cost. The concept o f synchronizing supply and demand is important for profes­ sional services m arketers. W e will see in Chapter Four how synchrom arketing can be used in professional services m arketing.

Inconsistency Professional services m arketing is also challenging because the quality o f service is often inconsistent. Because professional services depend on the people who provide them , the quality of service m ay vary because people have different capabilities. Additionally, while inconsistency can occur across individ­ uals, variance in service quality can also occur in the day-to-day job perform ances o f the sam e individual. Perform ance can also depend on level o f demand; in periods o f high dem and, a profes­ sional service provider m ay not spend as much time or exert as much effort as in periods o f low dem and. This variability is often problem atic for professional services m arketers. Consum ers cannot be certain about the perform ance o f the professional services provider on a given day, even if they use the sam e service provider on a regular basis. The reduction o f inconsistency can be tied to a com prehensive client m anage­ ment program (see Chapter Four).

Inseparability W hile tangible goods arc produced, sold, and then consum ed, professional services are sold, then produced and consum ed si­ m ultaneously. Because o f inseparability, the consum er m ust be present in the service system to receive the service. The con­ sum er is also an active participant in producing the professional

F. G. Crane

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service and thereby can affect the perform ance and quality o f the professional service delivered. For exam ple, a physician’s diag­ nosis or an accountant’s tax advice requires both the presence and the active participation o f the consum er. The accuracy and effectiveness o f the professional will often depend on the con­ sum er’s specifications, com m unications, and degree o f partici­ pation in the production o f the professional service. In other w ords, how well the professional services provider perform s depends on how well the consum er perform s. Because o f inseparability the professional services m arketer needs to offer the service at the right place and at the right tim e for the con­ sum er. How effectively the professional and consum er interact and participate together in creating and delivering the service, how ever, will be the key to determ ining w hether or not future exchanges will occur. This will be discussed further in Chapter Four.

THE MARKETING MIX FOR PROFESSIONAL SERVICESTHE SEVEN P’s Chapter One introduced you to the Four P ’s or the m arketing m ix. T his original list o f the m arketing m ix elem ents needs to be adapted and expanded in order to take into consideration the uniqueness o f professional services. Boom s and Bitner (1981) offer a m odification and expansion to the existing m arketing mix fram ew ork that is m ore appropriate for professional services m arketers. Figure 2-2 depicts the Seven P ’s (M arketing M ix) for professional services m arketing. W e will discuss the three addi­ tional P ’s added to the original m arketing m ix, nam ely people, physical evidence, and process.

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P R O F E S S IO N A L S E R V I C E S M A R K E T IN G

FIGURE 2-2. The Seven P ’s (M arketing Mix) for Professional Services 1. 2. 3. 4. 5. 6. 7.

Product Price Promotion Place People Physical Evidence Proccss

People T h is includes all p eop le w h o play a part in the professional scrvice d elivery p rocess and w h o can in flu en ce the co n su m er’s perception o f the scrv ice. It c o n sists o f the personnel in the pro­ fession al serv ices firm as w e ll as other con su m ers in the serv ices environ m ent. T he personnel w h o perform a role in the service production or d eliv ery p rocess m ay be p erceived by the c o n ­ sum er as part o f the serv ice. T h ese personnel m ay play a dual role o f perform ing the serv ice and m arketing the se r v ic e . The critical role o f personnel in serv ice production and d elivery m eans that em p lo y ee recruitm ent, se le ctio n , training, and m o ti­ vation b ecom e part o f the m arketing activity o f the p rofession al serv ices firm . S u c c e ss in p rofession al serv ices m arketing is partly con tin gent on reco g n izin g the im portance o f consum er contact personnel (see Chapter Four). In addition to contact p erson n el, con su m ers can be in flu en ced by noncontact personnel and other co n su m ers w h o are present in the service sy stem . T he problem for p rofession al serv ic es mar­ keters is con trollin g h o w noncontact personnel can support c o n ­ tact personnel as w ell as regulating the com p o sitio n o f co n -

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sum ers and the nature o f the interactions betw een consum ers in the services environm ent.

Physical Evidence Physical evidence includes the physical environm ent where the service is provided and all tangible clues that a consum er can exam ine in order to derive an im pression o f the professional ser­ vice. T his is discussed in detail in Chapter Four (Im pression M anagem ent).

Process T his involves the actual procedures, m echanism s, and flow of activities by w hich the professional service is delivered. C on­ sum ers o f professional services are not only interested in what they receive in the end from the professional services provider, they are also interested in how they receive the professional ser­ vice. The concepts o f technical and functional quality o f the ser­ vice process are discussed in Chapter Four.

PREFACE FOR PROFESSIONAL SERVICES MARKETING Before the anatom y o f a professional services m arketing plan can be discussed (Chapter T hree), the professional m ust be pre­ pared to em brace m arketing as a philosophy and as a w ay o f doing business. W hat follow s is a series o f propositions designed to enhance critical thinking about the scope and nature o f profes­ sional services m arketing. T hey provide a foundation and under­ standing o f w hy the professional should be m arketing oriented as w ell as construct a professional services m arketing plan.

PROFESSIO NAL SERVICES M ARKETING

Proposition /- P r o f e s s io n a l services m arketers need to m arket their services. Professional services m arketers cannot continue to believe that their services will m arket them selves. P rofessionals can no longer expect to hang a shingle and find consum ers beating a path to their door. C om petition has increased and consum ers have becom e m ore sophisticated. O btaining clients by chance can no longer w ork. Profitability is not a dirty w ord and in order to survive and to prosper, the professional services provider needs to accept m arketing as part o f his or her practice philoso­ phy.

Proposition 2 -P ro fe s s io n a ls need to be m arketers. In addition to the need to m arket professional services, the professional services provider needs to be a m arketer. It is not incongruent to be a professional and at the sam e tim e to build and expand a professional services business. Since m arketing is about satisfying needs o f clients, professionals m ust by defini­ tion be m arketers. Professionals m ust satisfy the needs o f exist­ ing clients but m ust also actively m arket their services to new and prospective clients. Even professional services firm s that are large enough to hire m arketing expertise should not delegate the m arketing process or reject responsibility for practice develop­ m ent. Everyone in a professional scrvice firm is a m arketer. All m ust w ork together to provide a service that satisfies the client.

Proposition 3 - T h e client’s needs should alw ays take prece­ dence over the professional’s needs. T his is probably one o f the m ost difficult propositions for pro ­ fessionals to accept. But rem em ber that m arketing is the science o f exchange; both parties m ust receive equity in the exchange process. The professional only obtains profitability as a result o f offering a satisfactory service to the client. In other w ords, the client needs to receive w hat he or she desires before the service

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provider receives what he or she desires. W hile a professional m ay have the technical ability to supply a service, it m ust be the right one for the client. D eveloping and m arketing the proper service com e as a result o f a client needs assessm ent.

Proposition 4 - Professional services m arketing requires time and m oney. M arketing m ust be seen as a system atic, com prehensive, and ongoing process. A s such, m arketing requires an investm ent. Professional services m arketers m ust set aside both tim e and m oney for m arketing activities. T his m eans both a short-term and a long-term com m itm ent.

Proposition 5 - Professional services m arketing m eans being o p ­ portunistic. Professional services m arketers need to be open and receptive to new opportunities. Every day, the professional must discover and seize opportunities to m arket existing services better, to de­ velop new services, and to m aintain a com petitive edge. Professionals have alw ays done som e m arketing yet its appli­ cation has usually been fragm ented. Often m arketing has been conducted under the guise o f public relations. T oday’s m arket­ place requires that professionals apply m arketing in the sam e professional m anner as they carry out their professional duties.

SUMMARY 1. A professional service involves offering qualified, advi­ sory, and problem -solving skills to clients. 2. T he characteristics that m ake professional services m ar­ keting and m anagem ent difficult are the Four P s: (1) intangibil­ ity; (2) inventory; (3) inconsistency; and (4) inseparability. 3. Intangibility m akes it difficult for the professional services

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PROFESSIONAL SERVICES MARKETING

provider to dem onstrate the service. O ften tangible surrogates are needed to prom ote the intangible service. 4. Professionals cannot store their capacity (inventory) to serve. M any tim es a professional has idle capacity w hile at other tim es has too little capacity to serve. 5. B ecause professional services depend on people to deliver them , the quality o f scrvice often varies across service providers or even the day-to-day perform ance o f the sam e service provider (inconsistency). 6. The client m ust be present in the service system to receive the service (inseparability). T his required active participation by the client can influence the quality o f the professional service. 7. The Seven P ’s o f the professional services m arketing m ix include: (1) product; (2) price; (3) prom otion; (4) place; (5) p eo ­ ple; (6) physical evidence; and (7) process. 8. The people involved, the physical evidence surrounding the service, and the process o f producing and delivering profes­ sional services are critically im portant for the professional ser­ vices provider to m anage. 9. Professional services providers need to m arket their ser­ vices and be active m arketers them selves. Professionals m ust be prepared to devote tim e and m oney to the m arketing function and to be opportunistic at all tim es. 10. Professionals need to be as com m itted to m arketing as they are to their professional duties.

R E FE R EN C ES Berkowiiz, Eric N., Roger A. Kerin, William Rudelius and Frederick G. Crane. Marketing, 1st Canadian Ed., Homewood: Irwin, 1991. Booms, Bernard H. and Mary J. Bitncr. “ Marketing Strategies and Organization Structures for Service Firms,” in Marketing Services, James H. Donnelly and William R. George (eds.), Chicago: American Marketing Association, 1981, pp. 47-51. Gummesson, Evert. “ The Marketing of Professional Services,” in Marketing Services, James H. Donnelly and William R. George (eds.), Chicago: Ameri­ can Marketing Association, 1981, pp. 108-112.

Chapter Three

The Anatomy of a Professional Services Marketing Plan WHY A MARKETING PLAN? To be successful in the professional services market, a firm must have three basic ingredients: 1. A service that is oriented to client needs. 2. An organizational structure and culture that is effective in delivering the service. 3. A marketing plan that identifies strategies and responsibili­ ties for implementing a marketing program designed to achieve realistic objectives. All three ingredients are equally important. To be weak in any often spells failure. A weak organizational structure and culture or inadequate planning can ruin the best professional service and cre­ ative planning cannot compensate for a poor professional service. However, a skillfully devised marketing plan can strengthen both the service and the organization. The marketing plan should be thought of as a road map or a guide to growth and success. But a plan must not only be created, it should also be put to work. Planning and execution must come together in a mutually rein­ forcing way. This chapter offers a suggested approach for developing a marketing plan. When developing a marketing plan, a profes­ sional services firm should ask three basic questions: 21

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PROFESSIONAL SERVICES M ARKETING

1. W here are w e now? 2. W here are w e going? 3. How w e are going to get there? T o answ er the first tw o questions, the professional services firm needs to conduct an internal m arketing audit as w ell as an environm ental scan. O nce they are com plete, a S W O T analysis (internal S trengths, W eaknesses, and external O pportunities and T hreats) can be com pleted. N ext, a firm can set its objectives (w here it can and w ants to go). The m arketing plan can then be com pleted w hich addresses the third question, how w e are going to get there? The m arketing plan logically flow s from the audit, scan, and SW O T analysis. T he m arketing plan itself should be the road m ap or the blueprint for practice developm ent. Figure 3-1 show s the basic anatom y o f a professional services m arketing plan. In this chapter w e shall cover in som e detail all those basic elem ents that are an integral part o f the plan.

FIGURE 3-1. Anatomy o f a Professional Services M arketing Plan 1. 2. 3. 4. 5. 6. 7. 8.

Internal M arketing A udit E nvironm ental Scan S W O T A nalysis M arketing O bjectives M arketing Strategy and C om petitive A dvantage M arketing Program Sales/Profit Forecasts and M arketing B udget C ontrol and E valuation M easures

THE INTERNAL MARKETING AUDIT W hen one hears the w ord audit, financial auditing usually com es to m ind. H ow ever, there is such a thing as a m arketing audit. W hereas the financial audit exam ines the health o f a firm

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from a financial perspective, a m arketing audit exam ines it from a m arketing perspective. A m arketing audit can be defined as: A com prehensive, system atic exam ination o f a firm ’s total m arketing activities. It exam ines all the m arketing control­ lable factors (or the m arketing m ix) on a diagnosis and prognosis basis. The m arketing audit should alw ays be con­ ducted in conjunction with the environm ental scan and be­ fore the m arketing plan is constructed. T he audit should be as objective as possible and often profes­ sional services firms find it necessary to seek the outside o bjec­ tive advice o f a m arketing firm . The audit should determ ine in­ ternal strengths and w eaknesses and provide the firm with an indication o f w here it is as well as w here it is going. Figure 3-2 show s the principal com ponents o f a professional services audit.

FIG U R E 3-2. C om ponents o f a Professional Services Audit 1. 2. 3. 4. 5.

Practice philosophy Physical operating environm ent C lient base Service process and delivery Professional fees

6 . C om m unications

Hard questions are necessary, as is hard evidence to support the answ ers. Figure 3-3 show s the type o f questions that should be part o f the internal m arketing audit.

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FIGURE 3-3. Marketing Audit Questions Practice Philosophy 1. What is the currcnt practice philosophy? 2. What is the mission of the firm? 3. W ho is responsible for the developm ent of philosophy and mission? 4 . What is the basic servicc concept being offered to our clients? Physical O perating Environment 1. What is the current level of m arketing practice and activities? 2. What factors inhibit or assist the adoption of a marketing orientation? 3. Docs a written m arketing plan exist? 4 . Are there any changes in the operating levels of the firm? Client Base 1. W ho are the main users of the firm ’s services? 2. How can the clients be classified or segmented? 3. W hich clients arc profitable? 4 . What is the client’s frequency and quantity of use? 5. What is the attrition rate? W hy is it occurring? Service Process and Delivery 1. Is the firm successful in completing work on time? 2. Is there a quality control process? 3. What procedures are in place to ensure effective delivery of service? 4 . Is the level of client service adequate? 5. How are service quality and reliability viewed by clients? Professional Fees 1. Arc the fees charges consistent with image and reputation? 2. How do fees compare to com petitors’ fees? 3. Arc clients satisfied or dissatisfied with fees charged? 4 . Arc fees set to produce volume or profit? 5 . Is there costing information for each type of service offered? Com m unications 1. What is the nature and quality of inhouse communications? 2. What is the nature and quality of external communications? 3. Docs the firm have a standardized client consultation procedure? 4 . How are the interpersonal skills of the staff? 5. W hat is the state o f the visual identity of the firm? 6. Is the correct message and medium being used for external com m unications?

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THE ENVIRONMENTAL SCAN In addition to conducting an internal m arketing audit, a profes­ sional services firm should carry out an external environm ental scan. Professional services m arketers should continually acquire and assess inform ation on events that occur outside the firm . The purpose o f the scan is to identify and interpret potential trends and their im pact on the professional services firm. T hrough envi­ ronm ental scanning the professional services m arketer can deter­ m ine w hether or not trends in the m arket environm ent pose sp e­ c ific o p p o rtu n itie s o r th re a ts . It sh o u ld be noted that an environm ental trend that represents an im portant opportunity for one professional service firm m ay be a m ajor threat to another and vice versa. The broad environm ental and uncontrollable factors described in Figure 1-3 in Chapter One should form the basis o f an environ­ m ental scan. Figure 3-4 show s key trends that m ay be important for professional services m arketers in the 1990s. Each profes­ sional services firm should evaluate both national and regional trends and determ ine w hich trends are m ost im portant when de­ veloping a m arketing plan. The results from an environm ental scan m ust be m easured and w eighed against the results o f the internal m arketing audit.

SWOT ANALYSIS T aken together the audit and the scan can form a SW O T analy­ sis (internal strengths and w eaknesses and external opportunities and threats). The objective o f a SW O T analysis is to help a firm com prehensively view the factors that must be considered when selecting the proper m arketing strategy and developing a m arket­ ing program . Figure 3-5 show s an exam ple o f how a SW O T analysis can be constructed.

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FIG U R E 3-4. An E xam ple o f an E nvironm ental Scan Environmental Factor Social/D em ographic

Trend Identified Increased aging; the rise o f the grey m arket Population shifting to urban areas Increase dem and for quality and scrvicc G reater role o f w om en in econom y

Econom ic

Dccline in real incom e for m any consum ers G reater consum er acceptance o f debt Rising concern over inflation/recession

T echnological

Increased use o f com puterization A dvances in com m unications G reater use o f robotics G row th in biotechnology

C om petitive

Low er entry barriers to professions Increase in sm all, innovative firms D ow nsizing, restructuring o f large firm s Increased international com petition A ggressive prom otional activities

Legal/R cgulatory

G reater concern over ethics in business Decreased regulation over prom otion G reater concern over practice liability G row th in self-regulation Increased consum erism

Every p rofession al serv ices m arketer w ish in g to d e v elo p a m arketing plan w o u ld be w ell advised to conduct a m arketing audit and an environm ental scan and to construct a S W O T a n aly­ sis. T h is type o f a n alysis w ill provide v alu ab le input into the strategy selectio n and m arketing plan d evelop m en t p hase.

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FIGURE 3-5. An Example of a SW OT Analysis Able Accountants

Internal

External

Strengths

W eaknesses

Quality service Rcspected image Financial stability Locational convenience

No clear strategic direction High overhead High staff turnover High level o f receivables

O pportunities

Threats

High-tech innovations Less regulation Joint venturing

Saturation of markets Strong price competition Recessionary economy

MARKETING OBJECTIVES Once the audit and environmental scan (plus SW O T analysis) is com plete, a firm can set its objectives (where it can and wants to g o ). A professional services firm must develop the specific objectives it seeks to achieve and by w hich it can measure its performance. A professional services firm must earn a profit to survive. Profit is considered a dirty word by many. H ow ever, profit is the reward the professional services marketer receives for the risk taken when offering the service to a client. Many professional services marketers believe one o f their pri­ mary objectives is to serve the public good w hile maintaining a reasonable level o f profit. Social responsibility can and should be an integral part o f a professional services marketer’s objectives. This may even be accom plished at the expense o f som e profit­ ability. But a professional services firm needs to maintain som e level o f profit in order to survive. Marketing objectives must meet five specifications in order to be considered good objec-

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tivcs. Figure 3-6 show s the five specifications m arketing objec­ tives must m eet.

FIG U R E 3-6. Five Specifications for M arketing O bjectives 1. An objective should relate to a single, specific topic (e .g ., one for profit level, one for m arket share, etc.). 2. An objective should relate to a result not to an activity to be perform ed. 3. An objective should be m easurable (quantitative if possible). 4. An objective should contain a tim e deadline for its achievem ent. 5. A n objective should be challenging but achievable.

In essence, good m arketing objectives should involve precise statem ents o f results sought, quantified in time and m agnitude if possible, and they should be realistic. A rriving at reasonable o b ­ jectives requires involvem ent from all m em bers o f the profes­ sional services organization. T here should be a sense of ow ner­ ship in the objectives. Tying personal objectives and the firm ’s objectives together will create greater synergy o f effort and will benefit both the em ployees and the firm.

UNDERSTANDING MARKETING STRATEGY The strategic m arketing process involves efforts by an organi­ zation to identify and select m arket opportunities, to allocate re­ sources, and to develop m arketing plans to capitalize on selected opportunities. T w o key factors characterize a m arketing strategy: (1) a specified target m arket and (2) a m arketing program to reach it. A lthough the term m arketing strategy is often used loosely, it im plies both the end sought (target m arket) and the

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m eans to achieve it (m arketing program ). The m arketing strategy is the m eans by which objectives are to be achieved. Two im por­ tant concepts in m arketing strategy are competitive advantage and growth options.

The Concept of Competitive Advantage M arketers search continuously to find a sustainable com peti­ tive advantage, a strength relative to their competitors likely to be m aintained in the market they serve or the product they offer. G enerally, m arketing research suggests that two broad general strategies are available in order to be successful in today’s m ar­ ketplace: (1) superiority based on perform ance (e .g ., better prod­ uct [service], better distribution, or better prom otion) or (2) su­ periority in terms of price (low cost). A professional service firm can attempt to offer a better ser­ vice or a better price, but generally not both. Many professional services firms shy away from com peting on a price dimension. This is because consum ers often use price as a surrogate indica­ tor o f quality. A very low price in professional services m arket­ ing may be viewed negatively by the consum er as opposed to a positive way to differentiate a service. So, superiority in terms o f product (service) offered often be­ comes the focus for the professional services organization. How ­ ever, an organization can also consider differentiation or super­ iority in terms of place (distribution) or prom otion. In fact, many experts believe that many professional services firms have the ability to offer comparable services. As such, differentiation may only occur through better distribution (e .g ., locational conven­ ience) or by creating a perception of differentiation through pro­ m otion. Differences in professional services today may more likely be achieved through image or psychological differentia­ tion. This concept o f achieving differentiation through prom o­ tion is discussed in Chapter Five.

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Strategic Options for Growth M any m arketers discuss strategic growth options and the con­ cept of com petitive advantage separately thus creating the illu­ sion that decisions regarding grow th options and com petitive ad­ vantage are linear or sequential. In fact, growth option selection and com petitive advantage are integrally linked. The profes­ sional services m arketer looking to obtain revenue or expand rev­ enue must consider how this can be achieved. Som etim es a pro­ fessional services m arketer considers w hat the com petitive advantage is and, at the sam e tim e, determ ines the best m arket in w hich to apply that com petitive advantage. Others determ ine the growth option and then consider w hat com petitive advantage will be needed to accom plish it. In general, a firm that w ants to achieve growth and profitabil­ ity can attem pt to (1) increase revenues, (2) decrease expenses, or (3) do both. W e will focus on options designed to generate or increase revenue. There arc a num ber o f strategic options avail­ able to the professional services m arketer in order to do so. W e will discuss the interrelationship betw een com petitive advantage and strategic growth options in som e detail. Figure 3-7 show s the grow th options available to the professional services organiza­ tion.

FIG U R E 3-7. Slralcgic G row th O ptions 1. M arket penetration 2. M arket developm ent 3. Product developm ent 4. D iversification

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Market Penetration Market penetration involves attem pting to expand market share and sales o f existing products in an existing m arket. This can be accomplished through superior product (service), com pet­ itive pricing (superior price), or through better distribution or aggressive prom otion. The increase in market share can occur through increasing the usage rates o f existing clients, or by at­ tracting nonusers or com petitors’ clients. Market penetration is generally the easiest and least risky option for professionals to pursue, at least initially. However, once a market becom es m a­ ture and saturated, other strategic growth options may have to be selected to maintain growth.

Market Development This involves taking an existing product into a new market. For professional services this norm ally involves geographic ex­ pansion or multisite developm ent. Generally, the professional services firm would seek out a sim ilar target segment in the new geographic m arket. How ever, it could involve appealing to new market segm ents (develop a new target segm ent, or m ultiscgmcnt developm ent). In most service businesses it is easier to achieve geographic ex­ pansion by sim ply taking the existing service to a new region and focusing on a sim ilar target. Attem pting to serve a different tar­ get segm ent in the existing market rather than a new geographic market may cause some difficulties. In trying to expand this way the professional services firm may alienate the existing target segm ent. The existing target may wonder why you are catering to a new segm ent and if your service is changing. On the other hand, the newly targeted segm ent may not respond to your m ar­ keting effort since their image o f you is derived from the target you currently serve. Often different versions o f the same service

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are used to appeal to the new segm ent. For exam ple, say a new lower-priced version o f your service is introduced to attract a new price-sensitive segm ent. This sends a new message and pos­ sibly a new image to existing clients w hich can cause conflict. Changing the existing scrvice or using a new image to attract a new segm ent may be m ore risky than sim ply m oving geographi­ cally via m ultisite developm ent to service m ore clients sim ilar to the existing segm ent. T his option, in my opinion, is the one that should be considered after the m arket penetration option has been exhausted.

Product Development T his involves the developm ent o f a new or modified product to appeal to present m arkets. It em phasizes new service versions, quality im provem ents, line extensions, or other m inor innova­ tions closely related to established services and the m arketing of such to existing clients. Often service im provem ents are required to maintain a com ­ petitive advantage in an existing m arket. Such innovation can be designed to preem pt com petitive entry. D eveloping new prod­ ucts (services) is risky and should probably be considered after market penetration and market developm ent options have been exhausted.

Diversification T his involves the professional services firm offering new products aimed at new m arkets. Generally this option involves expansion into unrelated lines o f business. It is often utilized to avoid over-dependency on the existing business. T his is the o p ­ tion with the most risk and should be considered with caution. In order to understand how growth options can be selected and how com petitive advantage fits into the process, consider that a m edical practice specializing in w om en’s w ellness clinics in B os­

F. G. Crane

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ton w as begun ten years ago. The product offered w as superior (com petitive advantage) and it w as offered to a unique m arket segm ent. The product had been developed (product developm ent) and had penetrated the Boston m arket (m arket penetration). B e­ cause of its success the service attracted com petitors to its m arket. M uch o f the com petition had been defended against or warded off (defending m arket share) by providing excellent service and by aggressive prom otion. Even so, the practice found it difficult to achieve further grow th through greater penetration. In an effort to im prove the situation the concept w as taken to a new m arket (m arket developm ent) by physically expanding about five years ago into M aine, w here there w as little com peti­ tion. T his expansion w as also driven by nonm arketing factors (e .g ., the service provider’s fam ily w anted to live there). C om ­ petitive advantage allowed this m arket to be penetrated. Tw o years ago, it w as determ ined that further m arket penetration in either the Boston or M aine m arkets w as not possible w ith the existing service. It w as therefore decided to expand the service offering to the present m arket. It w as discovered that a large num ber o f existing clients, especially seniors, had difficulty get­ ting to the clinics. An old-fashioned house-call service w as de­ veloped (product developm ent). T he house-call service w as available tw enty-four hours a day, seven days a w eek. The youn­ ger associates currently w orking in the clinics could handle the bulk o f the dem and and a few new associates w ere hired on a part-tim e basis to handle excess dem and. T he Boston and M aine m arkets have been successfully pene­ trated w ith the w ellness clinics and the newly developed product, the house-call service, also has penetrated the m arket. C urrently, new options are being considered. It is believed that all opportu­ nities in m edicine that are available or o f interest have been ex­ hausted. The practice is now considering diversification, a new line o f business unrelated to m edicine. A friend convinces the profcs-

34

PROFESSIONAL SERVICES MARKETING

sional to invest in a land developm ent project in M aine. The objective is to develop an upscale resort near the ocean in M aine. It will cater to the upscale business convention m arket and the luxury-seeking individual traveller. The com petitive advantage will be a prem ium product bundled with outstanding service. T his exam ple illustrates the usual and often the most logical path to selecting growth options. W e moved from m arket pene­ tration to m arket developm ent, to product developm ent and then to diversification. Grow th options m ay not be selected in the m anner show n, but the progression illustrated usually involves the least risk. It is also possible to use and com bine two or more growth options at the same tim e. A lso, it should be noted that there is spillover across the alternatives. For exam ple, in order to use m arket penetration the service must first be developed (prod­ uct developm ent), or the service firm can be penetrating an exist­ ing m arket w hile at the sam e time developing a new m arket geo­ graphically.

THE MARKETING PROGRAM W e saw earlier that a m arketing strategy involves a specified target m arket and a m arketing program to reach that target m ar­ ket. W hile strategy provides the basic road m ap, a m arketing program involves the detailed day-to-day operational decisions essential to the overall success o f the m arketing strategy. To im ­ plem ent strategy many decisions are often required, such as de­ term ining prom otional budgets or m aking pricing decisions. These decisions are tactical and involve actions that must be taken im m ediately or in the short term in order to effectively execute strategy. The m arketing program lays out how the m arket­ ing m ix variables (Seven P ’s) will be m anipulated and leveraged. The m arketing program spells out how each o f the m arketing mix elem ents will be operationalized. The m ajor com ponent o f

F. G. Crane

35

the professional services m arketing plan will involve details on the m arketing program . U nder the m arketing program section o f the m arketing plan, specific statem ents about product (service) price, place prom otion, people, physical evidence, and process m ust be m ade. Precision and detail are required here. Each o f the m arketing m ix elem ents m ust be synchronized. D ecisions about one aspect o f the m arketing m ix m ust be considered in light o f the other elem ents. The m arketing program should cover the Seven P ’s in som e detail. The follow ing list illustrates som e o f the decision areas that m ust be considered under the m arketing program com ponent o f the m arketing plan. 1. Product (service). W hat will be the range o f services o f­ fered? W hat will be the level o f quality? W ill product (ser­ vice) be used as a com petitive advantage or differentiator? W ill there be guarantees? W hat will be the after-the-salc service level? 2. Price. W hat will be the pricing or fee levels? W ill there be discounts for som e clients? W hat will be the paym ent term s? W ill credit be offered? W ill price be used to differ­ entiate service? 3. Place. W hat will be the location for the service? How ac­ cessible will the location be? W ill others be used to distrib­ ute the service? W ill place be used to differentiate the ser­ vice? 4. Promotion. W hat will be the prom otional m ix? How much m oney will be spent on prom otion? How will prom otional efforts be evaluated? W ill prom otion be used to differentiate the service? 5. People. W hat types o f people will be hired? W hat kind of training will they receive? W hat role will they play in ser­ vice provision? How will they be com pensated? W ill our people be used to differentiate the service?

36

PROFESSIONAL SERVICES MARKETING

6. Physical Evidence. W hat will the service environm ent look like? W hat cues should be managed and controlled? W ill physical evidence be used to differentiate the service? 7. Process. W hat will be the practice policies? W hat will be the basic procedures for developing and delivering the ser­ vice? W hat role will com puters and autom ation play in the process? W hat role will the client play in the process? W hat will be the quality control m easures? W ill the delivery pro­ cess be used to differentiate the service?

EFFECTIVELY IMPLEMENTING MARKETING PROGRAMS There is no form ula for effective im plem entation o f the m ar­ keting program . H ow ever, there are som e basic guidelines that can assist you in effectively im plem enting a m arketing program . 1. Com m unicate the content o f the m arketing program to the organization. Be certain that everyone understands what the objectives are and how they will be achieved. 2. Have som eone responsible for the im plem entation. W hile everyone is ultim ately part o f the process and responsible for execution, one key person should be responsible for en­ suring successful execution o f the program . 3. Foster open com m unication. To ensure successful im ple­ m entation o f the program , foster a w ork environm ent that is open and honest so that any problem s that arise can be dis­ cussed and solved. 4. Have precise tasks, responsibilities, and deadlines as part of the program . Successful im plem entation requires that peo­ ple know the tasks for which they are responsible and are given deadlines for com pleting them . (The use o f action item lists is a good idea. Action lists describe the task, the name o f the people responsible for com pleting the task, and the date by w hich it is to be finished.)

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5. Have a bias for action. Som etim es fine-tuning o f the m ar­ keting program will be required but do not delay the pro­ gram by overanalyzing it. Strive for about 90 percent per­ fection and let the m arketplace help to fine-tune any elem ents that m ay require it.

MARKETING PLANNING VS. EXECUTION Som etim es we hear the statem ent, “ W e had a good plan, but w e didn’t execute it.” W hen a m arketing program fails it is often difficult to determ ine w hether it w as a result o f poor strategy or poor im plem entation. Som etim es a professional services firm will have the right strategy and effectively execute (good strat­ egy, good execution). T his will lead to success. Som e will have a bad strategy but execute well (bad strategy, good execution). This case spells trouble unless the strategy can be corrected. Som etim es the strategy is correct but im plem entation has been ineffective (good strategy, bad execution). A gain, this spells trouble and the im plem entation problem m ust be rectified. Fi­ nally and unfortunately, som e professional services firms will have both the w rong strategy and also fail to execute well (bad strategy, bad execution). For m any years, m arketers overem phasized execution rather than strategic planning. N ow , m any m arketers are planning m ore, but unfortunately are executing less. A balance is required to be successful today. If anything, em phasis m ay often have to be placed on im plem entation since strategy w ithout execution is useless.

SALES/PROFIT FORECASTS AND MARKETING BUDGET The m arketing plan will be designed to achieve certain objec­ tives. Often sales and profit are part o f the stated objectives.

PROFESSIONAL SERVICES M ARKETING

T hus, part o f the m arketing plan should spell out sales and profit levels that will be expected as a result o f the m arketing program . A dditionally, the m arketing program is going to cost m oney to develop and execute. Estim ates for how m uch the m arketing ef­ fort will cost m ust be part o f the w ritten m arketing plan. Decide on the specific m arketing tasks to be undertaken and allocate the m onies to carry them out.

CONTROL ANI) EVALUATION MEASURES The m arketing program m ust be closely m onitored and evalu­ ated. T he essence o f control, the final com ponent o f the m arket­ ing plan, is designed to com pare results w ith planned objectives and to take any necessary actions required because o f deviations from planned objectives. G enerally, m anagem ent by exception is recom m ended here. T hat is, identify results that deviate from plans, diagnose their causes, and take new actions. If objectives w ere established corrcctly (quantitative and m easurable), a benchm ark exists to com ­ pare actual results. Part o f the evaluation process will involve sales analysis, profitability analysis, and cost analysis.

AN EFFECTIVE MARKETING PLAN E ffective m arketing plans should answ er the follow ing ques­ tions: 1. 2. 3. 4. 5.

W here are w e now and how did w e get there? W here are we going? W hat is the best w ay to get there? W hat actions are required to get there, by w hom , and w hen? W hat is it going to cost and w hat w ill be the return on in­ vestm ent?

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6. W hat will be m easured in order to control and evaluate the plan? E ffective m arketing plans are often a result o f managerial judgm ent and plenty o f com m on sense. In addition to the plan addressing the six questions posed above, an effective m arketing plan for professional services should: 1. 2. 3. 4. 5. 6.

Be based on sound facts and valid assum ptions Have specific m arketing objectives Have a sound strategy Contain a sim ple, clear, and specific m arketing program Be self-contained and com plete Possess control and evaluation m easures

SUMMARY 1. The m arketing plan for a professional services provider should be view ed as a road m ap or guide to growth and succcss. 2. A m arketing audit should be part o f the plan. It exam ines the health o f the firm from a m arketing perspective. 3. An environm ental scan is also a part o f the m arketing plan. The scan identifies trends in the environm ent that m ay impact on the firm. 4. T aken together, the audit and scan form a SW O T analysis, or the internal strengths and w eaknesses and external opportuni­ ties and threats confronting the firm. 5. A professional services firm can then form ulate m arketing objectives. These objectives m ust be realistic, achievable, m ea­ surable, and contain a tim e deadline for achievem ent. 6. T w o key factors characterize a m arketing strategy: (1) a specific target m arket and (2) a m arketing program to reach this m arket. The m arketing strategy is the m eans by w hich objectives are to be achieved. 7. A com petitive advantage is a strength relative to com peti­

40

PROFESSIO NAL SERVICES M ARKETING

tors w hich is likely to be m aintained in the m arket served or the product (service) offered. It usually involves superiority based on perform ance (product [service], distribution, or prom otion) or superiority price. 8. T here are four strategic grow th options available to the professional services m arketer: (1) m arket penetration, (2) m ar­ ket developm ent, (3) product developm ent, and (4) diversifica­ tion. T hese options m ust be considered in concert w ith the conccpt o f com petitive advantage. 9. A m arketing program involves the detailed day-to-day o p ­ erational decisions essential to the successful execution o f the selected m arketing strategy. T actical decisions regarding the Seven P ’s are m ade as part o f the m arketing program . 10. Effective im plem entation o f the m arketing program re­ quires that (1) the content be com m unicated to the organization, (2) som eone is responsible for im plem entation, (3) there is open com m unication, (4) precise tasks, responsibilities, and deadlines are part o f the program , and (5) the program has a bias for action. 11. A balance betw een strategic planning and execution is re­ quired for effective m arketing. 12. A m arketing plan should also contain sales/profit and a m arketing budget. 13. Finally, a good m arketing plan will have control and ev al­ uation m easures. T his usually includes sales, profitability, and cost analysis. 14. An effective m arketing plan should answ er these questions: (1) W here is the service now and how did it get there? (2) W here is it going? (3) W hat is the best w ay to get there? (4) W hat actions are required to get there, by w hom , and w hen? (5) W hat is it going to cost and w hat will be the return on investm ent? and (6) W hat will be m easured to control and evaluate the plan?

Chapter Four

Client M anagement—A Critical Tool

In the search for a sustainable competitive advantage, profes­ sional services m arketers often overlook the obvious: superior client service. In a market where it is becom ing easy for com peti­ tors to match technical service skills, pricing, distribution, and prom otion, it may be that superior client service will be the only w ay for a professional service firm to differentiate itself. A l­ though client m anagement is a relevant tactic to consider for all four strategic options for growth (as discussed in Chapter Three), it is clearly more central to the im plementation o f a market pene­ tration or market development strategy. In fact, client m anage­ ment will be instrumental for any professional practice wishing to maintain and build market share, either in their present market or through expansion into new geographic markets. The client m anagem ent concept should be considered part o f the practice philosophy for all or most professional firms. Client m anage­ ment is a tactical m anagem ent tool that, in reality, is an umbrella for a num ber o f activities. Thus, the key to understanding and im plem enting a client m anagement program is to think com pre­ hensively about the professional practice. Client management should be seen as a solution to managing and overcom ing the difficulties caused by the Four I’s o f professional services (intan­ gibility, inventory, inconsistency, and inseparability). The four basic elem ents of any client contact management pro­ gram include impression m anagem ent, internal m arketing, rela­ tionship m arketing, and synchrom arketing. Clients of profes­ sional services are becoming more dem anding and the best professional services suppliers realize that service quality may be

42

PRO FESSIONAL SERVICES M ARKETING

the only w ay to differentiate them selves in a relatively hom oge­ neous industry. T he skills and know ledge o f professionals and their em ployees that influence the end result o f the service are often referred to as “ technical service q u a lity .” T he appearance, behavior, custom er orientation, and service m indedness o f p ro­ fessionals and their em ployees is called “ functional service qual­ ity” (G ronroos, 1985). T he physical environm ent w here the ser­ vice is delivered and the ability to build a relationship w ith the client are also part o f functional service quality. T hus, clients do not evaluate the results o f the service produc­ tion process only (w hat they received), they also evaluate how they received it. In other w ords, it is not w hat is done (technical quality), but how it is done (functional quality) that m akes the difference to the client. T he coordination and m anagem ent of technical and functional quality is required to be successful in professional practice in the 1990s. In order to ensure that quality service is delivered, those in professional practice m ust integrate all the elem ents o f client m anagem ent in a com prehensive and m utually reinforcing w ay. A client m anagem ent program can ensure that a professional service firm delivers client satisfaction w hich will result in greater profitability. In order to do so, senior m anagem ent o f professional firm s m ust dem onstrate their support for such a p ro­ gram . W e will exam ine each o f the elem ents o f client m anage­ m ent in greater detail and dem onstrate how they can help over­ com e the problem s caused by the Four I ’s.

IMPRESSION MANAGEMENT Theodore Levitt (1981) suggests that services can rarely be tried out, inspected, or tested in advance. Prospective buyers are g e n ­ erally forced to depend on “ surrogates” to assess w hat they are likely to receive from the service supplier. In essence, because o f the intangibility o f services consum ers m ust rely on tangible ev i­

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43

dence surrounding the professional service. A solution to the in­ tangibility problem is im pression m anagem ent. Im pression M an­ agem ent theory (U pah, 1983) holds that the w ays in w hich clients com e in contact with professional services firm s are m any and varied. M anagem ent o f these “ contact points” or tangible evidence is im perative if a firm is to convey the appropriate im ­ age. The key aspects o f im pression m anagem ent that every pro­ fessional firm should be conscious o f are as follows: 1. R ecognize that “ everything about a service ta lk s.” 2. Clients evaluate what they cannot see by what they can see. 3. The im pressions created at any contact point influence the perception o f the service itself. 4. Im pression M anagem ent requires a totally integrated ap­ proach to everything that com m unicates. Professional services firm s m ust integrate, m anage, and coor­ dinate all the contact points or evidence and do it better than their com petitors. Upah (1983) suggests that there are basic contact points or evidence that m ust be m anaged by all professional firms: 1. Physical Environment—The ultim ate goal is to create an environm ent or situation that produces the desired client im ­ pression and perception o f professional service quality and leads to fulfillm ent o f business goals. The physical environ­ m ent o f a service organization includes exterior and interior decor, accoutrem ents, m usic, furnishings, equipm ent, and color language. 2. People —Elem ents o f this aspect o f im pression m anagem ent involve the m anaging o f the appearance and dem eanor o f the professional service providers and providing evidence of capability o f perform ance (e .g ., degrees, certificates). 3. Procedures and Methods —Procedures and m ethods used in the process o f professional service delivery will influence

44

PROFESSIONAL SERVICES MARKETING

perceptions about the quality of the service. T he design of procedures should be keyed to client needs and expectations and the overall service concept. 4. Organizational Capabilities—T angible, objectively v e rifi­ able evidence as to a firm ’s capacity is often used by clients to evaluate a professional service organization. Such tangi­ ble evidence w ould include: years in operation, size, client list, dem onstration o f results achieved for other clients, and experience. 5. Communications — All com m unications should be designed to create the proper im pression o f the professional service firm . T his includes w ritten as w ell as oral com m unications. T he quality and design o f w ritten com m unications have proven to affect readership and thus can favorably influence clients. T he reality o f the service should not be diluted by advertising that is too abstract. It is im portant to character­ ize the professional service firm via tangible elem ents and sym bols, but the desired personality o f the service organiza­ tion should also be com m unicated. T he personality co n ­ veyed should be consistent w ith the target g ro u p ’s expecta­ tions. O ne w ay to view the im pression m anagem ent concept is show n in Figure 4-1. T his figure show s som e critical contact points w hich m ust be m anaged by the professional firm . The figure reveals that the client will assess all the inform ation he or she is confronted w ith and then end up w ith an overall net im ­ pression o f the professional service. Professional services m arketers m ust really put them selves in their clie n ts’ shoes, thinking through and gaining control o f all the inputs to the c onsum er’s m ind that can be classified as co n ­ tact points or tangible evidence o f their service. Som e m ay seem trivial until one realizes the im pact they can have on service per­ ception. T o the client perception is reality. For exam ple, exam ine som ething quite sim ple like the colors

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u se d in p r o f e s s io n a ls ’ o ffic e s . F ig u re 4 -2 s h o w s th e p e rc e p tio n s a n d a ss o c ia tio n s a c o n s u m e r c an m ak e s im p ly b y v ie w in g c c rta in c o lo rs . T h in k a b o u t h o w a c lie n t w o u ld v ie w a p ra c tic e if the in te rio r c o lo r o f th e o ffic e w a s red v e rs u s b lu e . T o o o fte n c o lo rs are s e le c te d w ith o u t re g a rd fo r w h a t th e c lie n t m a y lik e o r w h a t th e c lie n t m a y th in k o f th e p ro fe s s io n a l a s a re su lt o f the c o lo r la n g u a g e u se d in th e o ffic e s . G e n e r a lly , c o lo rs c an be th o u g h t o f in te rm s o f w a rm th o r c o ld n e s s . F o r e x a m p le , re d , y e llo w , and o ra n g e a re c o n s id e re d w a rm c o lo rs an d as su c h te n d to stim u la te , e x c ite , o r c re a te an a c tiv e lo o k in g e n v iro n m e n t. C o ld c o lo rs su c h as b lu e te n d to p ro v id e an ice im p re s s io n .

FIGURE 4-1. Impression M anagem ent-C ontact Points A. BUILDING EXTERIOR

B. INTERIOR OFFICES

• • • • •

• • • • •

Appearance Signage Parking General neighborhood Other businesses located nearby

Appearance Decor/color language Noise level Lighting Furniture

C. PRO FESSIONAL STAFF

D. SUPPORT STAFF

• Dress and general appearance • Dem eanor and attitude • Telephone etiquette

• Dress and general appearance • Demeanor and attitude • Telephone etiquette

E. OTHER • Business cards and stationery • Advertising and collateral materials • Other clients served A + B + C + D + E = NET IMPRESSION OF SERVICE

46

PRO FESSIONAL SERVICES M ARKETING

Referring back to the exam ple o f the red office versus the blue office, it is easy to see that a totally different im pression o f a professional practice can be derived by the client as a result o f the color language used in an office. H ow ever, color language is not that sim ple; consider the use o f blue. A dark blue tends to convey an im age o f trustw orthiness and security, w hile m id-blue tends to convey an im age o f sobriety and sturdiness, and light blue tends to convey a sw eetness or a calm or tranquil effect. The type o f blue selected m ust therefore be considered in light o f w hat im age one w ould like to convey to the client. W hat this illustrates is that even som ething as sim ple as color selection for a p rofessional’s office should be considered part o f im pression m anagem ent. A nother illustration o f an im portant contact point is sim ply the reception the client receives on the telephone. T he telephone is a critical contact point that can m ake or break a professional prac­ tice. Figure 4-3 depicts a basic guideline for handling the tele­ phone in such a w ay that the proper im age o f the firm can be conveyed to current and prospective clients. One good w ay to receive unbiased feedback about how w ell a firm handles the telephone is to have a friend phone the office and ask w hat im ­ pression he or she had o f the firm as a result o f the phone call. M any professionals actually phone the office regularly ju st to spot check on the telephone etiquette of the firm .

INTERNAL MARKETING The need for internal m arketing in professional services firm s is obvious. A professional services firm m arkets perform ances. T hese perform ances are, for the m ost part, delivered by people w hen the consum er is present. T he quality level o f those perfor­ m ances is im portant in order to attract and retain clients. U n fo r­ tunately, the quality o f professional services m ay vary because o f

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inconsistency and inseparability problem s. In order to achieve greater con sisten cy in professional services quality, and to over­ com e the problem o f inseparability, internal marketing m ay be the answ er. Internal m arketing, as defined by Berry is: . . . v iew in g em p lo y ees as internal clien ts, v ie w in g job s as internal products, and then endeavoring to offer internal products that satisfy the needs and w ants o f these clients w h ile addressing the ob jectives o f the organization. (1 9 8 0 , p. 26)

FIG URE 4-2. Perception o f Color Red —Symbol o f blood and fire. Brilliant and intense. Hottest color with highest action quotient. Most versatile color. C onveys strong m asculine appeal. Brown —A ssociated with earth, w oods, m ellow ness, age, w arm th, com fort. A nother m asculine color. Y ellow —Sunny, incandescent, radiant. C reates high impact to catch consum er’s eye. Provokes a response o f an active, cheering kind. C om bined with red it equals a desire to conquer and the expectancy o f som ething new. G reen —Symbol o f health, freshness, nature, w ater. Greenish blue is a sym bol o f security and self-esteem . Blue —T he coldest color. Ice im pression, sky, w ater. Dark blue can convey security; m id-blue conveys sobriety and sturdiness; light blue conveys calm ness and tranquillity. Black (and G old) —Conveys sophistication, quality, ultim ate sur­ render. Excellent as background or foil for other colors. W hite —Spatial light, cool, snow , cleanliness. Conveys a youthful, frank, pure look.

48

P R O F E S S IO N A L S E R V I C E S M A R K E T IN G

FIG U R E 4-3. T he T elephone: A Critical C ontact Point 1. A nsw er the phones w ith a positive and professional voice. Do it with a sm iling face. 2. N ever put a client on hold w ithout asking for perm ission and w aiting for his or her response. 3. A lw ays check back w ith the client w ho is on hold. 4. Take dow n the m essage correctly; verify nam e and phone num ber o f the caller. 5. W rite dow n the m essage, with the tim e and date. 6. A nsw er the telephone by the third ring. If you are very busy ask som eone to assist. 7. Get to know im portant clients (all clients are im portant but som e are very im portant). Never give these clients the runaround. 8. Know the schedules of all the persons receiving calls so you can assist the caller by giving them calling tim es w hen the person is likely to be in.

9. A lw ays answ er the phone using the firm nam e, even after hours. 10. A lw ays thank clients for calling.

Internal m arketing starts from a notion that in order for a pro­ fession al service firm to be su ccessfu l it must treat its em p lo y e e s like internal clien ts. In e sse n c e , y ou cannot exp ect e m p lo y e e s to sh o w care and concern for their job or the clien ts u n less th ey , as e m p lo y e e s, are sh o w n care and con cern . Internal m arketing can help a professional serv ices firm attract and retain the best p o ss i­ ble e m p lo y ees and get the best p o ssib le w ork from them . By sa tisfy in g the need s and w ants o f internal clie n ts, a firm upgrades its capability for sa tisfy in g the n eed s and w ants o f its external clien ts. In order to m ake an external market respond, the firm n eeds an acceptab le product. T he sam e is true for an internal m arket. A client-oriented and com p an y-orien ted attitude cannot exist u n less the firm has som eth in g to o ffer its em p lo y e e s. A sim p le o fferin g

F. G. Crane

49

o f a job w ith pay will not do it. A m ore m arket-oriented internal product is needed. T hus, the internal product consists o f a job and a w ork envi­ ronm ent w hich m otivates an em ployee to be client oriented. M anagem ent m ethods, procedures, personnel policy, training, and feedback all impact on the success o f internal m arketing pro­ gram s. The first target group o f any internal m arketing program is top m anagem ent, not contact personnel. If internal m arketing is not accepted by m anagem ent at that level it will not succeed. M oreover, the perceived quality o f service o f contact people is also affected by noncontact personnel. Such supporting person­ nel m ust also be included in an internal m arketing program . Berry (1980) argues that internal m arketing involves creating an organization clim ate in general, and jo b products in particu­ lar, that lead to the right service personnel perform ing the service in the right w ay. In consum ption circum stances in w hich peo­ p le’s perform ance is the product being sold, the m arketing task is not only that o f encouraging external clients to buy, but also that o f encouraging internal clients to perform correctly. W hen they do, the likelihood o f external clients continuing to buy is in­ creased. Investing in the firm ’s staff through an internal m arket­ ing program is investing in service quality. A professional ser­ vice firm cannot be client oriented if it is not em ployee oriented. M any professional firm s have not considered this notion o f inter­ nal m arketing. M any firm s do not know w hat attitudes em ployees or support staff hold about their jobs, the organization, or m anagem ent in general. One good w ay to exam ine the attitudes o f these internal clients is to carry out a quality o f w ork life survey. The survey is a w ay to gauge the em ployees’ or support staff’s perception and attitudes toward the job and the w ork environm ent. This should be done in order to determ ine or isolate any problem s that may hinder or prevent the delivery o f satisfaction to clients. U nhappy personnel can m ake unhappy clients.

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PRO FESSIO N AL SERVIC ES M ARKETING

F igure 4 -4 d ep ic ts an e x a m p le o f a sim p le instrum ent that can be u sed to m easu re the q u ality o f w ork life in a firm . O ther in form ation can be added to it, su ch as years o f s e r v ic e , sa lary , or d e m o g ra p h ics, to d eterm in e if any d iffe r e n c e s in resp o n se can be attributed to th o se fa cto rs. It is reco m m en d ed that th is p ro ce ­ dure be carried ou t a n n u a lly . If it is found that e m p lo y e e s or support sta ff d o not v ie w their jo b s as rew ard in g, or that th ey are w orried about jo b se c u r ity , or that th ey b e lie v e m a n a g em en t is u n ca rin g , there w ill b e p ro b lem s m o tiv a tin g them to fo c u s on c lie n t sa tisfa ctio n . But carrying

F IG U R E 4-4. Internal M arketing —Q u ality o f W ork L ife Q uestionnaire DA

SDA

N

A

SA*

1. My job is worth doing and doing well.

1

2

3

4

5

2.1 receive reasonable pay and benefits.

1

2

3

4

5

3.1 feel 1 have job security.

1

2

3

4

5

4.1 believe management is competent.

1

2

3

4

5

5.1 receive feedback on job performance.

1

2

3

4

5

6. I have opportunity to learn and grow in my job.

1

2

3

4

5

7. 1 can get promoted based on merit.

1

2

3

4

5

8. The firm offers a good social climate.

1

2

3

4

5

9. The firm treats all employees fairly.

1

2

3

4

5

10. Management cares about their employees.

1

2

3

4

5

11.1 enjoy my job.

1

2

3

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5

*SDA = Strongly Disagree DA = Disagree N = Neither Agree

A= Agree SA = Strongly

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out the research should enable the firm to begin to address the issues o f quality o f work life within the professional practice. If problem s are uncovered, the professional should be w illing to take action. Such corrective action should be conducted in con­ junction with the employees; they should be asked about what remedies they feel are warranted to affect change in the work environm ent. Having them participate in the decision-m aking process will ensure comm itm ent to any new initiative designed to create a better w orking environm ent.

RELATIONSHIP MARKETING Generating repeat business will be the key to success for pro­ fessional services m arketers in the 1990s. Relationship m arket­ ing should be viewed as a cultivation process, a way to ensure repeat business. The cultivation process posits a simple equation; greater involvem ent with the client leads to greater client com ­ mitment to the service which leads to greater loyalty. Berry de­ fines relationship m arketing as attracting, m aintaining and enhancing client relationships. Servicing and m arketing to existing clients is viewed to be as important to long-term m arketing success as acquir­ ing new clients. Good service is necessary to retain the rela­ tionship. Good m arketing is necessary to enhance it. (1983, p. 25) The objective o f relationship m arketing is to obtain and m ain­ tain clients by building a relationship with them . Attracting new clients should be viewed as only the first step in the m arketing process. U ltim ately, the professional service firm must build a relationship with that client and create loyalty. Upah (1983) sug­ gests that relationship m arketing can help tangibilize and differ­ entiate the professional service, improve client m anagement ef­

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forts, m ake the service m ore relevant and appealing, and as such, can help to solidify relationships, expand the relationship w ith the client, and reinforce w hat the professional service firm has done directly for the client. It has been w ell established that it is m uch m ore cost-effective to retain clients than to go out searching for new ones. In fact, som e research indicates that it m ay cost five tim es as m uch to replace a client as it does to retain one {Marketing N ews , 1991). R etaining clients is also im portant since satisfied clients not only rem ain clients but can be valuable generators o f new business for the professional service firm . On the other hand, dissatisfied c li­ ents are lost clients and can be active agents w orking against the firm in generating new business. In fact, som e statistics show that one satisfied client m ay tell one other client about the service w hile a dissatisfied one will tell betw een four and eleven pros­ pects about their dissatisfaction w ith the service. T hus relation­ ship m arketing is vital not only to m aintaining existing clients, but as a m eans to attract new ones. Berry (1983) suggests there arc a num ber o f possible relation­ ship m arketing strategies that can be considered. Such strategies are not independent o f each other and could be used in com bina­ tion. 1. Cure Service Strategy —A key relationship m arketing strat­ egy is the design and m arketing o f a core service around w hich a client relationship can be established. The ideal core service is one that attracts new clients through its needs-m eeting character, cem cnts the business through its quality, and provides a base for m arketing additional services over tim e. For exam ple, one sm all law firm specialized in fast, inexpensive will preparation. A s a result o f offering this core service and by doing it in an excellent m anner, the firm w as able to attract m ore business from those sam e clients in other areas o f the law . 2. Relationship Customization —A nother strategy is relation­ ship custom ization. If a service firm can learn about the specific

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characteristics o f its clients it can m ore precisely tailor services to m eet those specific needs. In doing so, the clients have an incentive to rem ain as custom ers rather than starting over with another supplier. T he possibilities for relationship custom ization are considerable. Custom fitting the service to a client’s particu­ lar requirem ents can be perceived as very valuable to the cus­ tom er. O ne dentistry operation w as able to determ ine that many patients w anted evening appointm ents and the option o f a pay­ m ent plan for dental w ork. In offering this service to those spe­ cific patients the firm w as able to retain and attract patients. 3. Service Augmentation — Service augm entation involves building extras into the service to differentiate it from com peti­ tors’ offerings. For service differentiation to occur, the extras m ust be genuine extras not readily available from com petitors and ones that offer value to the client. The key is to build client loyalty since they should find these extras beneficial. If those extras are o f value and not easily duplicated by com petitors, then service augm entation can be a successful strategy. For exam ple, an accounting firm w hich prepared corporate tax returns for sm all businesses offered, as part o f its service, to prepare the individual tax returns for the ow ner/m anager and any family m em bers w orking for the small business. 4. Relationship Pricing — An old m arketing idea —a better price for better clients —is the basis for relationship pricing. Re­ lationship pricing encourages loyalty. In effect, clients are given a price incentive to consolidate their business with the profes­ sional service firm . T his should be considered carefully for pro­ fessionals w hose governing bodies have established fee sched­ ules. The com m on elem ent in all relationship m arketing strategies is the incentive the client is given to rem ain a client. The incentive m ay be extras or a price break but in any case, the client is given one or m ore reasons not to change his or her professional.

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SYNCHROMARKETING One o f the Four F s that can be very problem atic for a profes­ sional services m arketer is the inability to inventory service ca­ pacity. Idle capacity is alw ays a problem in professional services m arketing. But perhaps m ore difficult is the inability to handle peak load dem ands. T his can cause problem s w hen attem pting to m anage a relationship w ith a client. The synchronizing o f d e ­ m and and supply m ust occur in order to overcom e idle capacity problem s and to ensure client satisfaction. T he key in synchrom arketing is adjusting supply to m atch d e­ m and and adjusting dem and to m eet supply. In other w ords, it m eans w orking both sides o f the street. A ltering the tim ing of consum er dem and and/or exerting better control over the supply of the professional services offering is vital. T he professional services m arketer m ust avoid not only excess capacity but also situations w here excess dem and goes unsatisfied. T his is particu­ larly im portant w hen one considers valuable or highly profitable clicnts. It will be virtually im possible to build a relationship with such clients if they cannot be adequately serviced. In order to better m atch dem and and supply, the follow ing m ethods can be considered by professional services m arketers: 1. M arket sim ilar services to target segm ents having different dem and patterns. 2. M arket service extras or price reductions during nonpeak tim es. 3. T rain personnel to perform m ultiple tasks. 4. Hire part-tim e em ployees during peak tim es. 5. Educate consum ers to use services during nonpeak tim es. C om m unications can play a key role in synchrom arketing. Use of m edia should be tied to capacity. Professional services

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m arketers can com m unicate to clients about nonpeak tim es anti encourage them to use the service during those tim es. T he fact that service extras or other incentives like price reduc­ tions are available at certain tim es can be com m unicated. It is also im portant to stop prom otion or pull m edia w hen dem and has already exceeded capacity. If an inability to m eet peak load d e ­ m ands is causing dissatisfaction, dem arketing m ay have to be used. W hat this m eans is that som e low -profit clients m ay be using your service at peak load tim es and causing problem s in delivering quality service to m ore valued clients. In this case, reducing dem and from low -profit target segm ents that you do not w ant (or dem arketing your services to them ) m ay be necessary. R em em ber that w hile you m ay w ant to provide quality service to all clients, som e clients are ju st m ore im portant to yo u r busi­ ness than others. F ocusing on ensuring that valued clients are satisfied w ith tim ely delivery o f service is critical to success. The low -profit clients w ho m ay be price-sensitive m ay be receptive to using the service at nonpeak tim es if price reductions can be offered.

USING RESEARCH TO DEVELOP AND MAINTAIN A CLIENT MANAGEMENT PROGRAM T oo often professionals believe they know w hat their clients w ant and fail to deliver w hat those clients really need. T his ne­ gates the possibility o f building a relationship w ith them . In o r­ der to be successful in building relations w ith clients the p rofes­ sional firm needs to (1) m easure custom er needs and service attributes sought and (2) m easure the firm ’s actual perform ance in delivering service based on those needs and attributes. You m ust determ ine w hat it is that clients arc really looking for and

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w hether or not the firm does or can deliver it. A s com petition increases in the professional services fields, superior service to clients is being used as a m ajor com petitive advantage; a w ay to attract clients. Increasingly, clients are dem anding greater levels o f service quality and are becom ing m ore unlikely to accept poor service. So, a professional firm w ho w ants to rem ain com petitive must carry out client research (w hat do they w ant and w hen do they w ant it?) and then conduct performance research to m easure the extent to w hich the firm delivers it (perform ance as m easured by the client). In this w ay the professional service firm can uncover possible m arket opportunities and discover hidden service p rob­ lem s before client attrition becom es a problem . R em em ber, cli­ ent m anagem ent is not ju st about creating clients but retaining them . Client research and firm perform ance research can be sim ple and inexpensive or com plex and expensive. Either w ay the p ro­ fessional service firm needs to: 1. D iscover c lie n ts’ needs. 2. Pinpoint the attributes clients are looking for w hen selecting professional firm s. 3. A nalyze how w ell the professional service firm m easures up on those attributes and how well the firm perform ed in de­ livering service and satisfaction. 4. D eterm ine w hat else the firm can do to increase satisfaction or build a better relationship w ith the client. A sim ple client research instrum ent designed to exam ine the firm ’s service perform ance can be seen in Figure 4-5. T his in­ strum ent docs not m easure the attributes being sought by the client but illustrates som e o f the attributes that m ay be im portant and how to m easure ju st how w ell the professional service firm scores in term s o f delivering on those attributes. Each firm should first uncover the c lien ts’ needs and the attributes that are

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FIG U R E 4 -5 . S erv ice Perform ance M easurem ent Instrument Dear C lient.....C ould you please take a few m inutes and com p lete this instrument. Answ er each question the way you feel best describes your experience and feelings with our service. For exam ple, in question Ml, a score o f 5 would indicate com plete agreement with the question that the firm's atm osphere was warm and friendly. Please circle one response per question. Y ou are a valued client and w e hope that this inform ation can assist us with improving our service for you.

Atmosphere was cold and unfriendly

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5

Atmosphere was warm and friendly

I received discourteous service

I

2

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I received courteous service

I received incompetent service

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I received competent servicc

Servicc w as slow

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Service was prompt

Staff were not helpful

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Staff were helpful

Staff dressed poorly

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Staff dressed well

The offices were dirty

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l l i e offices were clean

M y problem was not solved

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M y problem w as solved

Overall I am dissatisfied with the service received

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Overall I am satisfied with the servicc received

im portant in delivering satisfaction, and then design an instru­ m ent sim ilar to the one found in Figure 4-5 to m easure the firm ’s perform ance.

WHAT CLIENTS REALLY WANT FROM PROFESSIONAL SERVICES PROVIDERS W hat do clients generally w ant from professional services p ro ­ viders? E xtensive research has sh ow n that regardless o f the pro-

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fessional scrvice a clicnt is using, there arc three basic things a client w ants from a professional: 1. C are and concern 2. Problem solving 3. R ecovery W hile som e professional scrvice firm s m ay conduct client re­ search and uncover different attributes, assum e for now this is w hat m ost clients w ant from the professional service provider. They do w ant problem solving; this is w hy they are using the service in the first place. T he role o f a professional is to be a problem solver. C lients w ant the professional to be responsive and available, but prim arily he or she has been selected to help them or fix them . C lients are also saying that in the course o f solving their problem they w ant care and concern; they w ant a dem onstration that the professional em pathizes w ith them and really w ants to help. In fact, m any experts believe that care and concern tends to rank even higher than problem solving as an attribute being sought by the client. Care and concern is not enough, how ever, if problem solving has not occurred. C onversely, it is im portant to rem em ber that just solving the problem is not enough; how it is solved is a m ajor factor in determ ining client satisfaction. W hile som e w ould argue that clients are not very forgiving in term s o f the professional’s ability to solve problem s, m ost clients realize that occasionally som ething will go w rong. Som etim es a job took longer than planned, som etim es an em ployee w as not as responsive or courteous as s/he should have been, or som etim es the firm just failed to give clients w hat they needed. C lients are prepared to forgive a bad perform ance if the professional service firm can recover and right the w rong. Prom pt and effective re­ covery from a bad perform ance is w hat can salvage the relation­ ship w ith the client. If som ething does go w rong w ith the deliv-

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cry and perform ance o f the se r v ic e , there are a few basic prin ciples that shou ld be fo llo w e d in order to correct the situation and sa v e the relation sh ip . Figure 4 -6 o u tlin es a b asic g u id e for han dling this critical aspect o f clien t m an agem en t. C lient m anagem ent m ay be the d ifferen ce b etw een su c c e ss and failure in p rofession al se r v ic es m arketing. W ith tim e, e n ­ erg y , and so m e m o n e y , a clien t m anagem ent program can be im plem ented that can o ffer the opportunity to e x c e l in p ro fes­ sion al p ractice.

FIG U R E 4-6. Recovery: R ighting the W rong 1. R em em ber to be professional. 2. A lw ays m aintain a calm dem eanor. 3. Be attentive: show care and concern. 4. L isten carefully to the c lie n t’s side o f the story. 5. Be sure the situation is understood; repeat the story back to the client if necessary. 6. Find out the people and service involved. 7. A nalyze the facts. 8. D eterm ine the urgency o f the situation. 9. E valuate the alternatives or options w ith the client. 10. U se discretion and judgem ent. 11. Select the optim al solution; err on the side o f the client in every possible case. 12. E xplain how the firm intends to right the w rong. 13. Ask the client if the solution is satisfactory. 14. Right the w rong. 15. Follow up to ensure the client is now satisfied. 16. T hank the client for his or her understanding.

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SUMMARY 1. Client management is essential for professional services firms who want to survive and to increase profitability. It may be the only way to achieve a competitive advantage in a competitive and maturing market. 2. Client management involves: (1) impression m anagem ent, (2) internal marketing, (3) relationship m arketing, and (4) syn­ chromarketing. It can be used to overcome the problems caused by the Four I’s of professional services marketing (intangibility, inventory, inconsistency, inseparability). 3. Both technical and functional professional service quality can be achieved through a comprehensive client management program. Remember it is not what you do, it is how you do it. 4. Remember the client’s perception is reality so the profes­ sional must be certain the appropriate image is being conveyed to the client. Impression management involves the coordination and control over all the ways in which a client comes in contact with the firm. It requires attention to detail in the physical environ­ ment, people, procedures and methods, organizational capabili­ ties and communications. 5. If the professional practice is employee-driven there should be no problem in successfully satisfying clients’ needs. Employees and support staff must be treated like internal clients (internal marketing). A quality o f work life instrument is a good starting place for embarking on an internal m arketing program. 6. Relationship marketing is vital to success. Cultivating and building a relationship with clients will increase client satis­ faction and loyalty. Four relationship marketing strategies are: (1) core service strategy, (2) relationship customization, (3) ser­ vice augmentation, and (4) relationship pricing. 7. It is important to ask satisfied clients to actively refer ser­ vices to friends and coworkcrs. More important, dissatisfied cli-

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cnts m ust be asked to tell the professional about their dissatisfac­ tion first, rather than their friends. 8. S ynchrom arketing m ust be used to overcom e the idle capacity problem prevalent in professional services m arketing. M ore im portantly, it can ensure that valued clients receive q u al­ ity service on a tim ely basis. In order to better m atch supply and dem and the professional services m arketer can: (1) m arket sim i­ lar services to target segm ents having different dem and patterns, (2) m arket service extras or price reductions during nonpeak tim es, (3) train personnel to perform m ultiple tasks, (4) hire parttim e em ployees during peak tim es, and (5) educate consum ers to use services during nonpeak tim es. 9. In order to effectively im plem ent a client m anagem ent program som e research m ust first be done to (1) identify and understand c lie n ts’ needs and (2) then carry out a perform ance m easure on how w ell the professional serves those needs. 10. A professional is hired to solve problem s, but m ust alw ays rem em ber that behind every problem solved there is a client w ho m ust be show n care and concern. O ccasionally, there will be problem s in delivering quality professional servicc. W hen this happens the professional m ust recover and salvage the relation­ ship w ith the client.

R E FE R E N C E S B erry, Leonard L. “ Service M arketing is D ifferen t,” Business, A tlanta: G eorgia State U niversity, A tlanta, M ay-June, 1980, pp. 25-26. B erry, Leonard L. “ Relationship M ark etin g ,” in Emerging Perspectives on Ser­ vices Marketing, Leonard L. Berry, G . Lynn Shostack and G regory D. Upah (ed s.), C hicago: A m erican M arketing A ssociation, 1983, pp. 25-28. G ronroos, C hristian. “ Internal M arketing: T heory and P ractice,” in Services Marketing in a Changing Environment, T hom as M. B loch, G regory D. Upah and V alarie A . Zeitham l (cd s.), C hicago: A m erican M arketing A ssociation, 1985, pp. 41-47. L evitt, T heodore. “ M arketing Intangible Products and Product In tang ib les,” Harvard Business Review, M ay-June 1981, pp. 94-102.

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Marketing News. “ Satisfaction-Action to Offer Tips on Pleasing Custom ers,” Chicago: American Marketing Association, February, 4, 1991, p. 4. Upah, Gregory D. “ Impression Management in Service Marketing: Key Research Issues,” in Emerging Perspectives on Services Marketing, Leonard L. Berry, G. Lynn Shostack and Gregory D. Upah (eds.), Chicago: American Marketing Association, 1983, pp. 105-107.

Chapter Five

Promoting Professional Services

There has been a tradition against the use o f promotion in m arketing professional services. Professional codes of ethics have often prevented the effective use of prom otion. The main arguments against the promotion o f professional services are (1) that prom oting professional services will demean the profes­ sions, (2) that promotion will adversely affect consum er confi­ dence in the professions, and (3) that promotion may even threaten the quality o f professional services. Recently, however, bans against promotion have been relaxed or abolished. What has happened as a result? The use of promotion is seen in m edi­ cine, optom etry, accounting, law, and other professions. Re­ search has indicated that the much feared debasem ent or con­ sum er negativity against the professions has not occurred, nor has any substantial evidence surfaced that the quality of profes­ sional services has diminished. For many professional associa­ tions, the issue now is how to assist members to use promotion in an effective and responsible manner. In today’s com petitive m arketplace, professionals cannot make the mistake of assum ing there is no need to promote their services. Since professional services are intangible, profession­ als must tangibilize the services’ existence. Promotion is one way to do so; it is now a key element of the m arketing mix for professional services. W hile som e professionals are prom oting their services inap­ propriately or in bad taste, prom otion, when used properly, can 63

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he effective in establishing and expanding a professional services organization. T his chapter will discuss the basic elem ents o f the prom otional m ix as well as each elem ent in detail. It will also offer guidelines for the effective use o f prom otion w hen m arket­ ing professional services.

THE PROMOTIONAL MIX T he prom otional m ix available to professional services m ar­ keters includes personal selling, advertising, sales prom otion, publicity , and word-of-mouth prom otion. T his m ix can be used to create dem and or to project an im age. Professional services m arketers will need to use a com bination o f dem and-oriented and im age-oriented prom otion. In general, all o f the elem ents o f the prom otional m ix can be used to: 1. Inform prospective clients about the benefits o f the scrvice. 2. Encourage them to try the service. 3. Rem ind them later about the benefits they enjoyed by using the service. 4. D evelop and m aintain a favorable corporate im age. 5. D ifferentiate the service and the organization. T he professional services m arketer can choose a com bination o f one or m ore o f the prom otional alternatives. V ery often the professional services m arketer will require use o f all the elem ents o f the prom otional m ix. H ow ever, som e arc m ore effective in achieving certain objectives than others. The professional must consider what has to be achieved and then select the appropriate prom otional tool to accom plish it. Prom otion objectives can be established to im part inform a­ tion, to persuade, to rem ind, to differentiate the service, or to develop or m aintain im age. Each o f the elem ents o f the prom o­

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tion m ix will be discussed and related to how well they can achieve the aforem entioned objectives.

Personal Selling Personal selling involves face-to-face com m unication betw een the service provider and the client. Professionals need to apply effective sales techniques. Central to this is the ability o f the professional to identify the needs o f the client. A dditionally, the professional m ust com m unicate to the client that he or she can offer a service that satisfies the client’s needs. Research indicates that client satisfaction is influenced by the professional’s atti­ tude, personality, and ability to be sensitive to the client’s needs. There are certain advantages and disadvantages to the use of personal selling in professional services. The advantages o f per­ sonal selling arc: 1. The professional can control to whom the sales presentation is m ade. 2. The professional sees/hears the client’s reactions and ob­ tains feedback. 3. The professional can detail or provide com plex inform ation to the client. 4. Personal selling can be very persuasive. The disadvantages o f personal selling are: 1. It can be very expensive (on a cost-per-contact it is the most expensive). 2. D ifferent professionals m ay change or offer different m es­ sages to clients. One o f the things that must be rem em bered by a professional w ho uses personal selling is that hard-sell or insistent selling is not advisable. A professional must understand the client’s needs

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and offer the service to m eet the needs, but should not oversell services or sell services the client does not need. Personal selling is relatively expensive and inefficient if the prim ary objective o f prom otion is to inform a large num ber of clients that the professional service organization exists. It is m ore appropriate if the objectives of prom otion are to detail the client and encourage the client to consum e the service. Personal selling is also im portant as a follow -up to service consum ption - per­ sonal contact after consum ption can increase satisfaction with the service. T herefore, personal selling does play a role if the pro­ motional objective is to rem ind. Personal selling can also be used to develop and m aintain im ­ age and to differentiate the service. Good personal selling con­ tributes to the overall image o f the professional service firm . Clients m ay judge the quality o f the organization based on their experience during the sales process. In term s o f differentiation, personal selling can help if the professionals and staff are courte­ ous, efficient, and attentive to the client. Good personal selling efforts can encourage satisfied clients to positively recom m end professional services providers. In today’s m arket professionals m ust actively m arket their services in addition to being service processors. Because o f the im portance o f face-to-face com m uni­ cation in professional services m arketing this topic is dealt with in detail (see Chapter Eight).

Advertising A dvertising is a paid form o f nonpersonal com m unication about the professional scrvice organization or its servicc. A dver­ tising involves m ass m edia such as T V , radio, new spapers, and m agazines. There are several advantages to a professional services firm using advertising:

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It can be attention-getting. The firm can control w hat it says and w hen. All clients and potential clients receive the sam e m essage. It is efficient in reaching a large num ber o f people.

The disadvantages o f advertising are: 1. The cost o f production and placem ent. 2. T here is difficulty receiving good feedback. 3. People m ay be skeptical o f the advertising claim s. A dvertising m ay be the m ost effective prom otional tool to use if the prom otional objective is to inform a large num ber o f people about the service. A dvertising plays an im portant role if the pro­ m otional objective is to remind clients and to achieve an image developm ent or m aintenance objective. A dvertising can also play a m ajor role in differentiating the professional service in the m inds o f consum ers. W hile advertis­ ing is not as persuasive as personal selling, taken together these tw o elem ents can be powerful tools in inform ing clients about the service, projecting an appropriate im age, rem inding clients about the service, and creating differentiation. Firestone (1983) as well as other services m arketers suggest several roles that advertising can play in m arketing services. 1. Advertising can create the organization's world in the mind o f the customer. A dvertising can describe the organization, its services, and its values. A dvertising can tangibilize otherw ise intangible services. The attributes o f professional services can be dem onstrated through advertising. 2. Advertising can build and project an appropriate personal­ ity fo r the professional services firm. A dvertising can strike an em otional or cerebral response with the consum er. A profes­ sional service firm needs to be concerned w ith what a consum er

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thinks o f it but also how the consum er feels about the firm . A d­ vertising can dem onstrate a personality that will m ake consum ers think well o f and feel good about the professional service firm . 3. Advertising can identify the professional service firm with the client. The professional service firm will be successful if clients can relate the image and attitude o f the firm to their needs and values. A dvertising can create a bond between the profes­ sional service provider and the client. 4. Advertising can influence how personnel handle clients. A dvertising can show the em ployees how they should deal with clients, how to be m otivated to perform , and how to feel good about the organization.

5. Advertising can warm up prospects fo r personal sales ef­ forts that need to be undertaken. A dvertising creates aw areness and interest but does not generally close deals. Advertising can create favorable custom er predispositions toward the firm and as such can assist any personal sales efforts that m ay be m ade by the firm.

Professional services advertising also needs to provide tangi­ ble clues about the service, help in building favorable word-ofmouth exchanges, be consistent, and assist in reducing post-pur­ chase anxiety. A dvertising should be truthful and develop reasonable client expectations about the professional service. Clearly, one o f the most important aspects o f advertising pro­ fessional services is the need to em phasize the benefits of the services. Benefits need to be stressed and m ust be consistent with the benefits being sought by the client. The focus should not be on technical details but rather on how the client will benefit from the service.

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Sales Promotion Cowell (1984) suggests that services marketers dismiss sales promotion as part of the promotion mix far too quickly. While some argue that sales promotion is not an important promotional tool, he suggests that this is not true. Certainly some kinds of traditional sales promotions are inappropriate for professional services marketers, for example the sampling of a dentist’s ser­ vices. Ethical constraints may limit the use of this and other sales promotion activities. But many professionals use sales promo­ tion, often under the guise of another name. A management con­ sultant who offers an initial consult for free is using sales promo­ tion. There are also other sales promotion activities that are considered appropriate for professional services marketers. For example, event or corporate sponsorship may be a very reason­ able sales promotion activity that can be deployed by profession­ als. Particularly important would be grassroots involvement in community-based activities that create goodwill and visibility. Cause-related marketing (covered later under publicity) can have a sales promotion component to it. Because of the inability to store capacity and the possibility of idle production capability, a sales promotion involving off-peak pricing schemes can be used by professional services. If sales promotion is to be used by the professional it should be integrated with the overall promo­ tional mix and fit the image to be projected by the professional.

Publicity Publicity is considered to be a nonpersonal, indirectly paid presentation of the professional service organization or its ser­ vices. It can take the form of a news story, editorial, or service announcement. By using publicity the professional services or­ ganization attempts to get a medium to run favorable stories on the organization. The most common publicity tools are the news

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release or the news conference. How ever, often professionals will schedule speaking engagem ents in an attempt to obtain posi­ tive publicity. There are som e advantages o f publicity: 1. Publicity is considered to be more credible than advertising. 2. Publicity involves little or no expense. There are also som e disadvantages: 1. It is difficult to obtain m edia cooperation. 2. There is little control over w hat is said, to w hom , and w hen. Publicity is rarely the m ain com ponent o f a prom otional mix. H ow ever, it can help if the prom otional objective is to impart inform ation about the organization or its services. It m ay also play a role in rem inding clients o f the firm and in developing or m aintaining im age. A relatively new form o f publicity is cause-related m arketing (CRM ). Often it involves a professional service organization w orking with a charitable organization. The professional service organization may sponsor a charitable group or m ay be involved in fund-raising activities. CRM often wins much free publicity for the sponsoring professional services firm and helps in devel­ oping and m aintaining the image o f the firm. Professional services m arketers m ust alw ays rem em ber that good publicity is alw ays planned publicity. If publicity is to be used as part o f the prom otional mix it should be planned for and integrated into the prom otional budget and the prom otion plan. For sm aller professional services firms w ith lim ited m arketing budgets, publicity can be an inexpensive w ay to gain exposure in the m arketplace.

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Word-of-Mouth Promotion W hile som e argue that since w ord-of-m outh prom otion is largely beyond the control o f the professional services m arketer it should not be considered as part o f the prom otional m ix. H ow ­ ever, research indicates that consum ers tend to rely m ore heavily on personal sources o f inform ation when selecting professional services than nonpersonal sources such as advertising (C rane, 1989). In fact, consum ers prefer to use, and have m ore confi­ dence in, personal referral or recom m endations from existing cli­ ents o f professional services suppliers. W hile w ord o f mouth is not system atic, research docs show that negative w ord o f m outh can travel five to ten tim es as fast as positive w ord o f m outh. W hat this m eans to the professional is that if clients are unhappy with the professional service rendered they m ay tell others and this can negate all the good advertising in the w orld. On the other hand, positive personal referral can help strengthen the m essages delivered through personal selling or advertising. W hat is said via w ord o f m outh about the profes­ sional service organization can have positive or negative conse­ quences on the grow th potential for the operation. Professional services m arketers can take greater control over w ord-of-m outh prom otion by actively listening to w hat clients say to them and to others. Professionals can encourage positive w ord o f m outh, for ex­ am ple, by (1) inviting clients and prospectives to open houses, (2) netw orking with other professionals w ho can refer the firm ’s services, and (3) by sim ply asking satisfied clients to actively refer their services. A dditional tactics could include (4) the de­ velopm ent o f m aterials for clients to pass along to prospects and (5) advertising to opinion leaders w ho can help spread the w ord about the service. W hen putting the prom otional m ix together, the professional services m arketer must alw ays consider w hat objectives are to be

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achieved and the target m arket he or she is attem pting to reach. The elem ents o f a good prom otion plan are shown in Figure 5-1. It is particularly im portant for professional services providers to construct an integrated plan. All elem ents of the prom otional mix should be m utually reinforcing and project a consistent m essage and image to current and potential clients. Professional services providers w ould be well advised to prepare in advance their pro­ motional activities and to detail them in a com prehensive calen­ dar o f events noting m edia to be used, tim es, and costs.

FIG U R E 5 -1 . Elem ents o f a G ood Prom otion Plan 1. 2. 3. 4. 5. 6. 7.

Specific prom otional objectives. D etails on the target m arket. B reakdow n o f the prom otional m ix. Specific m essage determ ination. A detailed budget. A calendar o f events/activities for the year. Evaluation and control m easures.

PRODUCT (SERVICE) VS. CORPORATE ADVERTISING The concept o f corporate advertising has received greater a t­ tention over the past decade. H ow ever, there is confusion over what constitutes corporate advertising. Some consider corporate advertising as image or identity advertising. Others suggest cor­ porate advertising as market preparation advertising. In this case, corporate advertising sells the organization behind the product and paves the w ay for product advertising. Corporate advertising can and should play a role in professional services m arketing. Earlier the concepts o f dem and-oriented and im age-oriented

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prom otion were introduced. Corporate advertising plays a key role in im age-oriented prom otion. C orporate advertising is strictly soft-sell while product (service) advertising is generally dem and-oriented. Because of the intangibility of the professional service, corporate advertising provides clues or cues about the service organization and can offer the client the opportunity to judge the organization as well as the service offering. In profes­ sional services m arketing where services and service providers are seen as sim ilar or undifferentiated, corporate advertising can create a perception o f difference. In fact, research shows that if products are sim ilar, corporate advertising can be used as a tic breaker; the professional service firm with the better corporate image as dem onstrated through advertising will have a distinct advantage. Determ ining objectives will dictate the appropriate use o f cor­ porate and product (service) advertising. If the objectives are awareness and image developm ent, corporate advertising takes priority. If a firm is attempting to generate demand, then more product-oriented advertising is required. The professional ser­ vices m arketer will probably require a combination o f corporate and service advertising in today’s m arketplace. Many times it is possible to integrate elem ents of both in specific advertisem ents. Remem ber that to the consum er, who cannot see the service, the organization represents the service. A lso, it should be noted that em ployees can be an important target for corporate advertis­ ing. Corporate advertising can also be used in reaching and m oti­ vating your employees to perform.

GUIDELINES FOR TELEVISION ADVERTISING Television can be an important medium if the objective of the professional services m arketer is to inform a large num ber of

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potential clients about the service offering. T elevision can offer broad rcach and an opportunity to dem onstrate the service crea­ tively and tangibly. It can be a com pelling m edium . H ow ever, there are com peting m essages, often referred to as clutter, and television provides little selectivity. In other w ords, you m ay reach people w ho are o f little interest to you. A lso, television is not deem ed as a credible source by m any consum ers. In fact, o f all the m edia, consum ers have the greatest skepticism tow ard television. Since professional services are considered a high-involving and high-risk purchase, television m ay not have the credibility required to deliver your m essage. H ow ever, it can be considered as part o f an overall prom otional cam paign. It can create aw are­ ness and m ay be appropriate for achieving this objective, w hile personal selling, for exam ple, can be used for detailing and clo s­ ing. If television is being considered as part o f your prom otional cam paign, the follow ing guidelines should be considered: 1. T elevision is a visual m edium , so be visual. D em onstrate the benefits o f the service. 2. Stick to a sim ple m essage and avoid a busy and over­ crow ded com m ercial. 3. It is critical to get the v iew ers’ attention early. A udience attention does not build, so the first few seconds are vital. 4. Be sure that the corporate nam e is a central part o f the co m ­ m ercial. It is necessary for prospective custom ers to rem em ­ ber a specific firm , not ju st a generic service being pro­ m oted. 5. It is im portant to convey som e sense o f w ho and w hat the professional is. The com m ercial should reflect a personality and im age. M ake sure it is possible to live up to the person­ ality and im age in the ad.

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GUIDELINES FOR RADIO ADVERTISING It is unlikely that any professional service firm would use ra­ dio as a prim ary m edium (one that accounts for 50% or m ore o f the prom otion budget). But radio can be considered a good sec­ ondary m edium when used appropriately. It is relatively inex­ pensive and frequency (num ber o f tim es a client is exposed to a m essage) can be achieved quickly. Radio is a portable m edium and offers the advantage o f im m e­ diacy o f m essage. H ow ever, since it is not a visual m edium it is difficult to create im pact. There is also a lot o f com m ercial clut­ ter on the air and the m essage decays quickly. H ow ever, there are a few basic rules to follow if radio is being considered by the professional services m arketer. 1. T ry to create a picture o f the service and organization in the mind o f the consum er. Use a good com bination o f voice and sound. 2. Stick to one m ain selling point and deliver it clearly. 3. Like television, there is a need to capture the attention o f the audience early. 4. Follow the old radio advertising axiom : tell them , tell them again, and tell them w hat you just told them . Be sure the firm ’s nam e registers w ith the consum er. 5. Use radio to get consum ers to take action. Ask them to call or visit. A lso, use radio to direct people toward other adver­ tising you m ay be using (e .g ., see our ad in the new spaper).

GUIDELINES FOR PRINT ADVERTISING Electronic m edia (television and radio) is considered passive or low -involving m edia, w hile print (m agazines and newspapers) is an active or high-involving m edia. M any professionals prefer

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print m edia prim arily based on personal taste or preference. On a more objective basis, print is often the m ore appropriate m edium for professional services because it is considered m ore credible than electronic m edia. Print offers som e advantages over elec­ tronic m edia. It offers greater advertising perm anence and good dem ographic and geographic selectivity. It is an excellent media if an inform ational cam paign is being considered. There are spe­ cial interest possibilities with print, especially m agazines, and the potential for an editorially com patible environm ent. There is also the opportunity to reach a good secondary audi­ ence because print tends to get passed along. M agazines offer good color reproduction potential but new spaper does not fare as well and color can be expensive in newspaper. M agazines re­ quire a long-term com m itm ent and long closing dates. It is also difficult to build frequency through magazine advertising and it can be costly. If print is being considered, professional services m arketers should consider the follow ing guidelines: 1. Liberal use o f pictures (preferably photographs) is recom ­ m ended. 2. Sim ple and uncluttered layouts are required to obtain read­ ership. 3. The headline should tell the story and the body copy should reinforce it. 4. Stick to a basic format for all print advertising including design, layout, and typeface. 5. Be inform ation oriented. Print is a high-involvem ent media so you can use either a short-copy or long-copy strategy.

GUIDELINES FOR DIRECT MAIL C ontrary to belief, direct mail used correctly is not m ass mail o r junk m ail. Direct mail can allow the professional to zero in on the target m arket being sought. It is the most focused o f the

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m edia options. D irect mail is generally designed to be dem and oriented. In fact, it is generally used w hen the objective is to have the consum er take direct action such as w riting or phoning for inform ation or m aking an appointm ent to discuss the service. Direct mail is one o f the fastest grow ing m edia in North A m er­ ica. It allow s the advertiser to be very selective and to avoid w aste. It can be personalized and professional services m arketers can control the tim ing and form at o f direct m ail. It also allows for effective m easurem ent o f results. W ith the rise in database m arketing and m ailing list brokering, direct mail can be an effec­ tive part o f a sound prom otion plan. It can bring new clients in, win back inactive accounts, collect accounts, research new ser­ vice ideas, build goodw ill, and w arm up prospects for personal selling activity. In fact, direct mail w ith telem arketing follow -up has resulted in im pressive growth in revenue for som e services m arketers. But w hile direct mail can be effective, it is costly. Cost per exposure is one o f the highest o f all m edia types. A lso, w hile at one tim e there w as little w orry about com petition from other direct mail advertisem ents, the recent popularity o f it has led to increased com petitive activity. Because o f the growth in direct m ail, consum ers are becom ing irritated and often refuse to even look at it. N evertheless, because direct mail can pay dividends its use will continue well into the future. The follow ing guidelines should be considered if direct mail will be part o f a prom otional cam paign. 1. Direct mail should be seen as a package consisting o f sev­ eral elem ents. 2. The envelope should arouse curiosity and begin the selling process. 3. The letter should be personalized as much as possible. Use the letter to interest the reader in the entire package. 4. The brochure or booklet should be the central piece.

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5. A business reply envelope should be part o f the package. 6. M ake certain that the offer is tailored to the target m arket. 7. Use a copy strategy that stresses benefits to the client. 8. Get the client involved and active. Ask them to take the next step (e .g ., call). 9. Test your elem ents including m essage, headline, type of envelope, paper stock, etc. before doing a full m ailing. 10. Consider telem arketing as a possible follow -up to the direct mail effort.

PREPARING THE PROMOTIONAL MIX T here are many considerations in developing the optim al pro­ motional m ix. It seem s that far too often cost drives the decision­ m aking process. W hile cost is a factor, the ability o f a prom o­ tional tool to reach a target m arket or its capacity to achieve a given prom otional objective should be determ inant factors. Before an appropriate prom otional m ix is constructed the pro­ fessional service provider must consider: 1. W ho is the target m arket being sought and w here are they? 2. W hat are the prom otional objectives? 3. W hich vehicles will achieve the desired objectives? 4. How much m oney is required (and available) to do the job? 5. How often should prom otion be used? 6. W hat arc the com petitors doing? Are they spending more money? 7. W ill clients be more receptive to some form s o f prom otion m ore than others?

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SUMMARY 1. Prom otion is a required and im portant part o f the m arket­ ing m ix for the professional services provider. 2. The prom otional m ix for the professional services m ar­ keter consists o f personal selling, advertising, sales prom otion, publicity, and w ord-of-m outh prom otion. 3. Prom otion can be dem and oriented and image oriented and professional services m arketers need to strike a balance betw een the two. 4. Prom otion is used to inform , create dem and, rem ind, de­ velop, and build a favorable image and differentiate the service. 5. Personal selling must be an integral part o f the prom o­ tional m ix for a professional services m arketer. 6. A dvertising can be used to inform or remind large num ­ bers o f clients or prospects about professional services available. 7. Som e sales prom otional activities m ay be appropriate for professional services, particularly off-peak pricing and event or corporate sponsorship. 8. Publicity should be planned, controlled, and integrated into the prom otional m ix. C ause-related m arketing (CRM ) can be an effective publicity tool for professionals. 9. W ord-of-m outh prom otion is im portant to professional ser­ vices m arketers and can be encouraged through good advertising, by asking clients to actively recom m end the service, netw orking w ith other professionals, and seeking out opinion leaders. 10. E lem ents o f a good prom otion plan include: (1) specific objectives; (2) detailed target m arket; (3) prom otional m ix break­ dow n; (4) m essage; (5) budget; (6) calendar o f events; and (7) evaluation m easures. 11. Both product (scrvice) and corporate advertising are re­ quired for professional services m arketing. 12. U se m edia w isely and refer to the guidelines offered in this chapter when using m edia as part o f the prom otional m ix.

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REFERENCES Cowell, Donald W. The Marketing o f Services, London: Heinemann, 1984. Crane, F. G. “ Choicc Criteria and Cue Usage in Selecting Lawyers,” Journal of Professional Services Marketing, (5)1, 1989, pp. 113-121. Firestone, Sidney H. “ Why Advertising a Service Is Different,” in Emerging Perspectives on Services Marketing, Leonard L. Berry, G. Lynn Shostack and Gregory D. Upah (cds.), Chicago: American Marketing Association, 1983, pp. 86-89.

Chapter S ix

Managing in a Professional Services Environment

Professionals often focus their efforts exclusively on providing services to their clients. However, in order to be successful in today’s m arketplace, the professional has to be concerned with m anaging a practice and em ployees as well. Professionals cannot m anage by instinct or by the seat o f their pants. A professional services organization can crumble as a result of poor m anage­ m ent. In this chapter we will exam ine the fundamentals o f m an­ aging in a professional services environm ent.

MARKETING AS A MANAGEMENT TOOL In Chapter Four we discussed the relevance and importance of internal marketing. Since people are responsible for delivering professional services it is important to have m otivated, scrviccm inded, and productive employees. Proper m anagement o f peo­ ple can go a long way in achieving organizational objectives. M arketing is all about exchange, as is much o f what we know about managem ent. In order to successfully carry out exchange activities, either with clients or em ployees, professionals must adopt a m arketing perspective. Drucker (1973) has said that most of what we call m anagem ent consists o f making it difficult for people to get their work done.

This is because managers often manage by fear or anxiety; or

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arc prod u ctio n -o rien ted not m ark etin g -o rien ted . Figure 6-1 d e ­ picts the d ifferen ces betw een a p ro duction-oriented and a m ar­ keting-oriented m anager in a professional services env iro n m en t. W e w ill exam ine each o f the d ifferen ces in som e detail.

FIGURE 6-1. Production versus Marketing-Oriented Manager in a Professional Services Environment M a rk etin g -O rien ta tio n

P r o d u ctio n -O rien ta tio n

• Production-Oriented • Sells output to Employees • One-Way Communication Process • Emphasis on Short-term Objectives • Narrow view of employees needs • Little adaptation to environ­ ment • Cost Oriented

• • • •

Employee-Oriented Uses Consensus for Output Two-Way Interactive Process Emphasis on Long-term Objec­ tives • Broad view of employees needs • Adaptation to environment • Profit Oriented

Production Orientation vs. Employee Orientation O b v io u sly , this a u thor believes there exists a dichotom y b e ­ tw een p rofessionals w ho are p ro d uction-oriented and those w ho are em p lo y ee-o rien ted . A professional w ho is production-orientcd is c oncerned w ith p roducing a service and not w ith the needs o f the clien t. S im ilarly , the p roduction-oriented professio n al-as-m an ag er is a p roduction pusher w hose prim ary interest is in pro d u cin g /co m p letin g the task at hand w ith little regard to his or her p eople. Just as pro fessio n als m ust be clien t-o rien ted , m anagers in a professional services environm ent m ust be people-

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oriented. M anagers w ho m ake the transition from task orienta­ tion to people orientation can inspire and m otivate em ployees to achieve collective objectives.

Sells Output to Employees vs. Uses Consensus for Output Essentially, a production-oriented professional must rely on selling to get rid o f product. If the product m et the needs of clients, selling w ould not be necessary. Sim ilarly, the produc­ tion-oriented professional-as-m anager assum es em ployees arc basically incom petent or lazy or both and must be sold on the concept o f w orking. Little regard is show n for em ployee input by the production-oriented m anager. He or she tends to use the con­ cept o f hierarchical pow er to overpow er adversaries, suppress conflict, and im plem ent (sell) ideas. The m arketing-oriented pro­ fessional is one w ho exhibits concern for his or her people as well as com pleting the tasks at hand. Such a m anager m aintains posi­ tive relations and creates a healthy w ork environm ent through co ­ operation, interdependent team w ork, and a consensus-driven ap­ proach.

One-Way Communicative Process vs. Two-Way Interactive Process Professionals w ho use a production orientation to m anage be­ lieve com m unication is a one-w ay process: from them to the em ­ ployees. T o effectively com plete the w ork that must be accom ­ plished in a professional services organization there needs to be tw o-w ay com m unication. Feedback is critical to the com m unica­ tion process in locating problem areas and ensuring their resolu­ tion. M arketing-oriented m anagers know the process and accept it as a basic part o f their everyday activity. Com m unication, to them , is incom plete w ithout integrated feedback. M arketing-ori­

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ented m anagers seek out and encourage feedback from em ploy­ ees about all aspects of the professional practice.

Emphasis on Short-Term Goals vs. Long-Term Goals Production-oriented m anagers focus on the day-to-day tasks with little regard to the future. T hey adopt a crisis m anagem ent philosophy w hich inhibits their effectiveness and efficiency. It is difficult for them to even evaluate w here they are, not to mention com ing to grips with w here they are going or how to get there. On the other hand, those w ith a m arketing orientation w ork from a w ell-grounded plan w hich provides direction for not only short­ term activities but ultim ately, for long-term achievem ent o f orga­ nizational objectives. In essence, this allows the m arketing-oricnted m anager to be proactive rather than reactive.

Narrow View of Employees vs. Broad View of Employees Production-oriented professionals view all em ployees as es­ sentially the sam e. They have little regard for the individual needs and w ants. Everyone is considered a hom ogeneous m ass. A m arketing-oriented m anager recognizes the heterogeneity o f people in developing products (jobs) or policies that will create satisfaction. T his leads to m ore flexible forms o f organizing and m anaging people. This approach is necessary in order to utilize individual talents to achieve organizational objectives.

Little Adaptation to the Environment vs. Adaptation to the Environment A production-oriented professional assum es people will accept w hatever is offered or proposed. T his type o f person rejects change and falls into the corporate com fort trap; they continue to

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do as they have done. Those that are marketing-oriented seize opportunities, innovate, and adapt to changes in the internal and external environm ent. There is evidence to suggest that the perception of work is changing in our society. There is a new, fresh acceptance of the work ethic. W orkers are rejecting the concept of authoritative m anagem ent. Jobs are becom ing more important to people, as well as their satisfaction with them . W orkers are seeking crea­ tive, action-oriented environm ents in which to w ork. The old style o f m anagement (fear and reward) is being rejected by em ­ ployees in favor of intrinsic interests such as the pursuit of excel­ lence and personal fulfillment. Employees are rejecting the m a­ nipulative, production-type manager who is more interested in pushing ideas than in satisfying their needs and w ants. A m arket­ ing orientation will allow the professional-as-m anager to under­ stand and deal with the changing requirements of effective m an­ agem ent.

Cost vs. Profit Orientation To be m arketing-oriented means to look beyond cost/sales to profitability. A m anager in a professional firm that looks at the costs o f carrying out tasks rather than the total impact of any given mode o f operation is bypassing an opportunity to provide better overall efficiency for the firm. An overem phasis on cost reduction can cause lower satisfaction and negatively impact on future participation by both employees and others outside the organization that must live with such cost-cutting behavior. M ar­ keting-oriented m anagers are able to grasp the big picture: that costs must be incurred in order to achieve objectives. Profitabil­ ity is not seen just in a monetary sense but is viewed as the overall achievem ent o f established objectives. The acceptance o f a m arketing orientation is critical to the success o f any product. M arketing can and should transcend

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every aspect o f an organization. Production-oriented m anagers in a professional services environm ent w ho fail to accept a m arket­ ing perspective must surely go the w ay o f the dinosaur. Paying attention to em ployees’ needs is just as im portant as paying at­ tention to clients’ needs. It is easy to find organizational schizo­ phrenia in professional services organizations. M anagem ent can talk about client satisfaction on one hand, but can neglect em ­ ployee satisfaction. Success in professional services m arketing requires you to be em ployee-driven as well as client-driven.

THE FUNDAMENTALS OF MANAGING IN A PROFESSIONAL SERVICES ENVIRONMENT Internal m arketing (Chapter Four) can only be operationalized through effective m anagem ent. There are several fundam entals of m anaging in the professional services environm ent. W e will exam ine each one in som e detail.

Fundamental #1 —Practice the Art of Delegation Know ing exactly when and how to distribute the workload in a professional services environm ent is a critical m anagem ent skill. A professional must first accept that delegation has to be part of his or her m anagem ent skills. Finding and then delegating re­ sponsibility to the right people are the next steps. W hen delegating w ork the professional m anager must be cer­ tain to delegate the entire jo b . Start-to-finish responsibility is a required part of delegation. It is also important to com m unicate to everyone in the firm the person to whom the w ork has been delegated. If no one is sure w ho is responsible to com plete the tasks, they m ay remain undone. It is necessary to assign good as well as bad tasks. Em ployees should share the unpleasant tasks. W hen delegating the profes­ sional m anager should provide specific instructions and m ake

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certain his or her expectations are clear. Em ployees must be told when and how the jo b is expected to be com pleted. If possible expectations should be put in w riting to avoid confusion. H ow ­ ever, the em ployee m ust be allowed som e latitude in com pleting the tasks. T hey m ay not com plete the task the sam e w ay as the m anager w ould, but they must be allow ed to use their own style if the task can be successfully com pleted their w ay. Creative problem -solving in the professional services environm ent should alw ays be encouraged and rew arded.

Fundamental # 2 —Build a Team M otivation is critical in m arketing professional services. One w ay to m otivate is to dem onstrate to em ployees that they are part o f a team . Show em ployees that they are valued and that their perform ance is critical to the success o f the firm . Take the time to ask their input w hen m aking decisions; this will lead to com ­ m itm ent to the course o f action decided upon. A w ell-organized and happy team will provide excellent service to a client every tim e.

Fundamental #3 —Be a Communications Specialist M isunderstandings in a professional services environm ent can destroy team spirit and m orale. Clear com m unication can help avoid such problem s. Com m unicating effectively with em ploy­ ees is extrem ely im portant. Be specific and spell out exactly w hat you desire. T ry in every case to speak to the em ployee directly and not through a third party. Ask the em ployee if he or she understands and encourage him or her to seek clarification if it is needed. It is im portant to hold regular m eetings w ith the staff in order to com m unicate objectives and to obtain collaboration. The concept o f com m unication is so im portant in professional

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services m arketing w e will discuss it in more detail in Chapter Eight.

Fundamental # 4 —Lead by Example Remain in touch with clients and em ployees. Be highly visi­ ble; show em ployees concern for the business, the clients, and them selves. Do the right things and be sure that em ployees see them being done. The professional should share his or her vision of the firm with the em ployees as often as possible. Learn to pull people along not push them along. Em ployees should never be asked to do som ething that the professional is not prepared to do. He or she m ust set the standards o f perform ance and lead through excellence.

Fundamental # 5 —Practice Servitude A m anager in a professional services environm ent needs to accept the role o f serving the people who serve the clients. This is an extrem ely difficult concept for professionals to accept. It does not m ean that strong leadership cannot be show n. In fact, being prepared to do the little things for clients and em ployees will go a long w ay in dem onstrating the desired leadership.

TIME MANAGEMENT Professionals are constantly engaged in a w ar against the clock. The time must be found to provide excellent professional scrvice to clients on a daily basis, to m anage, and to develop new business to ensure survival and growth o f the firm. A profession­ a l’s productivity often com es down to how well he or she m an­ ages their tim e. Professionals need to be organized and system ­ atic in order to m anage tim e w isely. How ever, few people have a system for using tim e effectively. T his book cannot offer a

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canned solution or com plete system for tim e m anagem ent. H ow ­ ever, here are som e guidelines that can be used to m anage tim e w isely, allow ing for a m ore productive perform ance.

/. Prioritize Tomorrow’s Tasks Tonight T im e should be taken every day to actually w rite dow n, in rank order o f im portance, w hat tasks need to be com pleted the next day. T his provides for a focus on w hat needs to be accom ­ plished every day. It also m akes it possible to track how well tasks are being com pleted. Som e tasks m ay not get com pleted that day. If not, the new task list should alw ays include the un­ com pleted tasks from the day before on the top o f the list. If uncom pleted tasks are being carried over every day, productivity suffers. Soon the professional will becom e overw helm ed with having too m any things to do and too little time to do them in. T his is called tim e poverty, w hich can be dam aging both em o­ tionally and financially.

2. Avoid Time Wasters Som e habits and/or people w aste valuable tim e. Som e habits that are tim e w asters are television, oversleeping, procrastination, and negative thinking. The average adult w atches tw enty-five hours o f television a w eek. T his author rarely considers w atching television an effective use o f tim e. If a program has som e rele­ vance to o n e ’s occupation or industry then that m ay be fine. But w atching m indless sitcom s is not a good w ay to spend valuable tim e. Q uite frankly, m ost people sleep too m uch. If a person sleeps eight hours a day he or she should consider sleeping seven and o ne-half hours. W orking this extra half hour per day will add an extra m onth in productive tim e annually (182 hours extra h- 40hour w ork w eek = 4.5 extra w eeks per year). If one can squeeze

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an extra m onth o f tim e into each year, it should pay dividends personally and professionally. Procrastination is deadly. Most people will not plan out their day or put it in w riting because they know they w ill not follow it. Often people cannot get m otivated to com plete the tasks at hand so they avoid the tasks. Everything becom es m ore interesting than the one thing that must be com pleted. M any professionals also get hung up because o f negative thinking. Negative thoughts are draining and a w aste o f energy and tim e. Em otions such as jealousy, anger, and fear can derail a person. Learn to forget about things that cannot be controlled and focus on things that can. Tim e is one resource that can and must be controlled.

3. Follow Plans, Not Moods Everyone has good days and bad days. H ow ever, m oods should not be allowed to dictate perform ance and productivity. If tom orrow ’s tasks are prioritized tonight, transitory em otions should not be allowed to put one o ff course. One m ust organize and discipline oneself or herself to comm it to the high priority tasks regardless o f daily external/internal factors that can pre­ em pt o n e’s perform ance.

4. Review and Improve the Schedule Most professionals must have a daily schedule. The w ay time is scheduled can m ake or break the professional. An indication of a poor schedule is not staying on tim e. (As m entioned earlier in the book, the problem could be failing to prioritize tasks.) Keep­ ing clients w aiting is not a good practice. Another sign o f a poor schedule is finding oneself totally drained during the day. It is necessary to be fresh and energized to be on top o f o n e’s jo b , but a poorly designed schedule can exhaust the professional. There is no one schedule that w orks best for everyone, nor one that can w ork across professionals. For exam ple, som e professionals

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such as dentists see clients in stream s, w hereas accountants gen­ erally do not. But there are a few things that can be done to im prove a schedule. M ost professionals have to com plete routine paperw ork and correspondence. T hey can set aside fifteen m in­ utes in the early m orning or at the end o f the day to carry out these tasks. M any professionals also have to return routine phone calls and it is a good idea to set aside a tim e to com plete these calls in a block. D eterm ine what other routine tasks m ust be done in the run of a day and calculate how much tim e these tasks require. If they are not generating revenue, try to com plete them during nonrevenue-generating tim e. A lso keep in m ind that a crow ded schedule m ay look good on paper but there should alw ays be an em pty block o f tim e for em ergencies or other m atters that m ay crop up during the day. The em pty tim e block also helps rescue the pro­ fessional w ho does fall behind in his or her schedule. Som e pro­ fessionals use the em pty tim e block (15-30 m inutes) strictly for cultivating new business. T hey use the tim e to call or w rite to prospective clients, to netw ork w ith other professionals, or to discuss cross-servicing with existing clients. If the professional can build this business developm ent tactic into each day he or she should not have to w orry about clients com ing down the pipeline in the future. One o f the most im portant things to rem em ber about a schedule is that it should be personal; the person m aking it should control it. The professional should try to schedule activ­ ities, appointm ents, and m eetings that m ake sense for him or her and com m unicate this to the staff so that they are aware o f sched­ uling preferences.

5. Set the Agenda M ost professional w orking days get eaten up by trivial drivel and interruptions unless an agenda is set. Professionals cannot be

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driven by what other people deem is im portant. T hey need to view time as an opportunity for perform ing w hat they need to do in order to be successful.

SUMMARY 1. A professional needs to be a good m anager. Proper m anage­ ment of people can help in achieving organizational objectives. 2. The professional-as-m anager needs to be m arketing-ori­ ented to m anage effectively. T his m eans (1) being em ployeeoriented; (2) using consensus for decision m aking; (3) using a tw o-w ay com m unication process; (4) em phasizing long-term o b ­ jectives; (5) taking a broad view o f em ployees’ needs; (6) adapt­ ing to the environm ent; and (7) being profit-oriented. 3. Effective m anagem ent in the professional services environ­ m ent also involves five fundam entals: (1) practicing the art of delegation; (2) building a team ; (3) being a com m unications spe­ cialist; (4) leading by exam ple; and (5) practicing servitude. 4. Professionals need to m anage their tim e w isely. Basic w ays to m axim ize tim e include: (1) prioritizing tom orrow ’s tasks to­ night; (2) avoiding tim e w asters such as television; (3) follow ing your plans, not your m oods; (4) reviewing and improving your daily schedule; and (5) setting your own agenda. 5. Professionals need to be em ployee driven and client-driven in order to be successful in today’s environm ent.

REFEREN CE Druckcr, Peier F. Management: Tasks, Responsibilities, Practices, New York: Harper & Row, 1973.

Chapter S even

Trade Area Analysis, Site Selection, and Facility Design

This chapter will examine the importance of conducting a trade area analysis when planning to locate a new professional services operation, as well as the need to complete a trade area analysis for an existing operation on at least an annual basis. The specific selection and reevaluation o f an existing site within a given trade area will also be covered as well as facility design criteria.

TRADE AREA ANALYSIS The location of a professional services operation, in most cases, is a serious and important decision. In order to be success­ ful the professional services m arketer must understand the nature of various geographic m arkets and the potential for business to be generated from those areas. There is little agreement among marketers as to what constitutes a trade area. Stern and El-Ansany (1982) define a trade area from three perspectives: the buyer’s, the seller’s, and sales and/or volume. If the buyer’s perspective is used, a trade area is the region inside which the buyer may reasonably expect to find the service con­ veniently located for personal consum ption. If the seller’s per­ spective is used, a trade area is the region whose size is deter­ mined by boundaries within which it is econom ical in term s of

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delivering the scrvice. From the sales or volum e perspective, a trade area is the area surrounding the professional services outlet from w hich ninety percent o f sales or volum e is derived. T his m ay be confusing but the professional services m arketer has to consider all three o f these perspectives w hen dealing w ith the trade area issue. O bviously, w hen attem pting to establish a busi­ ness, the professional services m arketer has to consider w here it w ould be econom ical to do business and this is often contingent upon w hether or not a large enough target m arket exists and w hether or not the target m arket is prepared to do business there. A dditionally, the professional services m arketer has to deter­ m ine ju st w hat the physical boundaries w ill be for the trade area. In other w ords, w hat will be the size and shape o f the trading area? T his is particularly im portant w hen calculating m arket po­ tential and w hen considering business expansion through m ulti­ site developm ent (m arket developm ent). A professional practice generally does not w ant to establish a new operation in a trade area served by an existing operation since this creates trade area overlap and possible cannibalization. In the quest for a geographic location from w hich to do busi­ ness, the professional services m arketer needs to consider three key variables: (1) characteristics o f the population, (2) econom ic factors, and (3) factors that contribute to the quality o f life for those that live or w ork in the area. T here are several factors that m ust be considered w ithin each o f the these categories. Figure 7-1 show s the factors that m ust be exam ined w hen considering a trade area. O ne o f the m ost im portant factors is the size o f the target m ar­ ket available in the trade area. A nother critical consideration is how saturated the m arket is. Is dem and for the professional ser­ vice equal, below , or above existing supply? T oo often profes­ sional services m arketers use intuitive judgm ent or personal bias during the trade area evaluation stage and select a trade area that is saturated, thus m aking it difficult to run a viable operation.

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M arket potential calculation m ust be m ade in the trade area and w eighed against the ability o f com petitors to m eet existing and/or future dem and. T his is not generally difficult to accom plish. It is very easy to obtain what the per capita expenditures are on par­ ticular professional services in a given trade area. If this is known and the size o f the population is know n, then overall m ar­ ket potential can be calculated. For exam ple, say the average person spends $100 on dental services per year in trade area A . If the trade area population is 10,000, then the overall m arket po­ tential in trade area A is $1 m illion for dental services. H ow ever, let’s also assum e that the trade area already has three dentists and, for illustration purposes, the average dentist requires $250,000 gross revenue to break even. The assum ption is m ade that natural m arket share is at w ork in the trade area. That is, each dentist is receiving an equal m arket share. In this case, the average dentist is generating $333,000 per year ($1 m illion/3). T his is above the break-even point and it can be assum ed that each dentist has a viable operation. A ssum e that a new dentist decides to locate in that area anyw ay. If the assum ption o f natu­ ral m arket share is m ade, what w ould be the potential? In this case, by obtaining natural m arket share, each dentist would gen­ erate $250,000 w hich is the break-even point ($1 m illion/4). T his trade area, unless it is grow ing at a fast rate, should be considered saturated. H ow ever, in business rarely does natural m arket share exist. Som e professionals are just better than others (com petitive advantage) and can generate unnatural m arket share. T his m eans that it is possible to enter even a saturated trade area and still be successful. H ow ever, to achieve m ore than an equal share o f m arket a professional m ust have a com petitive advantage. It is often difficult to generate new dem and for ser­ vices so m arket share will and must com e at the expense o f com ­ petitors. H ow ever, most professionals m ay be advised to seek unsaturated m arkets first and w ork on m arket penetration in those trade areas sim ply because it m ay be less costly and in­

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v o lv e lo w e r risk . W h e n c o n s id e rin g tra d e a re a s , th e re fo re , the siz e an d p o ss ib le g ro w th o f th e ta rg e t m a rk e t so u g h t as w e ll as th e e x is tin g c o m p e titio n sh o u ld be k e y d e te rm in a n ts fo r tra d in g a rea s e le c tio n .

FIGURE 7-1. Trade Area Variables Population Factors

Economic Factors

Distribution of age groups Level of education Percentage of home owners vs. renters Size and rate of population growth Gender Social class and subculture

Disposable Income (Un)Employmcnt rates Retail sales potential Tourism inflow Labor availability

Quality o f Life Factors Availability of transit Climate Schools Roads Culture and recreational facilities Police and fire protection

T h e re are se v e ra l fa c to rs th at d e te rm in e the siz e a n d sh a p e o f a g iv e n tra d e a rea fo r a p ro fe s sio n a l s e rv ic e . O n e c o n s id e ra tio n is the ty p e o f p ro fe s sio n a l s e rv ic e . S o m e p ro fe s sio n a l s e rv ic e s th at are h ig h ly s p e c ia liz e d w ill h a v e th e a b ility to d ra w c lic n ts fro m a g re a te r d ista n c e th an n o n sp e c ia liz e d o r c o m m o d ity -b a se d p ro fe s ­ sio n a l se rv ic e s . A n o th e r fa c to r is the p ric e o f the p ro fe s sio n a l se rv ic e . If th e re is p ric e c o m p e titio n fo r a c e rta in p ro fe s sio n a l s c rv ic e , a c lie n t m a y b e p re p a re d to tra v e l fa rth e r fo r th e b e tte r p ric e d se rv ic e th u s c re a tin g a la rg e r tra d e a re a . A th ird fa c to r is

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the location and availability o f com petition. If there are few su b ­ stitutes available, a trade area for a professional service m ay be quite large. H ow ever, if there are m any com petitors then it is likely that each com petitor will share a sm aller trading area. A final factor w ould be physical and psychological barriers to a trade area. A trade area m ay cut o ff potential clients because of a physical barrier (traffic congestion) or a psychological barrier such as being considered a high crim e area. W hen seeking to m ake decisions about trade areas, a profes­ sional services m arketer should draw inform ation from a variety o f sources. T w o useful sources from the U .S . Departm ent o f Com m erce are the County and City Data Book and the Statistical Abstract o f the U. S. A nother source in the United States is the Editor and Publisher Market Guide. In C anada, Statistics Can­ ada offers a variety o f data that w ould be useful in assessing various trade areas. For professional services m arketers already in business, is there a need to conduct a trade area analysis for an existing oper­ ation? The answ er is yes. Such an analysis will answ er several questions: 1. W hat is the m arket potential in the current trade area? Is it grow ing or shrinking? 2. W hat is the professional’s current share o f m arket? Is it g et­ ting bigger or sm aller? 3. W here arc the clients com ing from ? How far are they travel­ ling? 4. Can another site be operationalized to satisfy clients w ho are not currently using the existing site? A very sim ple w ay to determ ine the extent o f an existing trade area is to random ly select about 400 client files and to physically plot on a m ap w here they live/w ork. If done properly, the resul­

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tant trade area w ill probably reveal the geographic boundaries from w hich about eighty to ninety o f the clients are draw n.

SITE SELECTION O nce a decision is m ade on a general trade area, a specific site m ust be selected w ithin the trade area to set up an operation. The question then is w hat part o f the trade area should be selected? Should the operation be established in the central business d is­ trict, in a shopping center, or in an isolated business location? O bviously, m any o f the factors that dictate the choice o f the general trade area im pact on the decision o f w here to specifically establish the business w ithin the trade area. Som e o f the key factors, in addition to location o f target m arket and com petition can be seen in Figure 7-2.

FIGURE 7-2. Factors Affecting General Site Selection 1. 2. 3. 4. 5. 6. 7.

Overall attractiveness and appeal of site Adequacy of mass transportation and parking facilities Traffic volume and pattern (pedestrian and vehicular) Local ordinances and zoning regulations Accessibility to the site Compatibility of neighboring businesses Costs and expansion potential

Each particular site w ithin the trade area w ill have advantages and disadvantages. T here m ay be m ore than one type o f site situation available in the trade area and each should be analyzed as to w hich one w ould be best for the operation. Further, there m ay be m ore than one site w ithin a particular building or b uild­

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ings on a site. For exam ple, there m ay be one site in the central business district and tw o sites w ithin a particular shopping c en ­ ter. W hen analyzing individual site possibilities, several factors m ust be considered in addition to the general factors for site se ­ lection listed in Figure 7-2. T hese include (1) history o f site and (2) conditions o f im m ediate area around site. Before locating in a particular site it is advisable to seek inform ation on the history of the site. H as there been another professional services operation there before? W as it successful? W hy did it m ove? If the pre­ vious ow ner or tenant can be located it w ould be useful to obtain the answ ers firsthand. T alking to other business ow ners nearby is also advisable. It should be rem em bered that even if previous professional services m arketers failed at this location before it does not im ply that the new business w ill fail. H ow ever, c o n ­ sum ers often have an im age o f a particular site and that is usually developed as a result o f their experience w ith the business that occupied that location. If their experience has been negative, som e negative carryover m ay exist. G enerally, professional services m arketers cannot afford to ow n their building or dom inate the im m ediate environm ent sur­ rounding the operation. T hus, the professional services m arketer m ust be concerned w ith the im m ediate area that w ill not be under his or her control. T here are several factors that affect the quality o f the area surrounding the professional services operation. T hey include (1) vacant sites and buildings, (2) poor w alking areas, (3) hours o f operation in area, and (4) location clutter. E m pty stores cannot generate consum er traffic and can give the area a depress­ ing appearance. If the professional services operation depends on consum er traffic, vacant sites and buildings will not help. Lack o f sidew alks or poor sidew alks m ay inhibit consum er traffic. A lso, anything blocking traffic flow on the sidew alk is p roblem ­ atic for the consum er. T he professional services m arketer m ust exam ine the hours o f operation o f other businesses in the area. M any consum ers prefer

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to do one-stop shopping and m ay only be w illing to use the ser­ vices if they can conveniently com plete other shopping tasks at the sam e tim e. T he final consideration is w hether or not the co n ­ sum er can see the location w hen approaching it. It is im portant to determ ine if the site is visible or hidden by satellite structures that m ay have built up around it. If the problem docs not c u r­ rently exist, it is advisable to determ ine if such developm ents are pending since the problem m ay arise in the future. The profes­ sional services m arketer should alw ays be future-oriented when selecting a trade area, a general site, and specific site location. T he optim al location is one that can be operationalized easily in the short term but will also offer potential for grow th and exp an ­ sion in the future. In order to increase the chances o f success, the professional services m arketer needs to select a business location that has a base o f consum ers to draw from . T hese consum ers need to know that the service is available and that it is convenient, accessible, and appropriate for them to use. O ften professional services m ar­ keters assum e that the only costs clients incur w hen consum ing professional services are the fees charged. H ow ever, there are m any other costs connected to obtaining professional services such as the co n su m er’s tim e to and from the location, as well as psychic and financial costs caused from inadequate or expensive parking and/or poor access to the location. T he old axiom o f business success used to be “ location, location, lo ca tio n .” T his m ay not be totally true for professional services, but it is an im portant axiom to rem em ber.

FACILITY DESIGN T he im portance o f im pression m anagem ent in m arketing pro­ fessional services w as seen in C hapter Four. An im portant cle­ ment o f im pression m anagem ent is the physical environm ent

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from w hich the services are produced and rendered. W hile a nice looking physical environm ent cannot com pensate for poor or in­ adequate service, it does send a m essage or a clue about the service to everyone w ho w alks through the door. The physical environ­ m ent can com m unicate the professional philosophy o f the profes­ sional services m arketer. A good physical environm ent should (1) m ake clients feel com fortable, confident, and safe; (2) com ­ m unicate a sense o f pride in the professional services operation; and (3) be a reflection o f the quality o f professional services that are offered. Environm ental psychologists have long argued that the physical environm ents w here people w ork prom ote and display who they are and w hat they think o f them selves. Chapter Four show ed how som ething as sim ple as color language can enhance or inhibit professional im age. Physical appearances allow the consum er to m ake judgm ents about the professional services under consider­ ation. Every piece o f the physical environm ent such as signage, building exterior, and building interior can provide a positive or negative im pression to the consum er. A s part o f the m arketing audit, the professional services m arketer should exam ine physi­ cal facilities critically. Docs the physical environm ent tell the consum er w ho the professional is, what he or she does, and how well it is done? If not, changes in the physical environm ent may be in order. M any professionals arc reluctant to m ake changes in their physical environm ent because it involves both time and m oney. T here are other reasons w hy professionals m ay not be interested in m aking changes to their physical surroundings. First, m any are happy with the status quo and incapable o f being objective about their surroundings. The professional often does not see the environm ent the w ay the client does and thus docs not see the reason to m ake changes. Second, many professionals see the need for changes but lack the energy or ideas to m ake the changes. And third, m any professionals believe that clients pay

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for professional services not for superficial elem ents such as a designer-built office. But a professional m ust rem em ber that the consum er m ay view the physical surroundings as a logical exten­ sion o f the professional. It is possible that som e consum ers m ay react negatively to the professional’s physical surroundings and not wish to consum e the service. W hen evaluating the environm ent the professional m ust con­ sider not only the clients but the em ployees. A good physical setting can help m otivate personnel and m aintain productivity. The physical environm ent must be assessed ergonom ically and from an atm ospherics perspective. W hen applying ergonom ics and atm ospherics to a professional’s physical environm ent the follow ing must be considered: 1. Lighting - T o assist personnel in com pleting their tasks ade­ quate lighting is required. Em ployees as well as clients will benefit if a view o f the outdoors is available. 2. Acoustics - N o is e can be distracting and disturbing to both em ployees and clients. It can also negatively impact on pro­ fessional im age. A nything that can be done to reduce inter­ nal and external noise should be undertaken, including in­ stalling acoustic tile and carpeting. 3. Temperature - B o t h personnel and clients need to be com ­ fortable in the physical environm ent. Tem peratures between 65° and 75° F are suggested for an office environm ent, and hum idity should be less than 50 percent. 4. M u sic - Good background m usic can relax clients as well as offer covcr for private conversation. The proper tem po o f m usic is important since m usic that is too fast m ay create clicnt anxiety. 5. C o lo r - The selection o f color in a professional office is im ­ portant. C olor can set the tone and mood o f the office. Re­ m em ber color has an em otional impact on clients and em ­

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ployees. D eterm ine w hat mood is desired and select colors accordingly. 6. Patterns o f m ovem ent- E m ployees and clients should be able to m ove easily in the physical environm ent. An ideal traffic flow needs to be part o f the environm ent. R ecently, a circular arrangem ent in w hich corridors are m inim ized has becom e popular in m any professional offices.

RELOCATION There arc a variety o f reasons w hy a m ove to a new location m ay be necessary. First, the conduction o f an annual trade area analysis m ay have show n som e changes in the com position o f the trade area. For exam ple, m any o f the clients being served m ay be relocating and it m ay now be inconvenient for them to continue to use the professional’s service. Further, perhaps the population grow th in the trade area is negative w hich will im pact on the pool o f clients from w hich to draw . A nother reason for a m ove is the fact that the practice has outgrow n the current space. Sim ple lack o f space m ay be com prom ising the ability to deliver quality ser­ vice to clients. Finally, perhaps it would be w ise financially to m ake a m ove now if an opportunity for better space arises. Often new building developm ents offer incentives to secure tenants early in the developm ent stage and it m ay be possible to capital­ ize on such an opportunity. In this situation, it is im portant to conduct a trade area and site assessm ent for the new location. Depending on the distance from the existing location, it m ay be possible to retain existing clients and add to the client base in the new location. O pening a second facility m ust be done only when appropriate research has been com pleted. Careful trade area analysis must be undertaken to determ ine revenue potential and to ensure that no cannibalization o f the first facility will occur. If m ultisite expan­

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sion is an option, other factors m ust also be considered. For e x ­ am ple, is there sufficient tim e to service the new location or will it be necessary to add additional personnel? Is the current loca­ tion running at capacity, has grow th peaked, or can the practice be built up? T hese decisions are often difficult to m ake and it m ay be advisable to seek assistance from other qualified profes­ sionals.

SUMMARY 1. T he location o f a professional services operation is an im ­ portant consideration. A trade area can be defined as a region w here the client m ay find it reasonable to consum e the servicc or w here the service can be delivered econom ically. Perhaps m ore im portantly, it can be defined as the area w here the bulk o f busi­ ness is derived. 2. W hen searching for a business location, the professional services m arketer m ust consider: (1) the characteristics o f the population in the trade area; (2) econom ic factors; and (3) factors that contribute to the quality o f life for those that live and w ork in the area. 3. W hen assessing a trade area it is also critical to consider the size o f the target m arket in the trade area and the am ount of com petition. 4. A professional should be able to calculate the m arket po­ tential o f a trade area by finding out per capita spending on the professional service(s) in the trade area and by m ultiplying this by the size o f the population in the trade area. 5. To determ ine m arket share potential, m any professionals use the natural m arket share rule. T hat is, they divide the total m arket by the total num ber o f com petitors (including them ­ selves) to arrive at an average share. H ow ever, rarely does natu­

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ral m arket share occur. Som e professionals can achieve m ore or less depending on their com petitive advantage. 6. Several factors determ ine the exact size and shape o f a given trade area. O ne is the type o f professional service; sp e c ia l­ ized services have a larger trade area. A nother is the degree o f price com petition; consum ers m ay travel farther for better pric­ ing. T he num ber o f substitutes or com petitors also affects trade area size and finally, physical or psychological barriers affect the size and shape o f a trade area. 7. W hen conducting a trade area analysis on an existing b u si­ ness, the professional services m arketer needs to determ ine: (1) the m arket potential in the trade area; (2) w hether or not it is grow ing or shrinking; (3) w hat the current m arket share is and w hether or not it is getting bigger or sm aller; (4) w here the c li­ ents are com ing from and how far they travel; and (5) if another site can be opened that will serve new clients not currently using the existing site. 8. A sim ple w ay to prepare a trade area analysis is to ran­ dom ly select 400 client files and to plot on a m ap w here they live or w ork. T his should reveal w here the bulk o f the clients arc draw n from . 9. O nce a general trade area is selected, a specific site needs to be chosen. M any o f the factors used for trade area analysis com e into play for site selection. But other factors include appeal o f the site, parking facilities, traffic patterns, zoning regulations, site a ccessibility, com patibility o f neighboring businesses, and the cost and potential o f the site. 10. It is also prudent to exam ine the history o f the site and conditions in the im m ediate area surrounding the site. 11. T he physical environm ent should m ake the client feel safe and com fortable as well as com m unicate a sense o f the p rofes­ sio n a l’s pride in the operation. It should also reflect the quality o f professional services that the client should expect. 12. A professional needs to consider the ergonom ics and atm o ­

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sp h erics o f the physical e n v iro n m en t. T h ey include: (1) lighting; (2) acoustics; (3) tem perature; (4) m usic; (5) color; and (6) p a t­ terns o f m ovem ent in the space. 13. Physical relocation o f an operation m ay be a consideration for a professional during his or her career. A cost-benefit a n aly ­ sis m ust be undertaken to d eterm ine the feasibility o f such a m ove. 14. It m ay be advisable to seek professional assistance w hen co n d u ctin g a trade area a n aly sis, site a ssessm en t, o r w hen c o n ­ sid erin g a m ove to a new location.

REFEREN CE Stern, Louis W. and Adel I. El-Ansany. Marketing Channels, Englewood Cliffs, N .J.: Prcntice-Hall, 2nd cd., 1982.

Chapter E ight

Communication —The Key to Success in Professional Services Marketing

M uch o f a professional’s tim e is actually spent com m unicating to clients and em ployees. Because o f the intangibility o f profes­ sional services, consum ers often have difficulty judging quality o f service. Often the only w ay to convey quality is to com m uni­ cate it to the client. A professional’s perform ance is often based on how well he or she can com m unicate. H ow ever, there have been m any recent studies that suggest m any professionally trained people suffer from poor com m unication and interpersonal skills. W hat this m eans is that there are m any technically com pe­ tent professionals w ho will not be successful in business sim ply because o f their inability to com m unicate with clients and em ­ ployees. C hapter Four referred to the concept o f functional quality in professional services m arketing. A m ajor com ponent o f func­ tional quality is the ability o f the professional to convey care and concern to the client (as well as the em ployee). W hile a profes­ sional m ay be caring and concerned he or she m ust be able to com m unicate it effectively to the clients. Im proving com m unica­ tion skills can im prove the chances o f success in professional services m arketing. Rem em ber while clients m ay be buying a service from the professional, they are actually buying the pro­ fessional. Because o f inseparability, the professional and client m ust com e together to create the service exchange; as such the 107

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professional is an integral part o f the service. Satisfying clien ts’ needs will be dependent on how well the professional can com ­ m unicate w ith the client before, during, and after the exchange process.

BARRIERS TO COMMUNICATION B arriers to effective com m unication betw een the client and professional are m any and varied. T here is a trem endous oppor­ tunity for m iscom prehension and m isunderstanding during every contact w ith a client. Som e o f the most im portant variables that can create barriers to effective com m unication arc: 1. Language — Professional term inology or jargon can confuse and intim idate clients. 2. Ego — O ften clients have difficulty accepting the fact that they need help and m ay becom e ego-defensive. T his m ay create a barrier for effective com m unication. C onversely, the professional’s ego m ay get in the w ay w hen a client asks a question, or states an objection about the instructions or advice. T hus, the professional m ay fail to listen effectively. 3. Level o f Knowledge — Som etim es there is an assum ption that a client has a certain level o f know ledge about the prob­ lem or solution under consideration. T his assum ption may lead to providing too little inform ation. 4. Negative Attitudes — A client can enter the purchase situa­ tion w ith a negative attitude about the professional or the profession. A bad previous cxpericnce can be the reason for the negative attitude and thus the client m ay put up a protec­ tive barrier w hich can inhibit com m unication. 5. One-Way Communication — T his is the case w here the p ro­ fessional talks and the client listens. W ith no feedback from

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the client, the chances o f m iscom prehension occurring for either party is high.

CHARACTERISTICS OF GOOD COMMUNICATORS In Chapter Six one o f the fundam entals o f m anagem ent was Fundam ental # 3 “ Be a com m unications specialist.” But what m akes a good com m unicator? H ere are several attributes that characterize good com m unicators: 1. Confidence — G ood co m m unicators convey confidence. Professionals have to gain the trust o f their clients and one key w ay to do so is to com m unicate confidence. The image projected can increase the professional’s credibility in the eyes o f his or her clients. Clients w ho are confident in you will help m aintain and enhance your confidence in yourself. There are several things you can do to com m unicate confi­ dence: (1) have the right professional appearance; (2) a l­ w ays be prepared; and (3) use a strong clear tone when speaking. 2. Sincerity - G ood com m unicators are able to dem onstrate sincerity and conviction when they speak. Since m any cli­ ents are relying on the professional’s skills, advice, and guidance, they want to be reassured that he or she is sincere and believes strongly in w hat he or she is conveying. 3. Thoroughness —Clients expect that professionals will offer thorough service. Som e professionals m ay offer such thor­ oughness but m ay fail to com m unicate it to their clicnts. T hey m ust tangibilize their thoroughness through proper com m unication with the client. T hey should walk clients through the service procedure orally in order to show them that tim e and care has been taken in dealing with their prob­ lem . The key here is to focus on im portant points (the things

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the client w ants to know) and be sure to cover those points com pletely. 4. Friendliness — People with good com m unication skills are capable o f projecting friendliness. A professional that can project an image o f friendliness will have a com petitive ad­ vantage over one that cannot. Clients dem and courteous professional service but prefer to deal with professionals w ho are friendly. T his friendliness is important in relation­ ship building. A professional m ay be a friendly person but can have difficulty com m unicating it. Often professionals seek to deal with clients with professional detachm ent. H ow ever, a client is a hum an being and can, at tim es, be scared, anxious, or stressed about their problem . Friendli­ ness on the part of the professional can ease the stress the client may be feeling when consum ing a professional ser­ vice. 5. Simplicity — A key characteristic o f good com m unicators is the ability to converse in a sim ple and direct w ay. Often professionals fall into the trap o f overw helm ing their clients w ith com plex responses or endless use o f jargon. They should com m unicate with clients in a direct and sim ple m anner. If professional term inology is used, explanations in laypersons’ language is required so that the client will know w hat the term s m ean. 6. Listening —M aybe the m ost im portant characteristic o f a good com m unicator is solid listening skills. In order to solve a client’s problem and offer reasonable advice, the professional needs to truly understand the client’s problem . O nly through effective listening can the professional get to the crux o f the problem . If one can com m unicate with confidence, sincerity, thorough­ ness, friendliness, and sim plicity and practice the art o f listening,

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one will be com m unicating care and concern for clients. T his ability m ay be one o f the m ost im portant parts o f a com petitive arsenal.

NONVERBAL COMMUNICATION W hile som e professionals have m astered verbal com m unica­ tions, m any have not considered the im pact o f nonverbal co m ­ m unications w hen dealing with clients. M any researchers believe that nonverbal com m unication plays a m ore im portant role in interpersonal com m unication. In fact, research indicates that nonverbal m essages account for as m uch as sixty-seven to ninety percent o f the total m eaning produced in face-to-face com m uni­ cation. N onverbal com m unication can be used to reinforce v e r­ bal com m unication or can m itigate or contradict the verbal m es­ sage. V irtually anything other than verbal com m unication, includ­ ing the w ay w ords are used, can be considered nonverbal c o m ­ m unication. N onverbal com m unication occurs sim ultaneously w ith m uch o f verbal com m unication and can include paralinguistic phenom ena (how som ething is said), posture, w alk, gestures, handshake, spacing, and facial expression. N onverbal com m unication can occur in the absence o f verbal com m unication through sym bols, as well as through social and physical cues (clues), and the structure o f the overall en v iro n ­ m ent. The im portance o f im pression m anagem ent as a m ajor com ponent o f a client m anagem ent program has already been discussed in C hapter Four. T he im portance o f the physical and social environm ent (e .g ., the nonverbal m essages created by the appearance and dress o f the professional, the physical surround­ ings, e tc .) surrounding the professional service w as covered. H ere the focus will be on nonverbal com m unication as it pertains

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to paralinguistic phenom ena, posture, w alk, gestures, hand­ shake, spacing, and facial expression.

Paralinguistic Phenomena T his includes the voice pitch, speed, volum e, and use o f w ords. The m anner o f speaking provides m eaning to w hat is said. O bviously, a good voice is a requirem ent for good com m u­ nication. V oice should not hinder the m essage. M onotone voices do not hold the attention o f listeners, so a variation in pitch is required. D eterm ining how fast to speak is another consider­ ation. G enerally, professionals should present the easy parts o f the m essage at a fast pace and the m ore difficult parts at a slow er rate. T he correct use o f pauses is also im portant. Frequent pau s­ ing can be irritating but properly placed pauses can em phasize certain m aterial and gain attention. O bviously, one m ust speak loudly enough for clients to hear but one should not speak too loudly. V arying voice volum e helps create interest and em pha­ sis. G iving w ords their proper m eaning and em phasis can be accom plished by varying pitch, speed, and volum e. W hat w ords are used is also an im portant part o f nonverbal com m unication. It has already been suggested that it is im portant to verbally com m unicate w ith sim ple, short w ords w hen dealing w ith clients and to avoid professional jarg o n . But the use o f w ords also carries a nonverbal m essage. For exam ple, not only m ay clients m isunderstand if a com plicated vocabulary is used, but nonverbally they m ay also get the im pression that the profes­ sional is trying to overpow er or intim idate them .

Posture T his is one thing that a client is very apt to notice about the professional. Even clients not close enough to see facial expres­ sions will still see the general form o f the body. Professionals

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should keep their body erect w ithout appearing too stiff. T hey should alw ays avoid looking too lim p. T heir posture should con­ vey that they are alert, confident, and com m unicative. They should try to appear natural, not artificial. T hey need to ask oth­ ers to give them feedback on posture and if im provem ent is sug­ gested, then practice is in order.

Walk Clients can form an im pression sim ply by the w ay the profes­ sional w alks. A strong, brisk, and confident walk is appropriate. A hesitant or awkw ard walk should not be used since it can con­ vey a negative nonverbal m essage to the client.

Handshake The author w as once told by a consum er that a professional’s handshake w as the signal to his or her character. T his consum er w ould not use a dentist with a weak handshake because it con­ veyed a w im py or insecure personality. Conversely, this con­ sum er w ould avoid a law yer with a bonecrushing handshake b e­ cause it conveyed an overbearing personality. A professional should use a handshake that dem onstrates confidence and caring. A good handshake takes practice and should never be underesti­ m ated as a nonverbal com m unicator.

Spacing Crossculturally there are significant differences in acceptablc distances betw een speakers. For professionals in the U .S. and C anada, research has indicated that standing or sitting about three feet apart is the optim al distance for effective com m unica­ tion to occur. Being too close m ay m ake the client uncom forta-

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blc, w hile being too far aw ay from a client sends a nonverbal m essage that perhaps the professional does not care.

Facial Expression H arrison (1976) suggests that “ the face is perhaps our m ost pow erful nonverbal com m unicator” (p. 217). M ehrabian (1972) has gone further by arguing that 55 percent o f interpersonal com ­ m unication is via facial expression. So, the saying “ it w as w rit­ ten all over his or her face” has an im portant m eaning for p rofes­ sionals. T hey can tell clients they care but if clients do not see it in their faces, then it is not believable. O ften professionals are unconscious about the use o f facial expressions and can, unw it­ tingly, convey unintended m essages. W hile certain facial expres­ sions convey different m eanings crossculturally, a sm ile and a frown have universal m eaning. As m entioned in C hapter Four, clients dem and courteous professionals but prefer friendly pro­ fessionals. A sm iling face is a cue to friendliness. An im portant part o f facial expression is the use o f the eyes. The eyes, long considered the m irrors o f the soul, dem onstrate to the client w hether or not one is caring and sincere. Eye contact is an im portant part o f the com m unications process betw een clients and professionals. M aintaining good eye contact w ith clients provides them w ith a positive nonverbal m essage. It clearly show s that professionals arc interested and respect them .

COMMUNICATION BY TYPE OF PERSONNEL IN PROFESSIONAL SERVICES MARKETING O bviously, it has been argued here that effective com m unica­ tion, verbally and nonverbally, plays a central role in the d eliv­ ery o f professional services. Professional services m arketers need to im prove their know ledge o f the com m unication process, identify the types o f com m unication exchanges that occur with

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clients, and train personnel to be com petent in those specific com m unication exchanges. In the professional services environm ent, com m unications w ith clients can range from very sim ple to very com plex e x ­ change processes. B oom s and N yquist (1981) have developed a classification schem a that show s the com m unication require­ m ents dem anded by particular positions in service organizations. In essence, personnel in the scrvice environm ent can be c ateg o ­ rized based on the com m unication dem ands placed on them by the client. B oom s and N yquist suggest there are three different types o f jo b s or people in the services organization. T hese au­ thors also provide the type o f com m unication skills and tech ­ niques that are required by each type o f jo b .

Type #1 People in this position m ust deal effectively w ith brief, often frequent, and one-tim e only com m unication interactions w ith m any clients. C om m unication usually involves the exchange o f sim ple and lim ited am ounts o f inform ation. An effective c o m ­ m unicator in this jo b category m ust be able to process short, rapid m essages quickly and provide a lim ited num ber o f ap p ro ­ priate responses to consum er inquiries. T hey m ust avoid treating clients like objects and being treated like objects them selves. C lear concise instruction skills are required as well as solid lis­ tening ability. T he ability to defuse anger and establish client rapport quickly is also necessary. An exam ple o f a person or job that fits the T ype # 1 category is the receptionist in a professional office.

Type # 2 T he com m unications involved in this type o f jo b consists o f restricted interactions w ith clients but w ill be longer in duration than those in T ype # 1 . T he inform ation exchanged can vary

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from the sim ple to the m ore com plex and this jo b requires m ore independent decision m aking. An effective com m unicator in this job category requires effective listening skills, and an ability to provide clear instructions. It also requires an ability to establish trust, good interpretation skills and the ability to persuade. The relationship betw een the client and employee is ongoing and the flow o f inform ation m ore intense. An exam ple o f a person or job that fits in Type # 2 is a paralegal in a legal office, a nurse in a physician’s office, or a dental hygienist in a dental office.

Type #3 Positions in this category require the most com plex com m uni­ cation skills o f all. C om m unication involves repeated interac­ tions w ith the client over tim e and includes an extensive flow of inform ation. The com m unication tasks in this category are com ­ plicated and often nonrepeatable. T o be effective in this category requires strong listening skills, the ability to process com plicated inform ation, and the skill o f asking appropriate questions. A bili­ ties to express feelings, m ake decisions quickly, and think crea­ tively in a one-to-one setting are required. Exam ples o f people or jobs that fall into Type # 3 are law yers, physicians, accountants, and other high-contact professional services suppliers. Most professional services firms will have personnel in one, tw o, or all three categories. The key for professional services m arketers is to understand that the client often requires a broad range o f com m unications and that personnel dealing with clients need specific com m unication com petencies. In order to success­ fully com m unicate w ith clients, the professional services m ar­ keter needs to:

1. Identify the types o f client and personnel com m unication exchanges that occur.

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2. C onsider the appropriate type o f com m unication responses that are necessary for the various personnel in the firm . 3. H ire personnel w ith the com m unication com petencies for the jo b . 4. T rain personnel in specific com m unication com petencies. 5 . D evelop com m unication policies and procedures to facili­ tate effective com m unication.

INTERNAL COMMUNICATIONS It has been argued that em ployees should be treated like c li­ ents. A s su ch , internal com m unication is ju st as im portant as client com m unication. In order to ensure that quality o f service is m aintained in a professional services environm ent, tw o co rn er­ stones need to be put in place: 1. E m ployees should know exactly w hat the pro fessio n al’s role is, and precisely their role in client m anagem ent. W hat everyone is to do and say w hen dealing w ith clients should be spelled out w ell. 2. E veryone should regularly exchange inform ation c oncern­ ing all aspects o f client contact. A s w as show n in C hapter Five, one o f the fundam entals o f m an­ agem ent is the ability to provide clear and concise directions about w hat needs to be accom plished in a professional setting. A sking for feedback from em ployees about the given assign­ m ents is also critical. E nsuring effective internal com m unication requires an open and honest environm ent that fosters such co m ­ m unication. O ne thing that can help is to conduct a five- to tenm inute m inim eeting every day before the day begins to discuss the priorities o f the day, and to review the previous d a y ’s activ ­ ities. It is essential to keep these m inim eetings short. If a m ajor problem is aired, set aside another tim e to handle it but assure em ployees that it will be dealt w ith. In addition to “ as req u ired ”

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m eetings that m ay be necessary to handle such problem s, a pro­ fessional practice should hold either a regular w eekly or m onthly m eeting. It can be used to discuss practice policies and proce­ dures, staffing requirem ents, business developm ent ideas, or suggestion exchanges. Be certain that an agenda is prepared and that everyone has the opportunity for input.

CLIENT COMPLAINTS Recent research has show n that for every com plaint a business receives, there are tw enty-six others that feel the sam e w ay but whose com plaints are not aired (Marketing News, 1991). This m eans the possibility o f tw enty-six lost clients per every com ­ plaint received. T his has serious im plications to professionals since it has already been learned in Chapter Four that it costs five tim es as much to replace a client as it does to retain one. It also m eans that using num bers o f com plaints received as a m easure of client satisfaction or service quality can be very m isleading. W hy is it that clients do not com plain directly to profession­ als? The prim ary reason is because, culturally, com plaint behav­ ior has not been accepted as an integral part o f the m arketing system . It is just not very appropriate to complain! Most people fear that others will view them as chronic com plainers even if there are legitim ate reasons for their dissatisfaction. M oreover, most organizations tend to exacerbate the problem by discourag­ ing, not encouraging, com plaint behavior. Em ployees in particu­ lar do not want to bring forth client com plaints to the organiza­ tions for fear o f reprisal by m anagem ent. Com plaints are not view ed as fundam ental feedback. Som e consum er research shows that w hen clients arc asked about w hy they do not com plain, rarely does this cultural dim ension surface. H ow ever, clients do say that the reasons for not com plaining include (1) a feeling o f helpless­ ness (it w ouldn’t m ake any difference) and (2) a feeling that it

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w ould not be w orth the tim e and effort. U nder the surface o f these responses lies the fact that a client feels uncom fortable challenging a professional w ho is paid for his or her expertise. A lso, the service encounter is now com plete and cannot be re­ called, so com plaining after the fact is view ed as an exercisc in futility. T herefore, the concept o f voting w ith their feet w orks best for m ost clients. T hey do not com plain, they ju st do not com e back. H ow ever, w hat about those w ho do take the tim e and effort to com plain? W hat is the basis for the m ajority o f com plaints these clients have about professional services providers? C hapter Four show ed that one o f the m ain things consum ers w ant from profes­ sionals is care and concern. It should not com e as a surprise that the num ber one reason for com plaints is sim ply that clients do not believe the professional cares about them . M any clients, how ever, do not w ord their com plaints in such an open fashion. Som etim es they put up a sm oke screen to hide their true feelings. For exam ple, look at som e o f the com m on com plaints that the author hears w hen he conducts his research on co n su m ers’ satisfaction/dissatisfaction w ith professional ser­ v ices. W hat the consum er w ent on to say w hen probed about their statem ents is in parentheses. 1. He d id n ’t listen to a thing I said. (He w as too busy to care about m e.) 2. She treated me like an object. (She d id n ’t care that I w as a person.) 3. She never calls m e by nam e. (She obviously d o e sn ’t care about me if she c a n ’t rem em ber m y nam e.) 4. He alw ays m akes me w ait. (He d o esn ’t consider me an im ­ portant clien t.) W hile m uch research show s that dissatisfaction w ith services can involve w aiting tim e, inconvenient hours, indifferent treatm ent,

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or overcharging, the m ajority o f com plaints, at least from this professional’s research, can be traced back to the professional’s inability to com m unicate that he or she cares about his or her clients. If poor com m unication has caused the com plaints, co u n ­ tering the com plaints will require com m unication skills. W hen clients w ant the professional to recover (m ake the situation right), he or she needs to com m unicate effectively in order to rem edy the situation. (W hen dealing w ith client com plaints use the recovery guidelines outlined in C hapter Four, Figure 4-6 on page 59.)

SUMMARY 1. G ood com m unication skills can m ean the difference be­ tw een success and failure in professional services m arketing. 2. T here arc several barriers to com m unication betw een a client and a professional. T hese include: (1) language; (2) ego; (3) level o f know ledge; (4) negative attitudes; and (5) one-w ay com m unication. 3. T here are several attributes that characterize good com m u­ nicators. T hey include: (1) confidence; (2) sincerity; (3) thor­ oughness; (4) friendliness; (5) sim plicity; and (6) listening skills. 4. N onverbal com m unication m ay account for sixty-seven to ninety percent o f the total m eaning produced in face-to-face com m unication. Professionals need to consider how nonverbal com m unication affects their verbal com m unication. 5. Key areas o f nonverbal com m unication that the profes­ sional m ust m aster are: (1) paralinguistic phenom ena (how som e­ thing is said); (2) posture; (3) w alk; (4) gestures; (5) handshake; (6) spacing; and (7) facial expression. 6. Research suggests that there are three different types o f jobs or people involved in the com m unications process w ith c li­

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ents. T hey are classified as T ype # 1 , T ype # 2 and T ype # 3 . Each requires different com m unications skills. 7. In order to successfully com m unicate w ith clients, the p ro­ fessional services m arketer needs to: (1) identify the types o f c o m ­ m unication exchanges that occur in their environm ent; (2) co n ­ sid e r the c o m m u n ica tio n re sp o n se s that are n e ce ssa ry for personnel in the firm ; (3) hire personnel w ith the com m unication com petencies for the job; (4) train personnel in com m unication com petencies; and (5) develop policies and procedures for e ffe c ­ tive com m unication. 8. It is im portant for professional services m arketers to have good internal com m unications. An environm ent that fosters good com m unication betw een individuals in the organization is vital. E veryone should know their role in client contact relations and regular and ongoing exchanges o f inform ation w ithin the org an i­ zation m ust be encouraged. 9. Research show s that only 1 in 27 clients com plain about the service they receive. T his is a serious problem since it m eans clients are voting w ith their feet and running from the business rather than staying to com plain. 10. G enerally clients do not com plain because culturally we do not encourage com plaint behavior. A lso, clients feel helpless or feel it w ould not do any good to com plain. 11. W hen they do com plain, how ever, the num ber one reason is because they do not feel the professional cares about them . T hey m ay m ask the com plaint, but behind the screen is the feel­ ing that the professional does not care. 12. W hen a client com plains, he or she m ust be taken seri­ ously and the professional m ust recover from the situation. U sing the recovery guidelines in C hapter Four is an im portant part o f the process. 13. C om m unicating care and concern can be the m ost im por­ tant part o f your com petitive advantage; use it.

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Booms, Bernard H. and Jody L. Nyquist. “ Analyzing the Custom er/Firm C om ­ munication Com ponent of the Services M arketing M ix,” in Marketing o f Ser­ vices, Jam es H. Donnelly and W illiam R. George (eds.), Chicago: American Marketing Association, 1981, pp. 172-177. Harrison, R. P. “ The Face in Face-to-Face C om m unication,” in De Sola Pool and W. Schramm (eds.), Handbook o f Communication, New York: Rand M cNally, 1976. Marketing News, “ Satisfaction-Action to Offer Tips on Pleasing C ustom ers,” February 4, 1991, p. 4. M chrabian, A. Nonverbal Communication, Chicago: Aldine-A therton, 1972.

C hapter N in e

Professional Services Marketing in the Future

No one know s for sure w hat is in store for professionals in the future, not even futurist gurus. But the author feels that the pro­ fessional services m arket in the next 10-15 years should be c h ar­ acterized by intense com petitive pressure as a result o f low er entry barriers and a lack o f population grow th. Q uite sim ply, too m any professionals will be serving too few consum ers. T here w ill be very few underdeveloped m arkets, including g eographi­ cally rural areas. T his saturation will lead to even m ore aggres­ sive prom otion as the professional services sector goes through the late m aturity stage o f its life cycle. H ow ever, heavy prom o­ tion m ay not be the solution for m any professional services firm s. M any will have to rethink their approach to business. M arket share m anagem ent will be the key. H olding on to clients and securing dissatisfied clients from com petitors will be the only w ays to achieve grow th. E m phasis will be placed on the functional quality aspects o f service, such as care and em pathy for clients, in order to achieve a com petitive advantage. As pro­ fessional services firm s becom e even m ore m arketing-oriented, there will be a greater em phasis on increasing profit m argins instead o f sales volum e. Cost reduction strategics will also be em phasized. T here w ill continue to be m uch concern over pro­ fessional liability, not strictly because o f the costs o f litigation and aw ards, but because o f the public perception created as a result o f such activities. 72.?

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Education about m arketing as a process and philosophy will becom e an inherent part o f the professional arena. Universities w ho train professionals will include courses in their curriculum on m arketing and business m anagem ent. C ontinuing education and ongoing professional developm ent in these areas will be re­ quired in m any states and provinces. The use o f research to de­ fine and understand target m arkets and to m easure service perfor­ m ance w ill becom e c o m m o n p lace. T here w ill be g reater em phasis on the recruitm ent o f service-oriented professionals and staff as opposed to strictly technically com petent personnel. Planning, both short term and long term , will be built into the fabric o f professional services firm s. W hile this book has offered som e m arket predictions and the responses that may be or will be required by professionals, what else will professional services firms have to do to com pete effec­ tively in the future? Any professional hoping to m aintain and expand m arket share in the future will need to consider the fol­ lowing: 1. Professional services firm s w ill need to apply internal m ar­ keting throughout their organization. Only satisfied em ployees can deliver client satisfaction. The professional services organi­ zation must buy into m arketing in order to use it effectively. In the future, m anagem ent m ethods, procedures, personnel poli­ cies, training, and feedback must all be geared tow ard the inter­ nal m arketing concept. Very sim ply, a professional services firm cannot be client-oriented if it is not em ployee-oriented. 2. Professionals will need to em brace impression m anage­ m ent. Because clients evaluate what they cannot see by what they can see, professional services m arketers m ust m anage the tangible evidence surrounding their service. The m arketplace will be even m ore com petitive in the future so conveying the appropriate image to the client will becom e a necessity. Every­ thing that speaks about the service must be integrated, coordi­

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nated, and m anaged, and it m ust be done better than the com peti­ tors. 3. Professional services firms will need to m anage service quality; both technical and functional. In the future, service qual­ ity m ay be the only w ay to create differentiation in a m arketplace o f hom ogeneity. Research on the determ inants o f service quality m ust be conducted and service quality perform ance m easures m ust be a regular part o f the professional services firm ’s opera­ tion. Functional quality such as care and em pathy for clients m ay be m ore im portant to stress in professional services firm s, but this does not m ean it can com pensate for poor technical quality. 4. Professional services m arketers m ust stress relationship m arketing in order to ensure grow th. G etting to know clients well and being able to cater specifically to their needs will be critical in the future. Servicing and m arketing to existing clients must be considered as im portant as acquiring new clicnts. R ela­ tionship m arketing should be view ed as a “ cultivation p ro cess,” a w ay to ensure repeat business. G reater involvem ent w ith the client will lead to client loyalty. 5. Professionals must practice synchrom arketing. Idle capac­ ity is, and will be, a problem w ith professional services m arket­ ing in the future. But, perhaps m ore difficult will be the inability to handle peak load dem and. The synchronizing o f dem and and supply m ust be a priority in the future. 6. Professional services m arketers will need to develop a sys­ tem s approach to service excellence. T his m ust include a welldefined strategy, good people to deliver the service, and a flexi­ ble and responsive service structure to support the people serving the client. Finding a com petitive advantage, or doing what you do best, and doing it better than your com petitors will be funda­ m ental in the future. H iring, training, and m otivating em ployees to put the client first will also be crucial. A service system must

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be designed that m eets the needs o f both the em ployee and the client. The system must be structured around the convenience of the client and not the professional. 7. Professionals will have to consider greater use o f paraprofessionals in order to keep operating costs down and to increase productivity. As long as these personnel are com petent, clientdriven, and deployed effectively, their use should be encour­ aged. 8. Professionals will need to balance high tech and high touch. In the pursuit of greater productivity, m any firm s will use technology to standardize or industrialize professional services. M any firms will go too far and abandon the personal touch. This should be avoided. W hile technology should and must be used, professional services firms are in the people business and clients must not be dehum anized in the exchange process. 9. Professionals will need to m anage inform ation m ore effi­ ciently. Inform ation will be an important part o f a successful professional practice in the future. Professionals will need to have an integrated inform ation m anagem ent system including an expert system and/or artificial intelligence com ponent as well as a com prehensive database system for client m anagem ent. 10. Professionals will need to recognize the concept o f seg­ m ented market grow th. O verall, the m arket will be m ature and exhibit slow grow th but som e segm ents will offer greater poten­ tial than others. Key segm ents to w atch will be the seniors m ar­ kets and to a lesser extent, the youth market and the professional w orking wom en segm ent. 11. Professionals will need to shift away from price as a com ­ petitive edge. W hile there is and will be a m arket for the profes­ sional w ho seeks the price-sensitive consum er, this m arket is ever shifting and offers little room for relationship m arketing. A larger and more im portant m arket will consist of the better edu­

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cated and professional consum er, or the sm art shopper, w ho will be a cornerstone o f the professional services m arket in the future. T hey will be seeking quality, value, and an ongoing relationship with their professionals. For this m arket, price is but one attri­ bute to consider when buying professional services. 12. Professional services firm s will need to m anage client sat­ isfaction. Client retention will be the key to grow th in the future and thus client satisfaction should becom e the num ber one priority in professional services firm s. By em ploying internal m arketing, im pression m anagem ent, relationship m arketing, synchrom arket­ ing, and m anaging service quality, the professional services m ar­ keter can ensure client satisfaction in the future. In conclusion, professionals m ust recognize that w earing a professional’s hat also brings with it the responsibility o f w earing a businessperson’s hat. The two are not incom patible, in fact, they are inextricably linked. For professional service suppliers, becom ing m arketing-oriented will be a fundam ental prerequisite to survival and prosperity in the future. There should be no future debate over w hether or not m arketing has a place in professional services. R ather, the issue will be how to effectively and ethi­ cally m arket professional services so that both the professional and the consum er can benefit. In the future, w hen a professional dons a business hat, it should and m ust be the one with the m ar­ keting label attached to it.

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Index

Action item list, 36 A dvertising, 64,66-68 print, 75-76 radio, 75 television, 73-74 direct mail, 76-78 Am erican M arketing Association, 1, 10 Anatom y o f m arketing plan, 22 Audit. See m arketing audit

Berry, Leonard, 47,49,51,52,61 Berkowitz, Eric, 12,20 Bitner, Mary J ., 15,20 Boom s, Bernard H ., 15,20,115,122 Budget. See m arketing budget

Care and concern, 58 Cause-related m arketing, 70 Client base, 24 Client com plaints, 118-120 Client m anagem ent, 41-59 Client research, 55-57 Client satisfaction, 56-57,127 C om m unication, 107-120 barriers to, 108-109 by type o f personnel, 114-117 good com m unicators, 109-111 internal, 117-118 nonverbal, 111-114 C om m unications, 24,44,83,87 C om petitive advantage, 29 Contact points, 44-46 C ontrol, 38 Core service strategy, 52 Corporate advertising, 72-73

Cow ell, Donald W ., 69,80 Crane, F. G ., 20,71,80

Delegation, 86 Direct m ail, 82 D iversification, 32-33 D rucker, Peter, 81,92

Effective m arketing plan, 38-39 Ei-A nsany, A del, L ., 93,106 Environmental factors, 5 Environm ental scan, 25-26 Evaluation m easures, 38 Exchange, 5,6, Execution, 42

Facial expression, 114 Facility design, 100-103 Firestone, Sidney, H ., 67,80 Forecasts, 42 Four F s, 16,19 Four P ’s, 4

Handshake, 113 H arrison, T. P ., 114,122

G ronroos,Christian, 42,61 G um m esson, Evert, 11,20

Im plem enting m arketing program s, 36-37 Impression m anagem ent, 42-46,124 Inconsistency, 14

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Inseparability, 14-15 Intangibility, 13 Internal m arketing, 46-51,124 Inventory, 13-14

Kerin, Roger, 20

Levitt, T ed, 42,61

M anaging, fundamentals of, 86-88 M anaging professional services, 81-92 Mass m arketing, 5-6,9 Market developm ent, 31-32,36 Market penetration, 31 Market segm entation, 6-8,126 Marketing as a m anagem ent tool, 81-86 audit, 22-24 budget, 37-38 concept, 5,6 defined, 1-2 environm ent, 4-5 era, 2 execution, 37 m ix, 4 objectives, 17-28 orientation, 82 philosophy, 3-4 plan, 21 planning, 37 process, 7 program , 34-37 strategy, 28-29,30-34 Marketing News, 52,62,118,122 McCarthy, Jerom e, 4,10 Mchrabian, A. 114,122

Nlyquist, Jody, L. 115,122

Organizational capabilities, 44

Paralinguistic phenom ena, 112 People, 16,35,43 Perception, colors, 45,47 Performance research, 62-63 Personal selling, 64-66,71-72 Physical environm ent, 24,43 Physical evidence, 17,36 Place, 4,35 Posture, 112-113 Practice philosophy, 23-24 Price, 4,35 Problem solving, 58 Procedures, 43-44 Process, 17,36 Product, 4,35 Product developm ent, 32,37 Production era, 2 Production orientation, 82 Professional fees, 24 Professional services defined, 11 characteristics of, 12-15 future, 123-127 preface for, 17-19 Prom otion, 4,35,63-80 Product advertising, 72-73 Promotional m ix, 64-65,78 Promotion plan, 72 Publicity, 64,69-70

Quality, technical, 42,125 Quality, functional, 42,125 Quality o f w ork life, 49-50 instrument for m easuring, 50

Recovery, 58-59 Relationship custom ization, 52-53 Relationship pricing, 53-54 Relationship m arketing, 51-53,125 Relocation, 103-104 Rudelius, W illiam , 20

Index

Sales era, 2 Sales/profit forecasts, 37 Sales promotion, 64,69 Satisfaction, 1-2,56-58,127 Segmentation. See market segmentation Scrvice augmentation, 53 Service performance measurement instrument, 57 Service process, 24 Seven P’s of professional services, 15-17 Site selection, 98-100 Six steps in the marketing process, 3 Spacing, 113-114 Strategy. See Marketing strategy

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Strategic growth options, 30-34 Stern, Louis, 99,112 SWOT analysis, 25-27 Synchromarketing, 54-55,125 Target marketing, 5-6 Team building, 87 Telephone, 48 Time management, 88-92 Trade area analysis, 93-98 Upah, Gregory, 43,51,62

Walk, 113 Word-of-mouth promotion, 64,71-72