Service Marketing: Demand pull

How professional service companies are creating demand pull trough reputation building By Laurie Young. More videos @ http://www.oxlearn.com

Male: So how do these businesses grow? The first thing that happens in any partner you would talk to will say that the number one marketing tool of any professional service firm or law firm or accountancy firm is the work. If you do a good work, your business will grow because it creates word of mouth. That’s true and it’s the experience of all these firms but let me dramatize. Imagine I was arrested and I haven’t been accused of a crime and I was at the police station. The first thing they’d say is do you need a lawyer. Now, I don’t know about you but whenever I watch CSI or whatever it is and I’ve just been watching the Sopranos. Anybody who is arrested, the police states, do you want your lawyer? And I they say, “Yes. I’ll call my lawyer.” Now, I haven’t got one, have you got criminal lawyer? I just did not happen. I wouldn’t know who to call? And I think most people just simply don’t have a criminal lawyer. So let me ask you, what would you do. What would you advice me to do. I’m in a police station. Male: Go for the Yellow Pages. Male: Maybe, I’m not sure if they have yellow pages in a police station. Female: Phone a friend. Male: Phone a friend. Well, that’s who wants to be a millionaire, probably. So suppose I phone a friend, what would they do? Female: They’ll tell me who they know. Male: Sorry? Female: They’ll tell me who they know. Male: They’ll tell you who they know. Female: Recommend someone. Male: So they would go to somebody they recommend who has got a reputation. Female: Or even the police can recommend you. Male: Oh the police might—yeah, but that’s going to be a lawyer isn’t it? Somebody who is not paid very much and starting their career. I’m not sure what my friends would want me to be represented by a public servant. He just that career and he’s got like six other cases. Male: So you’d probably call someone in the profession that you do know. Male: Right. Male: Can refer to someone that does what you need. Male: Yes, maybe I know a lawyer who specializes in property and he’s bought a house for me. I could ring them and say—do you know anybody. Yeah, maybe they’ll get through the law society and find somebody good. I mean firstly, I don’t know with you, I’d be terrified because I like to— Male: Can we test this? Male: But suppose one of my friends who I phone finds a lawyer and this person arrives somehow later and they sit down. I mean, firstly, they need to convince me that they’re pretty good, wouldn’t they? I think the first thing that would impress me is the way they dress, perhaps their demeanor, perhaps whether the police are a bit weary of them. If the police you know, oh my God it’s so and so then you’re going to be pretty keen to use them aren’t you. But the trouble you have is you simply do not know. That person could be—you’ve got no way of knowing and that’s the cracks of how this works. Now if they take me through and say look this is obviously nonsense. First we’re going to do this and then we’re going to do this and then we’re going to do this and as we work through the process, I’m cleared. Afterwards, would I tell other people of how good that lawyer would be? You wouldn’t, wouldn’t you? And there’s evidence that the emotion intensity of your need amplifies the amount you talk. So if you had a real difficulty and your professional sorts out your problem for you, you tell a lot of people and from that word of mouth grows. And what I’ve thought about is two things there. Firstly, the things called place trust with the professional. The first thing you have to do is place your trust in them and secondly, the word of mouth that grows after that. Now, if that lawyer deals with lots and lots of people, eventually more and more people are talking about them, word of mouth grows in the market place and they get a reputation and hopefully that reputation is good. Eventually, that would turn over the years into this thing called a brand and as I said, some of the best brands in the world I think like McKinsey and Deloittes and those are the most powerful business brands in the world. And then what happens is, two really fabulous things. Firstly, people come back and buy again. So they come for something else. I don’t know whether I’d go back and buy again from a criminal lawyer but for example what happens, what’s happening in the current recession which is happening as we talk here is that there are businesses set up by people with fabulous dreams of what their business might achieve and they’ve been running two years, three years and five years. They’ve been more successful than they thought they would be and they can make more money than they thought they would ever do and they dream of having this on to their children. And suddenly, some of their customers go bankrupt or start taking longer to pay and they’ve got problems with cash flow and through a really no thought of their own, they worry themselves. One of the people are going to pay, can I last very long? And it maybe that their bank system, you need to talk to a specialist accounting called an insolvency practitioner and that person will help you to spread your cash flow and they’ll help you to do this. Now there are lots of people whose businesses are being saved simply through that process right now as we speak and after that, they’re very grateful, they’re very happy and they talk about it and they come back again and again to the person who’s going to help them, you would, wouldn’t you? They come to them to help about you know investment advice and such things. So you come back and buy again. The second thing that happens that’s very powerful if they refer you to others—I think you said that I might go to somebody with a reputation. They say, well if you’ve got this need, get into this person and they really help me out. And so what you have here is a really powerful virtual circle and it does two things for these professional service firms. Firstly, it keeps the cost of selling low. If you look at the accounts of most businesses, they’ve got this thing called cost to sale. And cost to sale might be the cost of employing sales people, it might be the cost of promotion—various sales promotions, it might be the cost of contracts, the cost of selling, Here, if people are coming to you rather than you going out to them, your cost of sale is quite low, isn’t it? Because you don’t have to go out and get your business. The second thing is the price that it is quite high because what happens is, the client comes to you and says I’ve been arrested, can you help me? And what you do as a professional, you say, well first we do this and second, we do this and third we do this. Price is the last thing on my mind as a worrying needy person. It’s in the back of my mind. Let me give you an example. I will tell you the company involved. Some years ago, about a decade ago, I was working with Ericsson in Sweden and I was out there in Stockholm, working with them on a project and I was called by a very senior manager who said, I’ve been given your number and name by one of my colleagues here and you’ve got a very good reputation and would you come to see me? I said, yes, I’m in Stockholm and I’ll come and so I went to see him that afternoon and he welcomed me into this really big office with carpet that sink under your feet. We talked about a need for the whole of Ericsson that he had to do with a new strategy and a new training program. And as we sat down, he said to me, welcome, I’ll tell you what our problem is and then we will negotiate the price. So I thought it was a very interesting sort of opening gambit. So we talked about what he might do and how urgent this was, how he might run it through and he said, well, give me an idea of what that might cost so I told him my direct and how I worked and he said yes, but what’s your Ericsson price? What would you say? I can say that is my Ericsson price because if I told him that the rate that I charge everybody else was different to the one I charge Ericsson, I’d be lying. I knew what my external value was and I said, that is the price I charge and he said, well that’s ridiculous, everybody negotiates with Ericsson, I said I don’t. He said, well, I could gone by this from somebody else and I said well, you could and I picked up my phone and I said, you called me here and this is urgent for you. I’ve actually got quite a lot to do. I could leave now if you like. And he said, no sit down and we carried on and he agreed the price and we did it at that rate. And that’s the experience of many professionals at partner level right across the world even in recession. There are partners in law firms and accountancy firms who are walking away with multimillion dollar deals that traditional sales people would give their right arm for and it’s because of this fabulous effect called demand pool. Look at the other way around if an accountant or a lawyer or a consultant goes out to sell. So you stop going on the other way, what happens to cost of sale? Female: Goes up. Male: It goes up. And what happens to price? Female: Goes down. Male: It goes down because they say what are you trying to sell me? Whereas if the clients come to you, you can start talking about their need and most professionals enjoy that because they’re talking about what they’ve trained, 15, 20 years to help people with. And that’s what then turns the partners of these firms into fabulous intuitive marketeers. Now I’ve mentioned world marketing, does any of these fit to the theory of marketing? Well, actually it does.