How to Grow a Service Business in 2023
Growing a service business can be challenging on so many different levels when compared to product-based businesses. After all, since service businesses are selling intangible items rather than physical goods, proving their value and winning the trust of customers are naturally more difficult.
With that being said, marketing and growing a service business requires a different approach than selling physical goods, and there will be some inherent challenges in growing this service-based business.
In this guide, we will discuss all you need to know about how to successfully grow your service business, and by the end of this guide, you’d have learned about:
- The basics of what to expect in running a service business
- Key challenges in marketing and growing a service business
- Best practices in marketing a service-based business
- Actionable tips for growing and scaling your service business
Without further ado, let us begin right away.
What to expect in a service-based business
The most important consideration in running a service business is how to sell the intangible. The service—or services—you are selling is intangible, so it’s naturally more difficult for your clients to determine value and quality from service businesses.
Yet, besides the objects being sold, there are also other notable differences between a service business and a product-based business you should consider:
- Services are performed, not produced, and the main resource used to provide service is time.
- Physical goods can be returned if the customer is not satisfied with them, but customers cannot return a service. They can ask for a refund, but then the time spent by the service provider cannot be returned.
- On the other hand, dissatisfied customers may also believe that they’ve also wasted their time if the services provided do not meet their expectations.
- It’s more common for dissatisfied customers to tell others, leave bad reviews, or even harm a business’s reputation when they are disappointed with services rather than when they are disappointed with a product they’ve purchased.
According to Porter’s Generic Strategies— a concept describing how companies pursue competitive advantage—there are three types of generic business strategies that businesses can adopt:
- Cost leadership: maximizing efficiency and cost-minimization in one way or another so the company can offer lower prices than its competitors.
- Differentiation: developing and/or selling unique products or services not available from the competition.
- Focus: identifying and then targeting a niche audience not catered to by anyone else.
In service businesses, it’s typically more difficult to pursue cost leadership. While you can lower your prices, the competition will likely match your prices almost immediately if they view your pricing strategy as a threat.
Thus, service businesses should typically pursue either differentiation or focus strategy (or a combination of both.) For example, a dentist can adopt the focus strategy to target a specific regional audience. Or if the dentist possesses unique expertise, they can also pursue the differentiation strategy, for example, if they are the only one that offers a dental implant service in a 10-mile radius.
Biggest Challenges in growing service-based business
Above anything else, the key to achieving growth in a service business is consistency in providing high-quality services at all times.
When clients are satisfied with your high-quality service, they’ll recommend your service to their friends and peers (word of mouth marketing), and they’ll also keep coming back to use your service.
This is the main way you can achieve growth.
Common challenges in marketing and running a service business
However, in achieving this consistent service quality, there’ll be many challenges that service businesses will face along the way, and the most important ones are:
1. Challenges in winning new clients
To keep growing, a service business must be able to continuously acquire new clients while retaining existing ones, but doing so can be easier said than done due to:
- Increased competition. More and more entrepreneurs are entering the service industry
- Difficulty in acquiring customer trust and loyalty. Establishing a positive reputation can be very difficult in this social media age
- Rapidly changing market trends
- Saturated markets are crowded with advertising messages. It is now much more difficult to capture the clients’ attention
To answer these challenges, the service business must be creative in finding marketing tactics that work for them.
2. Hiring and keeping the right talent
One of the most important factors in facilitating business growth is the people.
While this is true for any business, it’s even more important for service-based businesses where consistency and quality are absolutely crucial.
When planning your business, make sure to list the vital skill sets needed to run your service business at a satisfactory level. If you already have existing employees, analyze their strengths and weaknesses, so you can decide whether to train them to fill the skill gaps or hire new talents.
It’s always important to carefully assess each situation to determine whether training your existing employee or hiring/outsourcing additional talents will be more cost-effective on a long-term basis.
3. Time and project management
Different people may approach time management differently and may have different priorities in executing their tasks.
Inconsistent and/or ineffective time management and project management issues will only grow as your team grows in size, so it’s crucial to monitor the situation closely and establish the required policies.
Make sure to make a detailed schedule for each project and clearly communicate everyone’s roles and responsibilities. Also, establish a comprehensive monitoring policy and/or system while keeping channels of communication open so you can monitor the performance of each team member in real-time.
Doing so will allow you to keep track and solve time management issues on time.
4. Client management and retaining existing clients
As a service-based business, managing your existing clients, so they keep using your services (and recommend your business to their peers) is very important if you really want to grow your business.
Ideally, you should know and understand each client by hand so you can cater to their unique needs and demands at all touchpoints, develop lasting relationships, and manage them well.
Develop clear and comprehensive communication policies and leverage various communication channels: email, text messages, social media comments/DMs, live chat, etc.
If necessary, invest in and implement technology solutions that can help you monitor your client’s activities and behaviors when interacting with your business, so you can use the data to help improve your services.
5. Managing your resources
Managing resources can be tricky in a service-based business, especially if the service requires a lot of equipment and/or if tools and equipment are distributed between locations or employees.
To tackle this issue, you should keep track of every piece of equipment so you can quickly identify what’s missing or what needs repair. Also, schedule preventive maintenance for tools and equipment so you can extend their longevity.
You should also keep track of when tools and solutions need to be updated or upgraded. You’d want to find the sweet spot between preventing your solutions and equipment from being too obsolete and updating to a newer version when it’s still brand new and too expensive.
Growing a service business: actionable tips and tactics
As discussed, above anything else, the most important foundation in growing your service business is your service excellence.
You’ll need to establish a team and a system in which you can consistently deliver high-quality service to satisfy your clients, and there’s no shortcut to this.
On top of service excellence, however, you can use the following tips and tactics to ensure your business is in the best possible condition to achieve growth:
1. Pick and focus on a niche
In service-based industries, it’s typically better to niche down and focus on one (or two) expertise rather than expanding your business to tackle too many services too quickly.
While it may sound counterproductive, establishing trust and credibility is very important in a service-based business, and as discussed, service quality is everything. When a service company offers too many services to too many target audiences, the quality of the services provided can suffer, and the company may lose its disappointed audience to its competitors.
The question is, how should you narrow in a (profitable) niche? Here are a few pointers:
- Pick a niche that you already have expertise in but especially that you’re interested in working in
- Identify a problem or need in your niche that you can solve that hasn’t been met by competitors. You can do this, for example, by checking customer comments on your competitors’ social media profiles.
- Assess the supply and demand for this niche in your area. If the niche is too competitive or vice versa, if there’s not enough demand for It, then it might not be worth pursuing
- Identify and analyze the competitors in your area, then evaluate your strengths and weaknesses and whether you can beat (or at least compete with) these competitors.
- Know and understand who your target audience is. Identify their needs and preferences, and identify their expectations from the service(s) you are providing.
- Research the current trends. In general, after taking current trends into account, try to find a niche with higher demand but lower supply.
- Once you’ve identified a niche to focus on, create an MVP (Minimum Viable Product) version of your business, and test your idea. This will allow you to test the market and collect feedback from your clients before you commit to building the real thing.
Once you’ve made a name for yourself in a niche and have established your expertise in your niche, you can consider expanding your business to your services. However, you’ll need to be extra careful not to compromise the quality of your service. Build a strong team and infrastructure first before you expand your business.
2. Build trust by promoting transparency, and communication
Establishing trust so that the service business can attract new clients and retain existing ones is the most sustainable way to achieve growth.
Again, the main way to build trust for a service business is to consistently deliver high-quality services to your clients, but you can support this by establishing a mechanism that helps promote transparency.
For example, you can allow clients to easily check reviews from your previous clients, which helps communicate that you are a committed, credible, and trustworthy business. Evaluate how you deliver your service, and think of ways you can incorporate a transparency mechanism in it.
Another important way to establish trust is to show your clients that you do care and that their concerns are being heard. Pay attention to feedback and comments (including and especially the negative ones) on social media, or provide a platform where your clients can leave their feedback (i.e., a testimonial/suggestion section on your website.).
Timely respond to this feedback, so nothing gets blown out of proportion, and prospective clients can see that you listened to your client’s concerns (and ideally offered solutions.)
In short, build transparency, and make your prospective and existing clients feel like a part of a community that they can trust.
3. Know your core clients inside and out
Define who your ideal clients/customers are, and gather as much data as you can about them.
Assuming you already have an existing client base, assess your customer database and try to find your ideal clients by looking at three main criteria:
- They are profitable, preferably with repeated and regular purchases
- They are easy to manage and don’t cause drama
- They are advocates who actively refer your business to their peers, friends, and family
Once you’ve identified a good collection of these ideal clients, you can try to find patterns and what’s similar about them, for example:
- Demographics data
- The channels from which they come through
- How they think and behave online
- Their values and views
- Their situation when they first used your service
And so on.
These will give you insights about who your ideal client is and especially where you can find similar people who may be interested in your service.
What if you are a brand-new business without any existing customers? You can conduct a competitive analysis (more on this later) and use the same approach to your competitors’ client base. Little by little, build your own customer base, then you can repeat the same steps with your own customer data.
4. Package your services like a product
Packaging your service like a product can help in tackling the tangibility issue in selling your service.
The basic principle is that people don’t actually purchase products or services, but rather they purchase the value and/or benefits they’ll get from this product or service. You watch a movie, for example, to be entertained by a good story, or you purchase a luxury watch for a boost in social status.
The thing is, it’s easier to notice these benefits on products rather than services, but we can try to imitate this in selling our services by ensuring three things:
- Create a unique experience in which your clients can learn the roles of the people involved in delivering your service and the different stages of production
- Brand your service by focusing on how it can solve a problem your client is experiencing rather than simply listing the features and benefits of your service
- Ensuring a tangible outcome (or set of outcomes) that can clearly give your clients evidence that their problem has been solved
Doing these simple steps to package your service can help in delivering a better experience for your clients, ensuring satisfaction and loyalty.
5. Establish a strong online presence
Marketing your service business can be challenging in the process, but one of the key foundations you should focus on is establishing a strong online presence.
In this digital age, if your prospective clients can’t find your business online, your business basically doesn’t exist, so it’s important to establish an online presence in at least four key areas:
For service-based businesses, a professional website is the equivalent of a digital storefront and an online business card. It’s quite common that your website will be the very first impression a prospective client will have for your business.
Fortunately, with platforms like Wix or SquareSpace, building a professional-looking and functional website is much easier and more affordable than ever. There’s also free and handy WordPress for those who prefer the platform for building their websites.
Thus, there’s simply no reason not to have a professional website that:
- Is well-designed according to today’s aesthetic standards and updated regularly
- Loads fast
- Contains all the important information surrounding your service business
- Has a fully-functional online booking feature (more on this below)
24/7 online booking
In this post-pandemic world, customers simply expect the convenience of an online booking function when looking to book their services.
Consider the fact that more and more bookings now happen during the weekends and outside business hours, and if you still rely on manual (i.e. phone-based) booking functions, your prospective clients will simply choose your competitors.
Just as with building a website, fortunately now adding an online booking functionality to your website is also very easy and affordable thanks to the various solutions available.
Bookeo’s scheduling software for service businesses, for example, offers an advanced online appointment scheduler at just $14.95/month. You can easily embed Bookeo’s WordPress booking widget Into your website or use Bookeo’s standalone (brandable) booking page provided by Bookeo. You can then paste your booking page URL into your social profiles, email signature, or even business cards.
Social media presence
It’s only obvious to build a presence and market your business on social media, which a huge portion of our prospective audience should be active in.
Yet, it’s important to do it right so your brand and social content can get noticed amidst all the noise.
Here are a few tips:
- Focus on the right social networks. Do your research homework and pick the platforms that your audience uses
- Post frequently, but make sure your posts are high-quality and relevant
- Actively engage with your audience. Respond to comments and DMs, including those who complain or review your service negatively
- Consider investing in paid advertising to generate quick results, but closely monitor your costs
- Partner with the right influencers in or related to your niche
Google Maps presence
Most service businesses are local by nature; targeting a local audience and having a strong presence on Google Maps is simply critical.
Today’s clients will search for phrases like “dentists near me” or “car service in (city name)” when they are looking for a car service business in their area, and for such keywords, Google will pull results from Google Maps.
You can optimize your Google Maps ranking via local SEO, which can be achieved in four basic steps:
- Claiming and verifying your Google Business listing
- Optimizing your listing. You can optimize for relevant keywords but focus on providing complete and relevant information for potential clients
- Build local citations by listing your business on relevant online directories. The more, the merrier, but make sure to use consistent information, especially NAP (Name, Address, Phone Number.)
- Encourage existing customers to leave (positive) reviews on Google Maps, but also on other relevant review sites and platforms (i.e., TripAdvisor, Yelp)
Do these four steps consistently, and you’ll see your business slowly but surely climb the Google Maps listing.
While starting a service business can be lucrative and profitable with a lot of potential for growth, it doesn’t mean it’s guaranteed to be successful right away. You’ll still need proper planning and proper execution of your plan in order to achieve success.
In practice, you’ll meet a lot of challenges before you can achieve sustainable growth for your service business.
Above, we have shared actionable tips and tactics that you can use to build a solid foundation on how to start and run a successful service business. Yet, the key remains to consistently offer high-quality services to your clients. The better you understand your audience and meet their expectations, the more prospective clients you’ll attract and the more satisfied clients you’ll retain.