Why turn services into products?
Turning your service offerings into standardized products increases the value of your business. When these standardized products are sold on a recurring basis you can much more easily train staff to both sell the products and perform the services required. This reduces the dependency of the company on you as an owner, and allows your company to scale much more easily. Furthermore, by offering products that can be sold on a recurring basis, you’re increasing the value of your business since recurring revenue streams are predictable and repeatable.
How to turn a service into a product
Identify recurring problems your customers have and turn your solution into a standardized service offering, or a ‘product’. Examples of recurring issues for which solutions can be turned into products exist in most service industries. Some of these are listed below.
- Digital marketing: Businesses need continuous marketing done in order to supply their sales funnels. Marketing firms can design specific weekly or monthly marketing packages such as those including regular blogging and social media updates.
- Bookkeeping: Business owners need their financial transactions recorded and their bank accounts reconciled on a regular basis. Bookkeeping companies can design packages that include the monthly recording of transactions and bank reconciliations. Premium packages could include basic tax compliance services.
- IT: Businesses need their desktops, laptops and servers to run reliably and to keep their data secure and protected. IT management companies can design monthly maintenance packages that address all of these needs.
What are the key consider ations in turning services into products?
It is worth addressing both your operational requirements and your client-facing features.
- Operational Requirements: Specialize in repeatable, trainable tasks for which you have capable staff that can effectively and consistently deliver your product. If you plan to customize your solution to every client’s specific request, you risk being unable to deliver. Furthermore, by trying to accommodate all anticipated requirements, you will have people on staff with capabilities that are very rarely used.Consider offering fewer, but higher-quality products. Staff will be easier to train and will become very proficient at what they do. A premium product can command a premium price.
- Client-facing Features: Pricing and terms are equally important and critical to successfully turning services into products. Consider establishing a recurring monthly fee for your product. This price may initially need to be estimated. For example, if you’re offering an unlimited number of technical support calls, you’ll need to estimate the number of calls you’ll get and the number of staff you’ll need to manage them. You should ensure the price is high enough to cover your expected costs and high enough to attract quality clients and filter out those who may exceed your costs to serve them. For example, it is preferable to serve ten clients who pay $297 per month compared to 30 clients who pay only $97 monthly. You would be able to provide these ten clients a high level of personal attention.Always err on the side of charging too much. If you are looking to attract people to your product but are concerned that the cost could be off-putting, you can always consider offering a ‘freemium’ package which entices clients with basic service offerings but requires them to upgrade to receive the premium service. Establish clear and reasonable service standards. These could include clearly delineated hours of service or specific turnaround times. For example, an IT services company may choose to receive calls during business hours and the early evening. Clients requiring 24/7 support may need to invest in a premium package priced accordingly. Bookkeeping companies can establish guaranteed turn-around times for filings, based on the number of days required upon receipt of complete supporting documentation.Where possible, implement client contracts. This is a good way to establish recurring revenues and create operational effectiveness. A good approach can be to have a relatively short up-front contract period when you invest in the onboarding process and then move to a month-to-month arrangement.
It goes without saying that it is important that the services you turn into a product are of the highest calibre and are packaged nicely into a product. All the standardization and customer service in the world will not help you if your product isn’t optimal.