Truth is, “most organizations…perceive after-sales services to be a necessary evil and behave as though big business-to-business service contracts, small business-to-consumer warranties, and everything in between are—like taxes—a needless expense.”iii With that type of mindset towards service and support, the brand-building opportunities are limited at best. On the other hand, if a company invests in resources to develop an excellent and differentiated service offering in the category, the brand-building efforts will most likely have far more significant effects than introducing a particular product feature.
Qualifying the Opportunity
In the life sciences the playing field for differentiated service and support models is wide open. From a messaging and advertising perspective, less than 10% of the advertisements that a typical scientist may be exposed to in a given month employ a service and support-related value proposition as a leading message. In fact, a rapid, 3-month scan of five industry magazines showed that if a scientist reads every single advertisement in an issue of one such publication, he or she will be exposed to less than 1.5 service/support messages per publication. Thus indicating that the opportunity to dominate the messaging landscape is real and ripe.
MASSAGES PER ISSUE
Table 1: If a scientist reads a typical scientific journal or trade magazine from cover to cover, he or she will most likely encounter less than two advertising messages related to service and support.iv
From a financial perspective, developing a robust service and support offering (and adequately promoting it) can be advantageous because the profitability of after-sales service and support in many cases exceeds that of the product itself. For example, “An Accenture study reveals that GM earned relatively more profits from $9 billion in after-sales [service] revenues in 2001 than it did from the $150 billion of income from car sales.” v Many other industry sectors boast similar profit margins from service and support and it is reasonable to expect the same being true in the life sciences.
The time to reinvent service and support for all life science companies is now, before another established player changes the rules, putting other companies in reactive mode.
More About the Industry: A Research Study
To better understand the dynamics of the life science industry’s service and support organization and to grasp the extent with which service and support offerings are getting marketing attention, The Linus Group conducted an exploratory research study with the help of ALSSA and surveyed 27 of the organization’s service executive members. Responding companies ranged from small to large, assessed by estimated annual revenue. All 27 companies reported that they have a dedicated service and support organization.
Marketing Service and Support
When diving deeper, it was found that the majority of the companies (>4 out of 5) operate their service and support efforts as a profit center with annual revenue objectives. Over 3/4 of companies’ service and support offerings are unbranded, as opposed to a branded service offering, such as Apple Computer’s “AppleCare” extended warranty. Further, 65% of the respondents offer service and support as an add-on to specific products or services, as opposed to offering service and support as products in-and-of themselves. An example of such would be the aforementioned AppleCare, which is sold through all of Apple’s retail channels. When purchasing this extended warranty, customers buy a box off the shelf (or order through the internet), which holds diagnostic tools as well as information for contacting Apple’s service and support.
Of the 27 respondents, more than 3 out of 5 have a dedicated budget for marketing service and support offerings, and use a variety of marketing tactics. The most common communication vehicle to promote such offerings is direct mail and online.
As Figure 2 demonstrates, only a third of the respondents who market their service and support offerings feel that such marketing has a significant positive influence on a customers’ perception of the company.
While the respondents claim that they use multiple channels to deliver service, over 5 out of 6 respondents use Field Application Specialists (FAS) as the primary channel for delivering service and support. However, 75% of respondents also feel that FAS and sales reps could do a better job explaining and identifying appropriate service and support offerings to meet customer needs.