kotler, conor - marketing professional services (cité 30) - 1977

7/28/2019 Kotler, Conor - Marketing professional services (cit 30) - 1977

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Philip Kotler and Richard A. Connor, Jr.

Marketing Professional ServicesA specific program for managers of professional services firms:

M ARKETING thinking and practice has beengradually moving into service industries. Itsrole in service indus tries is still limited, however. Ithas achieved some utilization in banks and airlines,to a lesser degree in insurance, brokerage, and pub-lic transpo rtation, and still less in law, accounting,management consulting, medicine, architecture,and engineering. Even marketing research firmsand advertising agencies tend to under-apply mar-keting concepts to the marketing of their own ser-vices.Many professional practitioners in these in-dustries deny a role to marketing or, if they doaccept it, have a very inadequate idea of its contentand how it can be implemented in a firm. Market-ing, far from being a minor negligible function inmanaging a professional services firm, is one of themost important functions for helping such firmsmeet the unprecedented challenges they are facing.to Cope With

rofessional practitioners must now cope withAssaults on Professional Codes of EthicsTheU.S. Supreme Court recently ruled that mini-mum fee schedules violate anti-trust laws andstated:

the Authorsis the Harold T. Martin Professor of

at the Graduate School of Management,A. CONNOR, Jr. is President of Professional

". . . Federal law requiring pricecompetition is applicable to legalservices." Justice Douglas opinedthat "for meaningful price competi-tion the fees must be made known"rather than suppressed by rulesagainst advertising.There is talk about lifting the traditional ban againsadvertising.2. Changing Expectations of ClientsFeweclients today are in awe of the professionalcredentials. Client executives are becominmore sophisticated in selecting, using, andincreasingly, replacing firms. They insist o"client-centered" performance in contrast t"technical-centered" service.3. Increased CompetitionIn today's uncertaieconomy, it is not unusual to encounter situations in which as many as six to eight firmsubmit proposals for new work. Some firm

are willing to "buy-in" to obtain off-seasowork and a few firms are known to engage iquestionable solicitation practices.Barriers to MarketingAt the same time, most professional services firmare generally ill-equipped to cope with these forcebecause of three barriers to marketing:1. Disdain of CommercialismFew profesionals like to think of themselves

businessmen. Many show hostility to ansuggestion that they are motivated by mone


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72 / Journal of Marketing, January 19772. Association Codes EthicsProfessional as-sociations have erected stringent rules againstcommercial behavior. In three professionsaccounting, actuarial, and lawan absoluteprohibition has existed against anything re-sembling selling activity. Advertising, directsolicitation, and referral commissions have

been banned. Other professional f irms dotend to adhere to certain "standards of goodpractice" which tend to limit the use of effec-tive marketing and sales techniques.3. Equating Marketing with SellingBecause ofthe bars or bans against selling, professionalservices firms show little interest in the subjectof marketing, having made the error of equat-ing marketing with selling. Marketing is amuch larger idea than selling.

By remaining ignorant of the concepts andpractices that make up modern marketing, thesefirms are without the skill to adapt smoothly to arapidly changing environment and to grow to theirpotential. Their professionalism is a blind spot thatkeeps them from acting to achieve their goals. Theirposition grows more precarious as a few of theircompetitors begin to learn and apply modern mar-keting techniques. I t is unfortunate not to under-stand marketing in a strong market when no oneelse does; it can be fatal in a down market whencompetitors do.This article is written to explicate the role ofmarketing in professional services firms. As a pre-liminary step, we offer the following definition ofprofessional services marketing:Professional services marketing consistsof organized activities and programs byprofessional services firms that are de-signed to retain present clients and at-tract new clients by sensing, serving,and satisfying their needs through de-livery of appropriate services on a paidbasis in a manner consistent with credit-able professional goals and norms.

What Styles of M arketing are Possib lefor a Professional Firm?Professional firms, like other business firms, havethree major objectives: sufficient d em an d, sustain edgrowth, and profitable volume. They must turn tosome form of marketing to achieve these objectives.Three different styles of marketing can be distin-guished: Minimal, Hard-Sell , and Professional.

Minimal MarketingA large number of professional firms practice mimal marketing. They avoid or minimize conscidevelopment of a marketing program. The firms fthat they will attain their objectives by renderthe best quality service to existing clients. Threason that a high quality of service will leadsatisfied clients, who will place their new businwith the firm. Furthermore, satisfied clients wrecomm end the firm to others, th us leading tsubstantial inflow of new clients.This logic is appealing and allows the firmfeel it is adhering to the spirit of the ethical canprohibiting direct selling activity. Unfortunateminimal marketing is a decreasingly tenable plosophy for professional firms. It places too mu ch confidence in the ass um

tion that quality speaks for itself. In marketcircles, this is known as the "better moutrap fallacy." It ass um es that the firm will deliv er distit ively better quality services than competitoBut several firms are usually pursuing same philosophy, and thus no f irm may strthe client as particularly exceptional in respect. It assum es that com petitors are not practic

the stronger forms of marketing. But an creasing number of firms are, and it is qutionable that a f irm doing m inim al marke tcan compete effectively. It is a reactive rathe r tha n a proa ctive app roto marketing opportunities. The f irm does tle to shape its future clients or services.

Minimal marketing means that the cliechoose the firm, rather than the firm choosingclients.Hard-Sell MarketingA few professional services firms practice hard-market ing. They engage in glad-handing, winiand-dining, sharp pr ic ing and discount ing, s lbrochures , par tner bonuses for new cl ients , sodiscreet badmouthing of competi tors , and esome direct solicitation and possible referral cmissions. Some of the hustling for business takes place borders on, or actually violates, the pfession's code of ethics. Even if it does not,majority of practit ion ers consid er i t distasteful predatory in nature .


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Marketing Professional Services / Hard-sell marketing really reflects a sales orien-tation rather than a marketing orientation. It may domore damage than good for the firm and the profes-sion. It has two major faults:

1. It does not use a discip lined approa ch to iden-tify and cultivate the market. It confuses sales(which is an outside job) with marketing(which is an inside job). It neglects the basicmarketing process which is to choose targets ,develop services, formulate plans, set up in-formation systems, and establish controls .2 . Firms using this approach often get carriedaway with the problem of attracting new clientsand are drawn into using more extreme tech-niques which begin to violate the ethical codeand may result in acquiring marginal clients.Professional MarketingWe define professional marketing as an approach tothe service/market opportunities of the firm that isconsonant with the profession's canons of ethics. Itsmajor attributes are: Stating long-range mark eting objectives andstrategies. Deve loping annu al volum e, grow th and profitobjectives, and detailed plans and budgetsbroken down into individual responsibili t ies . Org anizin g regular training sem inars to im-prove the professional person's effectiveness atmarketing and personal sell ing. Assign ing formal respon sibili ty to one or a fewpeople to organize, manage, and motivate themarketing activity. Allocating time and bud get to supp ort themarketing activity. Setting up a system of controls and rew ard stied to individual and group performance inattaining marketing goals . En surin g that the qua lity of professiona l wo rkdoes not suffer as marketing activity is in-creased. Using only those ma rketing tools and proce-dures tha t a re consonant with the indus try ' scode of professional ethics.

W hat are the M ost Effective M arketingStrategies for a Professional Firm?

tained demand, growth, and profitabili ty. Now it important to spell out professional marketing in strategic, planning, and control aspects. Six stratgies are available to the professional firm that seeking disciplined growth:1. Expanding Service to Existing ClientsMany professional firms see the key to growth to lin expanding their services to existing clients. lauryer wh o is pre pari ng a client's taxes may unco vsome poor asset management and propose somestate plann ing. A public accountant may note somareas of deficient performance and suggest that thclient utilize the firm's management services divsion. Cross-selling of services is a major source ogrowth for the professional firm.2. Identifying and Cultivating High PotentialProspective ClientsThis strategy calls for identifying eligible and attrative potential clients and laying plans for their culvation. Each professional firm can identify speciprospective clients that it would like to serve. Tcriteria for good prospects include: high growth aprofit potential, actual or potential dissatisfactiwith their current firm, a base for attracting furthclients in that ind ust ry, and the availability of a goocontact or referral source.One firm divides the new client developmeprocess into six stages:1. Gen erating and evaluating leads.2 . Developing a plan for each good lead.3. Making contact with the prospect.4. Preparing and present ing the proposal .5. Closing the sale.6. Follow-up work.Each stage is further modeled with specific procdures. For example, leads are evaluated with tformula sh ow n in Exhibit 1. The par tner s allocatheir t imes to the prospects ranking highest accoring to this formula. Periodically they report on tprogress they are making with each prospect.

Exhibit 1Expectedvalueof aprospect

Probabilityof attractingprospectwith $C ofValueof theprospect(if he

Cost otrying attracprospe


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74 / Journal of Marketing, January 19773. Widening and Deepening Personal ReferralSourcesThe professional firm also takes steps to cultivatekey referral sources. Each professional firm has itsown idea of the most helpful referral sources. Alawyer in a medium-size law firm ranked his refer-ral sources as follows: His best source for new busi-ness was bankers since bankers are often asked bytheir clients to recommend lawyers. His second bestsource was insurance agents; they recommendedclients needing estate work and revised wills. Thethird best source was other lawyers wh o had a h ighregard for this law firm's work in certain areas.Certified pu blic accou ntan ts stood as a weak fourthin referral value to this law firm. The law^yer spendsa lot of time with these referral sources, especiallyin social settings. He practices reciprocity by rec-ommending his clients to these f irms when theyneed a bank, an insurance agent, a specialistlawyer, or an accountant. He carefully chose hisreferral sources because he recognized that hisgrowth depended on their growth.4. Favorable A warene ss ProgramsThe professional firm also has to undertake steps toincrease its overall market visibility and reputation.The first step is to assess its public image. Mostprofessional firms have a disto rted view of thei rimage and are surprised to discover how they areactually perceived and talked about by competitors,referral sou rces, and clients. Exhibit 2 sho ws theresults of an image study of eight management con-sulting firms offering their services in France. Themanagement consulting f irms in the upper r ightquadrant are in the best position. On the otherha nd , a firm s uch as 7 at the far left is seen ashaving fair quality but low awareness. Its task is toExhibit 2Images of Eight Management Consulting Firmsin France

HighQuality

LowAwareness HighAwareness

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maintain quality and expand its public relationprogram to achieve higher visibili ty among Frencexecu tives. Firm 8 on the other h an d, is seen ahaving low quality and medium awareness. I ts tasis not to increase the market 's awareness but rathto first upgrade its quality and then proceed increase its visibili ty. Furthermore, image mesurement is not confined to these two scales. Thprofessional firm may also want to measure iimage of integrity, innovativeness, s ize, experence, and fr iendliness.

Several methods are available to the profesional firm seeking to increase its visibility anfavorable image. Association me m bers hip s wi thin the f irm. Fvored associations are business and tragroups, polit ical parties, and charitable, relgious, civic, and educational institutions. Public speak ing and w riting . Those partnewho are effective at public speaking shouseek out opportunities to speak to target idustry groups, particular ly those containinghigh number of decis ion-makers . Par tneshould be encouraged to write good articlfor journals that will reach a high number potential clients. The dev elopm ent of sem inars. The profesional accounting f irm may build a semin

around a "hot" account ing topic such "Accounting for Inflation," or a seminar drected at a target ind ustry such as "Ne w D iretions in Bank Accounting," or an annuseminar to summ ar ize new dev elopm ensuch as "What ' s New in Audit ing Pract iceInvitations are sent out to current clients, iportant referral sources, existing contacts , aattractive prospects. Sponsor ing scholarships , aw ards , profess ioal chairs , and professional training programThese goodwill gestures make a useful cicontr ibution and at the same time draw favable attention to the f irm.

A f inal way of achieving visibili ty is throutaking a controversial s tand on some public or pfessional issue. This brings immediate media atttion and free publicity to the firm. At the same timthis can be risky; the professional firm has to be sure ground before staking out a role as iconocla5. Service and Market SpecializationOne of the major marketing errors of professio


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Marketing Professional Services / 75tions, speak everywhere and anywhere, and acceptall clients. This "total service" philosophy is coun-ter-productive. It is an inferior strategy to that ofservice and market specialization.Specialization offers two distinct advantagesto the professional firm.1. Specialization gives the firm a preferred po si-tion placing it automatically in contention forpotential clients seeking that kind of expertise.2. Specialization permits a greater profit on vol-ume because the f irm develops "cutting-edge"expertise and low cost procedures for handlingrecurrent situations.

These benefits came to a medium-size Chicagoion of group medical practices. Now it is a leadingo avoid bankruptcy law. It recognized that: (1)

The management consulting department of aget industr ie s on the basis of their growth poten -

The firm needs an objective system to iden-

d discourage similar potential clients without

Procedures are Required forhav e argued in favor of profession al ma rketin g

Where should the primary responsibility fobusiness development be located in the professional firm? There are three alternatives:1. Leave busine ss dev elopm ent to those in the firmwho are most interested in it and effective at it.Every firm has certain partners, managers, and staffwho have a flair for spotting market opportunitiesand converting them into realized business. Thenatural marketers should meet from time to time asa marketing committee to exchange informationand develop plans. If the firm, however, is lackingin "natural marketers," it should make a point oflooking for this trait when it hires new staff. Thisalternative, however, really doesn't improve thebusiness growth rate that currently exists. While ithas the merit of not foisting a role on the staff that isunnatural or uninteresting to them, it has the faultof leaving business growth to spontaneous ratherthan organized forces in the firm.2. Develop a special office for business develop-ment headed by a partner or specialist in market-ing. This "director of business planning" wouldhave the following responsibilities: Gu ide the develop men t of a long range and anannual plan for business development. Search in a system atic way for new busi ne soppor tuni t ies . Mo tivate throu gh incentives, assist , and trainmembers of the firm to perform better in business development activities.

We regard the creation of this center of responsibili ty for business development a necessarystep in tbe evolution of more effective businesdevelopment procedures. At the same time, i t is noa complete solution.3 . Develop a firm-wide program for marketingtraining, incentive development, planning, andcontrol. The f irm's leadership decides that everyprofessional in the firmwith the possible exception of junior practit ioners and specialistsshouldreceive training and incentives in business development .

A large public accounting f irm made the decision recently that practit ioners should spend approximately one-fourth of their time in practice development . Management , however , real ized thathis would be a pious utterance unless backed bincentive and budget. Practit ioners could not bexpected to work a longer day. Nor could they bexpected to cut down their current "billable" time


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76 / Journal of Marketing, January 1977pract i t ioners ' c lub memberships , luncheons , andcharges to billable time.Furthermore, the desired behavior sti l lwouldn' t come about unless practit ioners foundthat their effectiveness at business developmentw^as include d as a factor in deter m inin g their ann ualbonuses. In addition, the f irm created a new posi-tion that, among other things, organized seminarsto help practit ioners improve their planning andsales skills. The office designed planning forms thatare filled out by the practitioners each year describ-ing their intentions in the areas of cross-selling,prospecting, referral source work, favorable aware-ness activities, etc. These plans are reviewed quar-terly for accomplishment and for redesign wherenecessary.A firm with many branch offices must intro-duce further mechanisms to build up business de-velopment effectiveness. Consider the followingmarketing planning model used by a public ac-counting firm:Example: Planning ModelThe planning process starts with the home officegathering information on the economy, market, andother factors that will influence its objectives for theyear. It also carries on informal discussions with thebusiness development coordinator in each branchoffice about possible growth goals. Based on itsinformation, the home office adopts a five-yeargrowth objective and specific growth and profit ob-jectives for the coming year. These objectives arecommunicated to the branch offices.Each branch office has a business develop-ment committee, which looks at the firm-widegrowth objectives and develops specific objectivesfor the branch office based on both the overall goalsand local economic conditions. The business devel-opment coordinator in each office (w ho is a me m be rof the bus iness developmen t commit tee) annou ncesthe branch's objectives to each department andpractit ioner .Each practit ioner prepares an individual bus-iness development plan in which he states his ex-pected contribution in terms of fee objectives, ex-pa nd ing service to existing clients, potential newclients, planned work with referral sources, favor-able awareness programs, plus speaking, wr i t ing,and seminar work. The individual plans are re-viewed by the bus iness development commit tee .

with sugges ted revis ions gained through indivual discussions. They are summarized for branch office to ensure that the time devotedvarious marketing strategies is appropriate.Branch off ice business development plans then forwarded to the home office for review approval. During the year, the home office receibranch office results and determines where constation is desirable. The home office evaluates pformance against objectives, using such measuas profitability, market share, the ratio of reporbusiness development t ime to total hours, the ratio (ratio of successful proposals to total propals), the percentage of lost clients, and percentagenew clients.

Summary and ConclusionProfessional practitioners like to think of thselves as removed from business development sponsibility in the practice of their professioThey would like to believe clients will come to thw ith ou t organiz ed effort on their part, simp ly result of achieving a good reputation. They wolike to believe they do not have competitors, or tother firms are not aggressively cultivating the sapool of clients.Professional firms that want to grow and pper will have to shed this atti tude and confront marketing issues and challenges. The professiofirm cannot base its future on minimal or casmarketing nor, on the other hand, is it free to ada hard-sell effort that violates the profession's ecal norms. Between these extremes, a firm can ptice a professional type of marketing appropriatits ne ed s. Often this calls for estab lish ing a centeresponsibi l i ty for bus iness development withinfirm. It calls for training members of the firmmarketing planning and sales-building. I t callsestablishing a special budget and bonus systemsuppor t individual pract i t ioners in their bus idevelopment act ivi ty .

The question facing professional f irms iswhether to do market ing. They are doing maring. The question is how to do it effectively. Asfirm's competitors resort increasingly to instalorganized programs for bus iness development ,professional firm can no longer remain indiffeto the discipline of marketing.


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kotler, conor - marketing professional services (cité 30) - 1977

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