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Who Drives the Demand—A Critical Concept in Services Marketing Strategy

by Mike Schultz  |  
June 8, 2010

There's no shortage of advice about which strategies work or don't work for services marketing, yet they seem to conflict with each other regularly. So what's the scoop? Which strategies work?

It's less a question of which ones work than a question of which ones will work for you given the dynamics of what you sell. Answering that question requires many considerations, but there's one that many firms overlook: whether the service they offer is demand-driven or demand-driving.

Determining Which Type of Service You Offer

With a demand-driven service, regardless of what you do for marketing you have to wait for the need to arise before you have a current opportunity to sell something.

Let's say you're a litigation attorney. You can market and sell your heart out, but until someone gets sued or decides to sue... that person is not hiring you or anyone else.

No matter how good a salesperson a structural engineer might be, it's unlikely you will hire that engineer to inspect your house's foundation unless you find a crack.

It's not hard to understand the concept of demand-driven: Until it is actually needed, it is not needed (or wanted, or purchased).

With a demand-driving service, however, you can create opportunities and influence people to purchase your service whether or not it is yet on their radar. In fact, they may not even know the service exists.

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Mike Schultz is president of RAIN Group, a leading sales training and consulting company. He helps companies around the world unleash the sales potential of their teams. Mike is bestselling author of Rainmaking Conversations: Influence, Persuade and Sell in Any Situation and Insight Selling: Surprising Research on What Sales Winners Do Differently. He also writes for the RAIN Selling Blog.

LinkedIn: Mike Schultz

Twitter: @mike_schultz

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  • by Kyle Hawke Tue Jun 8, 2010 via web

    What are some good examples of demand-driving services/companies?

    I like the concept and distinction, but it seems arrogant for a business to think they are so good they can create the market demand on the spot. Maybe I am missing the point so the examples will help.

  • by Robert Wed Jun 9, 2010 via web

    The demand -driving process sounds good on paper, but how much can you expect to harvest from such a concept?. Firstly, your company must have bottomless pockets of cash to go around searching for needles in hay stacks, all-over your business world.

    I would rather RAMP in on the demand-driven proven concept, than try and error demand -driving idea. Please educate us more, with good examples.

  • by Mike Schultz Wed Jun 16, 2010 via web

    The amount of successful companies that are demand driving are huge. Here are three examples, big and small:

    An accounting firm I know of had a huge amount of their business in tax and audit about 5 years ago. They always complained, "For these compliance services (demand driven), our prices always get pushed down and it's so hard to differentiate."

    They also had business consulting services where they would analyze a client's P&L and find the hidden areas of profit. But they rarely sold them! So they focused on creating conversations specifically around that, trying to sell a "day of time to poke around" and see if there's a lot of money to be saved if they did it.

    No CEO woke up and said, "I think I'd like an accountant to poke around my P&Ls to find hidden areas of profit." But they accepted discussions about finding the hidden profit, they saw little risk in accepting the accountant's offer to poke around, and then they bought large amounts of consulting services because in that poke-around day, the accountant could show compellingly how the firm was overspending in certain areas by hundreds of thousands of dollars.

    Bain has a service that's similar. Google "profit hunt" and you'll find it. Again, no CEO wakes up and says, "I need a Profit Hunt today." But if you can create the conversation, you can sell the service.

    Another consulting firm I know of could save large organizations millions of dollars in overhead spend. No hospital CFOs wake up and say, "Today's they day I save a lot of money on janitorial supplies, phone bills, and rubber gloves." They're thinking about new wings for surgery, buying smaller hospitals, and increasing operational workflows.

    But they took meetings about overhead spend reduction, and then they spent large sums on overhead reduction consulting because, when shown the strong ROI, there was no reason not to.

    You can succeed exceptionally well with demand driven only services and produts, but it's just one of the two options.

    It's also not much arrogance on behalf of businesses to think they're "so good.". It's a little simpler than that. There are ideas all the time that can help businesses succeed that the leaders of the businesses might not be thinking about today.

    Put these great ideas on their radar screens (drive the demand) and they might just buy it, and buy a lot of it.

  • by Kyle Hawke Wed Jun 16, 2010 via web

    Great detail and examples. Thanks.

  • by Robert Thu Jun 17, 2010 via web

    Great. Thanks. It's now worth trying, after hearing you out so clearly.

  • by Sharon Mon Jul 11, 2011 via web

    Seems like a great approach but I was hoping you could possibly give some guidence on how this could be implemented on a real estate franchise business via a corporate marketing perspective?

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