After taking the day off yesterday to eat at Radar and inadvertently help its owners celebrate its 7th (49th in restaurant years) anniversary, I’ve reflected some more on how (and why) to productize services.
That’s because one of my readers asked me:
- If a service can be productized, what exactly is the difference between a service and a product? What makes it different? ((I have another question for you – can a product be “servicized”?))
Which I’d like to talk about today, along with these two accompanying questions:
- What is high-touch vs low-touch sales?
- What is high-touch vs low-touch delivery?
The difference between a product and a service. Here’s the problem: there’s no clear-cut difference, especially in the context of B2B solutions.
That’s because all products come with some degree of service which affects their value. This is true whether the buyer is a business or an individual buying a non-business item, like Zappos shoes. B2C sales like this are not the context of this newsletter but offer perspective. Because every time you’ve bought a “product”, you have also bought “service” with it.
So what’s the difference? Degree – of two things in particular.
High-touch vs low-touch sales. In the ideation worksheet I sent yesterday, I talked about high-touch and low-touch sales in devising productized services.
Touch is the amount of interaction but also the length of time they span. In the extreme case, a customized services sales cycle can span a year or more. Prime examples:
- enterprise custom software and/or website development
- enterprise software platform adoption and data migration
- the construction of high-employment office complexes or factories
And even in less extreme cases than those three, services tend to have can last a long time and involved many conversations. This is what you’d call a messy sales process. I say messy because there’s no repeatable way to structure, anticipate, or organize this level of complexity.
Messy-ness is equally inevitable for a $5,000 website, a $50,000 website, or a $500,000 one. Meetings, presentations, emails, memos, conference calls, proposals. And plenty of miscommunications. Most of us have witnessed SomethingSomething_v18-Final(3).pdf. That’s the typical cruft of the high-touch sale of services.
Enterprise software product businesses also have slow-paced and multi-touch sales processes. That’s because they always sell services with their products. Salesforce is a prime example.
First, a qualifying call. Then a basic product demo or two. Then perhaps a solution prototype demo, more calls, estimates, interviews, etc., to define things like product implementation, migration, integration, etc.
In the above scenario, the product per se might be sold low-touch, in theory, but the solution as a whole is a high-touch sale.
In contrast, standalone digital product solutions sell in a low-touch way. Examples:
- An ebook from Amazon
That’s the model for productizing our services. The closer the sale of your services gets to those three experiences, the more of a product it is.
And the lower-touch your product, the better positioned you are, psychologically, for a low-touch delivery thereof.
High-touch vs low-touch delivery. The delivery is everything that happens after a solution is sold and before a transaction is concluded.
As is the case with sales, delivery can be either high-touch or low-touch for either products or services.
But the goal of productized services delivery is simplicity. Simple for you the provider to give, and simple for your client to get. Here’s where repeatable processes do make a difference. Less total value can be delivered in a product than through custom services – at least to a single client. The high-touch of customized services, custom-tailored to map to client problems, is exactly what makes them so valuable.
Still a good idea to productize services?
Which is a good point to end on – productizing all services may not be ideal for your firm. It’s less profitable for a small tech firm with a niche market to solve fewer problems for one of its clients. And products always solve fewer problems than custom services and therefore create less value. Therefore products command smaller fees.
If you do choose to productize services then, try a hybrid of productized and customized services. Just as many small SaaS firms can emulate the 800 pound gorillas like Salesforce, and sell customized solutions on top of their products.
Then there’s the content marketing dimension – the lowest end information products act like high-value content. Cheatsheets, guides, checklists, are just a few examples – I want to talk about how to build them, as I have products on the mind!