Marketing in Service Areas Essay

Submitted By cpbromley
Words: 657
Pages: 3

Communicating and leveraging the value of existing services to both internal and external customers so that these critical audiences are aware on the tangible benefits they provide is paramount in deriving positive profitability from the services provided. This stems from an internal realization that a company is indeed a service company, even if they manufacture and sell physical products or goods. This is termed by the authors in the article as shifting the customer mindset (both internal and external) from a “free to fee” mentality. Services such as delivery or permanent bulk packaging that are traditionally rolled into product costs are not transparent to the customer, and by breaking them out and making these costs visible to the customer can they become a perceived value-added benefit to them. Once they are perceived as such, revenue can be derived from billable services. A cross-business unit and operational audit of company-wide billing processes can provide insight into the optimization and standardization of charging for over-looked existing services, often allowing for a broader cost-sharing structure across business units leading to quicker return on working capital investment. A senior level employee responsible for oversight of business wide billing practices and strategic development of service offerings can be a champion for short and long-term objectives and best practices centered on profit enhancement for the entire organization. Manufacturing organizations are often savvy and posses core competencies in predictable production standards and processes for physical goods, but fail greatly in terms of profitability when the “front-office” or commercial organization is tasked with developing processes for making money in the provision of services. A failure to account for the varying degrees of service required by different types of customers creates a drain on value-added service margins. Building service platforms that are flexible and allow customers to chose or opt-in to a service level option that best meets their needs helps avoid margin erosion pitfalls. It is critical that firms continuously cost monitor service and delivery processes so as to allow for improvement and ultimately revenue optimization. This requires a top-down, disciplined approach and commitment from senior management that is disseminated down through the organization. A company-wide cultural emphasis on innovation will allow for rapid adoption of new technologies that enhance service efficiencies and reduce operational costs. Ensuring that the sales force is competent and capable of merchandising of value-added services is the third critical success factor for profitable management of a company’s service offerings. Complexity of the offerings must be taken into account when developing sales