Intangibility – the problem with selling services

Value is like a snowflake – no two commercial value propositions are ever exactly the same, so truly understanding value you’re offering is the key to selling services.

Professionals are in the business of selling services. In educated, developed nations like Australia, services are a defining part of our economy and how we will create our future. The services we deliver underpin the economic growth of our nation. A World Bank study showed that in high-income countries, services represent 66 per cent of GDP compared with only 35 per cent in low-income countries. In Australia, services employ more than 8.6 million people, representing 76 per cent of all employment.

As the people who deliver these services, we understand how essential they are. Services are part of making products, buildings, bridges and rockets to Mars, and of making lives better in the community. Yet services can be hard to understand and define, making them difficult for us to sell.

Professor Valerie Zeithaml of Texas A&M University noted that professional services exist on the “extreme intangibility” end of the tangibility spectrum, and that the “product” of a service is often the result of many years of specialised study and training. As a result, clients who lack this knowledge often have difficulty evaluating service products.

Enter competitive tendering. Since the 1980s, this system of buying has grown quickly, and now most contracts of any size and value are transacted through bids and tenders. In the period covering 2014 to 2015, one of Australia’s largest buyers – the Federal government – spent $59.447 billion buying goods and services through Austender, and issued 69,236 supplier contracts.

The competitive tendering system is particularly challenging for people who sell services. Many services – including health and human services, large-scale enterprise services and professional services – are complex and time-consuming to execute.

Unfortunately, this also makes them complex and time-consuming to explain. In competitive tenders, we are under constant pressure to get straight into unpacking our methodologies and implementation plans (what and how). This often comes at the expense of explaining the problem we are solving (why), which is the main reason a customer actually needs us in the first place. Understanding value is the key to selling services.

Value is like a snowflake – no two commercial value propositions are ever exactly the same. This is because every customer has different hopes, dreams, goals and problems to solve. Yet like a snowflake, commercial value has a six-sided structure, and it is quite beautiful when you can see it up close. Each of us buys with our gut, head and heart. Within each of these drivers, there is a left-brained (quantifiable) and right-brained (qualitative) attribute for value. When professionals with a complex offering can explain it according to these attributes, it helps us to talk about what we do so that people want to buy it.

Firstly, visceral (or gut) value attributes include cost and risk. Author and neuroendocrinologist Dr Deepak Chopra says that gut feelings are “every cell in our body making a decision.” Buying decisions are often triggered by fear. According to a 2015 IBM survey of 5200 CEOs, 54 per cent said their biggest fear is “being Uber-ised” – disrupted by a competitor outside their industry. We can help protect our customers against these fears.

Secondly, buyers value logical attributes like productivity and reduced complexity. The head drives logic. And most of us have way too much going on in there to be logical about all of it. This phenomenon is known as cognitive load, and we can play a role in reducing this burden for our customers.

Finally, buyers value aspirational attributes like quality and connectivity. Buyers want to make an impact and create a legacy. Understanding this, we can set our customers on a different – smarter and better – path than they would be able to choose on their own.

Robyn Haydon, www.robynhaydon.com, author of “Value: How to talk about what you do so customers want to buy it”

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