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

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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.

Some consulting firms will approach a company's chief financial officer with a free service that will analyze the company's telephone and Internet spending and renegotiate contracts with the telecommunication companies on the client's behalf. If they save the client substantial dollars, the consultants take a 20% cut of the savings.

Consider another example: We know a firm that will investigate a company's entire history of insurance policies and then pursue the insurance companies for reimbursement for matters covered under those policies that the company didn't even know were still covered. (They even have a term for such a service: insurance archaeology.)

In both of those examples, the firms offer demand-driving services.

The idea of demand-driving services is a little more complicated than that of demand-driven services, but not much. A demand-driving service is needed, is wanted, and will provide substantial value—but the prospective client may not perceive any need. You may have to bring it up for the client to see it.

Marketing Demand-Driven Services

When you're marketing a demand-driven service, you need to build your Brand RAMP, and top-of-mind awareness (TOMA) with buyers and referral sources so you can capture opportunities at the elusive time of need (ETON).

Since you often can't predict when the need will arise, you have to be positioned to be considered when it does. That means either the buyer knows about you and thinks of you when the need arises, or a referral source will mention you when asked.

For demand-driven services, use the Brand RAMP as your guide. You need buyers to...

  • Recognize you and your firm.
  • Articulate what you do and how you help people like them solve problems like theirs.
  • Memorize what you do so you have top-of-mind awareness (TOMA) at the elusive time of need (ETON).
  • Prefer to get help from you rather than other sources.

As you run your marketing and selling process, you'll occasionally run into short-term leads when a prospect says, "You know, you called at the right time," or "I was just meaning to get in touch with you!"

That's great when it happens, but too many service firms are disappointed when their marketing activity "doesn't create demand" when, indeed, it can't. It can only skim demand and position you to be in place and considered when demand happens.

But your marketing efforts will work... over time. The best firms methodically and efficiently increase their referral bases, the leads that come over the transom directly from buyers, and their ability to win deals as their brand reputation grows through their marketing and selling activities.

Marketing Demand-Driving Services

When marketing a demand-driving service, you should also focus on the entire RAMP, but often R and A are more important than M.

People selling a demand-driving service frequently say to us, "Just get me in front of the right titles at the right companies, and I'll be able to sell the value of what we do whether they were thinking about it today or not... and they'll buy!"

That's why R and A are so important. You need to get on the radar because prospects can't buy if they don't know you exist (recognition), and they won't buy if they don't know how you help people like them solve problems like theirs (articulation).

Assuming they understand the return on investment of what you do, see the benefits as compelling enough, and believe you'll be able to generate the results you say you will, you're in great shape.

Your marketing is likely to look much different, however, than that of demand-driven firms. You'll be on a mission to pitch, to educate, and to persuade. Now you might pitch with tact, eloquence, and a well-conceived and crafted strategy, but you're still pitching and you should be.

Does that mean you should forget about the rest of the Brand RAMP? No, of course not.

You'll need to warm up some buyers for years before they'll be willing to talk to you. Others will have things on their plates and won't be willing to consider what you have to say.

But if you can get them to memorize what you do and prefer to work with you when their circumstances allow it, you'll keep winning new conversations and deals over time.

And, of course, you may also get referrals, but many demand-driving firms don't get them as often as demand-driven firms.

Know the Difference

In the end, the fundamental difference between demand-driven services and demand-driving services comes down to the elusive time of need. With demand-driven services, you never know whether the ETON will arrive while you are reaching out and positioning yourself to be considered.

With demand-driving services, the ETON is now... I just need to get you to see the need, know that I can meet it, and believe that I am the one who can get it done.

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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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