Before we delve deeper into the benefits of this transformation, let’s define what we mean by Services and Products.
A Service is when you (your company) offer your expertise and experience to customers by dedicating your time for them.
The reason why so many businesses offer a Service is because it is the easiest way to establish yourself in business. If you are good at something, then it is natural to offer yourself to others for remuneration.
A Service company ordinarily offers a broad range of services within its expertise – “We are accountants”, “We are software developers” – and the company will take on any work it can handle.
The price for the services provided is based on the amount of time spent by you or your employees. “Timesheets” and “hourly rates” become not only the foundation for pricing but are also the most frequently used words throughout your company. There are many companies that successfully operate on this basis, and for some industries it is the norm.
However, there can be difficulties with this generalist approach. These include:
- Employees must be allrounders to cover the wide offering
- The need to recruit allrounders limits choice, and they expect more pay
- Scalability is very limited and strictly related to the number of employees
- Marketing is difficult and costly because it cannot be focused
As an example, imagine having a restaurant where you offer to prepare anything a customer wishes. If you are a great chef then this scenario is quite possible. But imagine trying to hire someone else if demand overwhelms you and you need to expand your team. Would you trust someone else? We’ll return to this example shortly.
In addition to the problems mentioned above, once a potential client has shown interest, the process of getting to payment would typically be along the following lines:
- An introductory meeting (and follow-ups) to understand the scope of the work
- Creating a quotation, sending it, and then waiting and hoping for acceptance
- Answering questions about the quotation
- Doing the work
- And then, more often than not, the awkward conversations with the client to charge them for the “unforeseen extras”
An alternative
Instead of trying to provide such a broad range of offerings, concentrate on a niche, to “Productise” what you provide.
To return to the restaurant analogy: you would not go into McDonald’s and order a pizza. McDonald’s doesn’t offer that. Equally you wouldn’t go to Domino’s and ask for a curry. These companies have focused on a niche. Occasionally products are added, but only in the same general area – for example, McDonald’s new “Hat trick burger”, or seasonal or limited time offerings. This niche approach removes all the obstacles of the “generalist” model listed above.
So how can a “service” be turned into a “product”?
Let’s take an example of a piece of widely used software, WhatsApp. The software developers could have marketed themselves as providers of bespoke systems. But, like McDonald’s, they focused on creating a single “product” – intangible, but a product nonetheless.
So, take the following steps:
- Review your clients… is there a cluster of related businesses?
- Review your “vertical” expertise… has your company grown to have experience in specific business sectors? (“We are specialist providers to the fitness industry”).
- Review your “cross-industry” expertise… has your company grown to have experience in a particular business function? (“We are specialists in debt recovery”).
- Review the market… is there a growing demand for certain expertise that you can meet?
If you can identify an opportunity, then set about “Productising” it, offering it as a package which typically will include the following characteristics:
- Detail of what is included (and, if open to interpretation, what is excluded)
- A fancy and catchy name – The NHS’s “Couch to 5k” for example
- A logo, branding, website, Social Media platforms, support
- Levels of engagement at fixed prices: the typical “free”, “pro” and “platinum” offers we see all the time
Over time, more products within the same niche could be added. For example, a vet who has focused on caring for household pets might create a “Happy Cat” programme that at the basic level includes one full check-up each year, moving on to full pampering at the top level of engagement.
Let’s briefly revisit the meeting with a client, assuming your business niche requires that face-to-face engagement. Now, the client can immediately see a nice brochure showing what’s on offer and the pricing already “baked in”. Maybe in an unstructured environment the client might have said that such-and-such is firm requirement, but if it’s not on offer the client might easily forget about it. There is no quotation to prepare, no anxious waiting for acceptance… and the client commits and pays immediately (or to agreed terms).
If you are serious about growing your business, then converting your Service offering into Products is the gateway to success. This might be the business growth opportunity you have been waiting for, so keep your eyes open for Productising opportunities and the magic will happen.
