Each professional involved in business development – either it’s business owner and founder or salesperson – at least once in their career comes to a question – is there any difference in selling product vs service? The more people you ask – the more opinions you get.
Someone says that there’s no difference at all, and if you are a good sales professional, you should be able to sell both with equal efficiency. Others would start giving you arguments about why those 2 should be approached differently. In my opinion – they both are right. And if you want to understand if there are any key specifics, we need to begin from understanding a difference between product and service.
What’s the difference?
Tangibility
If you open any classic economy book, you will find the definitions stating that product is something tangible, while service is intangible. If you like to see the things oversimplified – that can be taken as truth. On the other hand, if you want to build a good sales strategy, you’ll need to accept this ugly truth – it’s not as simple as that.
Products can be intangible and the services can be tangible.
One of the key differentiators that those books give is that the product has features, may be standardized, the ownership might be transferred and separated from the provider. Let’s look at the software product. If you buy a game, install it on your PC – it’s your copy, it’s standardized, you have the ownership and it’s separate from its provider. And this product is intangible. You cannot touch it.
Another example – bike rental. When you rent a bike – you get a service – a possibility to use a bike for the price X and Y amount of time. But this service has a specific tangible form – you can touch it, choose the one you prefer more, add additional options (like a baby seat). And this service also has features and can be standardized.
Having that said, I believe that tailoring your sales strategy only by relying on this simple difference – tangible vs intangible, standardized vs personalized – is not very efficient.
Applicability
There’s another common view on product vs service – the product solves a very specific problem (targeted onto a very specific audience), while service has a broader applicability.
I have to admit – I used to think this way too. And again – not always true.
Let’s look at 2 more examples.
Soap – a very standard item used by billions of people on a day to day basis. Does not sound like the easiest product to build a unique selling value proposition for, right?
Pet grooming – a very specific business with clear added value and specific target audience – does not sound like the most complicated business to build the sales strategy for, doesn’t it?
Summing it all up – it’s never good to simplify things and rely on outdated standards and approaches. In order to build a good sales strategy, you need to understand what makes a product or service unique or different among hundreds of competitors. And here we come to the target audience broadness.
Measure your target audience
Whatever your business is about – product or service – one of the key things you need to formulate while building your sales strategy is your Ideal Customer Profile (ICP), Buyer Personas and the broadness of your target market. The broader your audience is, the harder it might be to formulate a concrete ICP.
Let’s come back to soap and pet grooming examples.
The ICP for soap producer could look like as following:
- Household of 2 adults and at least 1 kid
- Average income per month: 2000 EUR
- Working status: employed
- Additional points: paying attention to their health
In case if your soap does not have any extraordinary features, it might be hard to define an excessive ICP targeted on a very specific audience. Just because the soap may also be used by the families without kids, with lower revenue or unemployed.
Pet grooming salon:
- Dog owner
- Average income per month: 2000 EUR
- Working status: employed
- Additional points: good looking pet, exhibition participant, breeder.
In this case we have one very strong identifier – your ideal customer should have a dog. This narrows your target audience to pet owners at least. And then you can niche further – mainly target those who have good looking dogs, specific breeds etc.
Looking at 2 examples above – it does not matter if we sell a product or a service. What’s important – how broad our target audience is. Depending on that you need to build your strategy respectively. Moreover, you need to take into account market entry complexity, market saturation and competition.
But does it mean that if the target audience is broad, then we should not create ICPs and sell to everyone instead? Of course not. There are always steps you can take to focus as much as possible.
Broad target
Exclude over focus
If you find it hard to formulate a specific or niche customer profile, and you see your product or service relevant to a very broad audience, try to look at the problem from the other side. Define the criteria which will exclude people from your target audience. This will help you to narrow them down. If we look at the soap business, it can be the segment of people who prefer liquid soap over the bars, those whose income is very limited or too high etc.
Find competitive advantage
How trivial it may sound, but it’s still important. Even if you have a soap business, you still need to find your differentiating point – whether it is an odor, color or shape. It might be hard to find a unique value proposition, but try to be creative. We all have something unique.
Choose a competition type
Depending on the competitive advantages you find, it’s also important to understand which competition you want to be dealing with. If it’s going to be a price, then think about the options. Is it a quality? Then be sure to convey it to your customers. If it’s a unique way of buying or consuming – play this card wisely. Price competition is not the only one existing, and sometimes it’s easier to avoid it.
Start small
Then you can still choose several focus groups / business verticals to begin with and on the later stages expand. Try to play around with locations, buying habits, outreach simplicity / complexity etc. In the later stages you can scale the results you achieve on the initial markets. And be sure to analyze it well.
Reach out first
With a very broad target audience and complications with concrete ICP formulation it might be hard to build a marketing pipeline. That’s why I would recommend starting with outbound outreach first. And later, when you test your approach on the first key markets, you can reinforce it with marketing.
Build trust
If you have a very strong competitive advantage, even having the audience broad, then you can definitely be more direct with your message. But if that’s not the case – you need to establish a good reputation on the target markets and learn more about buying habits, cultural peculiarities and nuances.
Niche focus
If your product’s or service’s goal is to cater the needs or a very specific group of people or businesses, then it will be easier to formulate concrete ICPs and build a more focused, personalized sales strategy.
The first thing you should do – complete your ICP profiles together with Buyer personas and Unique Selling Proposition (USP). Then you should analyze your main competitors on key markets, define your pricing strategy and build up a marketing plan. Considering that a product or service is more niche, I would recommend starting from a marketing campaign to introduce it to the market and raise the audience’s awareness. In this case your messaging might be more direct. But be sure to convey your key value proposition clearly.
Summary
There is no big difference between selling product vs service – just because each of them may be tangible and intangible, may have unique features and value proposition. It is more important to understand how broad your target market is and how complicated it is to reach out to your potential customers. Even if you see that your business might be relevant to a big audience, it does not mean that there are no options for focusing. Just instead of focusing on a specific group of people with a concrete ICP in hand, you can approach this differently – targeting specific locations, business verticals or excluding someone from your outreach.
