At a recent networking event, it had been a long day, and I was ready to go home. But I had paid to attend the event, which offered a chance to mix it up with VCs and small business funders. After slapping on my badge (why don't those things ever stick?), I headed straight for the wine bar, where I saw three bottles: a generic, mundane merlot, a generic white wine and something called Smoking Loon Merlot. WOW! I could almost smell the evening campfire, and hear the woods at sunset. My choice was easy.
Yet as marketers and sellers of professional services, we frequently pass up the chance to make the choice easy for our customers. Instead of enticing them with names of rich emotional significance, fragrant with the emotional impact of the benefits embodied by their services, we default to uninspired names like "Gold" or "Server Integration Service." No wonder our sales teams must work so hard to sell service contracts and service uplifts. Are pedestrian names causing us to miss sales and profit?
And we may not be missing just a tactical advantage; services can have a strategic impact on our core business. In the technology space, for example, support revenue represents the lion's share of the service revenue pie. At margins of 30 percent to 50 percent (or as high as 60 percent for some high-tier support offerings), support revenue contributes a disproportionately high percentage of the overall corporate profit.
Smoking Loon or Gold Medal Merlot?
Just because I'd go for Smoking Loon over mundane Merlot any day, I was delighted to come across some research that seems to support my preference. According to an IT Services Marketing Association (ITSMA) group study of its members, in some geographies, the "take" rates for high-level offerings using the precious metals naming convention (Platinum, Gold, Silver, Bronze) are falling. Of particular interest is the observation that European buyers seem to be willing to settle for the "gold" offering: Sales levels of the highest and most profitable services and support offerings have trailed the U.S. results.
Does this mean that European buyers are less discriminating? Or that they have no emotional connection to the underlying value of the highest level support offering? I vote for the latter.
Moving from tired naming conventions to refreshing ones.
While traditional service naming conventions may be useful in helping customers quickly identify the most robust among a variety of offerings, they provide no emotional connection for the customer and no hint of a value proposition. Companies that persist in using these "tired" conventions may experience reduced sales levels of their top-tier offerings. This can lead to eroding margins, lower profitability contribution to their bottom line, and they may even cause loss of market segments to competitors that wake up and try something new.
The power of an effective service name can help establish a new offering, even usher in a whole new category of services. In the early 1990s, my friend, Justin, had a new voice mail and messaging service he demonstrated for me. Called "Wildfire," customers could summon it by speaking the word while connected with a special number. Once "in session," it allowed him to place calls without looking up numbers (the system used voice recognition software), send faxes or conduct other business. Even more impressive, when people called Justin, instead of just leaving a message, they could tell the system to page him or find him at one of his other numbers.
This was the early offering of a category of productivity tools known as voice-activated virtual assistant technology, and it grew with market enthusiasm of its value to customers. Sure, it was a genuinely useful service, but I believe that it "caught fire" among early adopters at least partially due to having such a great name.
Why isn't everyone drinking from the "naming" Kool-Aid?
So if names pave the path to riches, why aren't more companies being smarter about naming their services? Recently, I called my friend, Athol Foden of the firm Brighter Naming in Mountain View, Calif. The company has a cool site full of fun stuff about product and service naming, including a Naming Critic with examples and critiques of great and not-so-great service and product names.
Foden says, "Part of the issue is that so many small service companies haven't properly registered their names ...
Making sure you aren't inadvertently stepping on someone's unregistered service trademark takes a little time and research money, resources in short supply when you are rushing service products to market. If companies spend money advertising a service name, they need to trademark it to protect their investment in building awareness and branding. So, as with most things, planning pays off.
Coming up with a great name or naming convention can lead to more money in the coffers of your company, and it makes the choices easier for your customers. Of course, the Great Name didn't keep me from spilling Smoking Loon Merlot down the front of my shirt when I took too big a gulp.
"I should have had the white wine," I said to myself, as I made a quick exit.