woman working in office on phone
While there are many differences between selling a product versus a service, the central similarity is that the success depends on how well you interact with your customer. — Getty Images/vgajic

Selling a service is vastly different than selling products. At the heart of it, the main difference is that a product business sells physical, tangible objects, whereas a service business provides value through intangible skills, expertise and time.

The marketing techniques and costs vary when you’re selling services versus selling products, as well. Understanding these differences can help you cultivate the right approach for your business.

Product-based selling

When selling a product, businesses will want to highlight specific features and display the item in-store or online for customers to view. In some cases, customers can touch or manipulate the product before purchase, or they may have the opportunity to see it being used in a demonstration via sales teams or online videos.

Products are designed to meet the needs of the customer, but cannot always be customized if there are certain requirements. If a customer isn’t satisfied with a product, they can easily return it or exchange it for a different one. With products, it’s easier for a customer to determine its value and whether or not their purchase was worth the money they spent. Customers can rate a product online, and prospective customers can use the ratings to determine whether they want to buy the product.

The challenge for product businesses is keeping up with product demand and finding room to store inventory. Running out of inventory can result in bad customer reviews and dissatisfaction, so it’s important to track the manufacturing process, the number of items you have and what customers are buying so you always have enough of each product.

A few examples of a product-based business include:

  • Consumer products (hygiene products, clothing, appliances, etc.).
  • Raw materials (metals, timber, minerals, etc.).
  • Agricultural products (wheat, corn, animal products, etc.).
  • Technology products (phones, cameras, laptops, etc.).

[Read: Looking to Launch Quickly? 10 Business Ideas You Can Start Today]

Whether you choose to run a product business or a service business, it is important to do your research and understand how best to satisfy your customers.

Service-based selling

When selling a service, it’s crucial to highlight what makes your service personal and how you can meet the customers’ needs. Typically, marketing services requires building trusting relationships with customers and customizing them as necessary. This may include low monthly or yearly subscription packages or additions to the standard service offered.

Generally speaking, service businesses are less expensive to operate than product businesses because there’s no inventory, and the physical location of a service-based business is often irrelevant (though, this will vary based on the type of service offered). The pricing for service businesses, however, can vary greatly depending on various factors, including the specific industry, the experience of those operating the business and the amount of time it takes to complete the service.

However, it can be more difficult to get ratings for a service business because it may take longer for a service to be completed or to take effect, whereas a product can be used and then evaluated, reviewed and shared almost immediately.

Furthermore, a bad review for a service can take quite a toll on the business. A service cannot be returned and exchanged like a product, so it’s important that businesses continually evaluate the service they’re providing. Bad reviews for a service-based business can create a negative brand image and turn prospective customers away. Addressing customer questions and complaints in a professional manner will aid in resolving any issues that arise.

A few examples of service-based businesses include:

  • Professional services (attorneys, engineers, marketers, etc.).
  • Home repair (carpenters, roofers, electricians, etc.).
  • Creative services (writers, graphic designers, etc.).
  • Personal care (hair stylists, massage therapists, etc.).
  • Health care (doctors, physical therapists, etc.).

Whether you choose to run a product business or a service business, it is important to do your research and understand how best to satisfy your customers. Take note of what your competitors are doing, what prospective customers are looking for and determine how you can compete and meet the needs of those customers. Once you start learning customer trends and collecting feedback, you can adjust your strategies and beat out your competition.

[Read: A Quick Guide to Starting a Service Business]

CO— aims to bring you inspiration from leading respected experts. However, before making any business decision, you should consult a professional who can advise you based on your individual situation.

Published September 09, 2019