Why’s everyone so obsessed with productized services?
If you’re looking to start your own business, productize your services. Productizing your service is the golden chance to increase your business growth. Turning your service into a product makes things easier for you and your customers.
The best part that makes productized services attractive is the easier recurring revenue.
If you’re not already selling your services as products, you might be wondering if that would work for you. You’ve heard stories about how productizing your offerings can help you scale your business. The idea sounds appealing, but as a reasonable service provider, you want more information before making the decision.
That’s why in this blog, we share some of the pros and cons of productizing a service to help you determine whether it’s the right choice for you.
Benefits of Productized Services for Business
Below are some benefits that businesses get from productizing their services.
More Sales
One of the key reasons to productize your service is to help you get more sales. By simplifying the customer journey, you will make your business more sustainable.
Productized services allow businesses to accurately forecast revenue and plan their operations. With a standardized offering and pricing, it becomes easier to predict profits and cash flow. When a service is productized, the sales, usage metrics, and other key performance indicators become more transparent and easier to track. This enables better data-driven decision-making.
Moreover, productizing a service makes it more scalable, as the delivery and fulfillment processes can be systematized and automated to some degree. This supports business growth.
Improve Productivity
Productized services will help to increase the productivity of your business. By offering a limited, well-defined set of services, your business can streamline its operations and improve efficiency. This can lead to greater productivity for your team.
With a productized services model, your team can focus on refining and optimizing a specific set of offerings, rather than constantly adapting to new client requirements. This can lead to more efficient and streamlined operations.
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Expanding Your Business
It is another one of the main benefits of productized services is scaling. It helps to scale your business easily. With business analytics, scaling a productized service business is easy. By closely monitoring key metrics like customer acquisition cost, customer lifetime value, churn rate, etc., you can identify opportunities to optimize and expand your reach.
Productized services often have more flexible and scalable pricing models, such as per-user or per-feature pricing. This can allow you to serve customers of different sizes and needs, further expanding your potential market.
Faster Payments
With set scopes and prices, productized services streamline the billing and payment processes, lowering administrative costs and enhancing cash flow. By using these tactics, consulting firms can use productized services to improve customer engagement, optimize operations, and achieve long-term growth.
Furthermore, with a productized approach, businesses can invest in streamlining processes and developing robust systems to ensure reliable service delivery. This can reduce the likelihood of delays or errors.
Reduce Churn Rate
Productized services can be an effective way for businesses to reduce customer churn rates. These services offer a standardized, repeatable service package that is well-defined in terms of scope, pricing, and delivery. This consistency can improve the customer experience and make it easier for customers to understand the value they are getting.
When customers have a positive, consistent experience with a productized service, they are less likely to churn and more likely to continue renewing. The predictability and reliability of the service offering can increase customer satisfaction and loyalty.
Productized services make it easier to cross-sell and upsell additional products or service tiers to existing customers. This can help drive higher customer lifetime value and reduce churn.
Better Customer Experience
Improving customer experience is one of the main benefits of productized services. It is a beneficial strategy for businesses. Productized services offer a standardized and consistent service experience, which helps set clear expectations for customers. This predictability can make the customer journey more smooth and transparent.
These services typically have clear, predefined pricing structures, which can help customers understand and budget for the services they need. This transparency reduces surprises and builds trust.
Drawbacks of Productizing a Service
When productizing a service has benefits, there are also some drawbacks associated with it. Therefore, it is vital to know about it before implementing it.
Here are a few drawbacks of productizing a service.
Less Personalized Service
Productized services tend to be more standardized and scalable, which can result in a less personalized experience for customers compared to a traditional service-based model. This can lead to lower client satisfaction if customers are expecting a more tailored approach.
Longer Sales Process
Transitioning from a service-based to a product-based model often requires educating customers on the new offering, which can lengthen the sales cycle and require more upfront investment.
High Initial Time Investment
Developing a productized service, including creating the required systems, processes, and deliverables, can require a significant upfront time and resource commitment before the offering can be scaled. It will take a lot of planning to figure out how to assemble your product packages in a way that represents great value for your clients.
In addition, you’ll need to discover how to automate the process as much as possible and set up internal processes. You cannot complete this task in a single day. To get it correct, it requires effort, research, and frequent changes.
Narrow Target Market
Productized services are typically designed for a specific customer persona or use case, which can limit the total addressable market compared to a customizable service offering that can be tailored to a wider range of customer needs.
They tend to have more rigid features and scope, with less opportunity for customization. This can be less flexible than a custom service-based approach that can be adapted to each client’s unique requirements.
Ongoing Time Commitment
Even after the initial development, maintaining and iterating on a productized service offering requires an ongoing time investment to ensure it remains competitive and relevant to customers.
Moreover, productized services often have more standardized pricing, whereas custom services can allow for more flexible pricing models.
Examples of Productized Services
Starting a productized service is the best decision you can make in your business. It is the path of scaling up to a more valuable business. Productized services are much easier to automate.
Look at the different examples of productized services that help you move in the right direction for your best idea.
Marketing Services
- ZenOutReach: It is a complete solution for your lead-generation needs
- FuseMate: On-demand marketing services
- GetRhys: On-demand marketing consultant and mentor
SEO and Content Writing Services
- SeoButler: SEO and content solutions for marketers
- KoalaRank: Content writing service for small B2B firms
E-commerce Services
- Tailry: Focus on small Shopify tasks and professional photo editing
Finance and Accounting Services
- Firstbase: Help to launch a remote US company
- Bench: Provide dedicated experts and easy-to-use financial software
Tips for Productizing Your Services
Below are some tips on how to productize your services.
Define Your Service Offering: Clearly define the specific services you are offering, the target customer, and the value it provides. This will help you focus your efforts and communicate the benefits effectively.
Standardize and Systematize: Develop a standardized process, workflow, and deliverables for your service. This will allow you to scale and provide a consistent experience for clients.
Create Packages and Pricing: By following this tip, you can get several benefits of productized services. Offer pre-defined service packages at set prices. This gives clients clarity on what they are purchasing and allows you to focus on outcomes rather than time spent.
Automate Where Possible: Use technology to automate repetitive tasks, streamline delivery, and minimize manual effort. This can include things like online scheduling, project management tools, automated reporting, etc.
Optimize for Scalability: Design your service offering, processes, and pricing to be scalable. This allows you to serve more clients.
Partnerships: Consider collaborating with complementary providers to expand your service offerings and reach new customer segments.
Continuously Improve: Regularly collect feedback from clients, analyze performance data, and iterate on your service offerings and delivery to improve quality and efficiency.
Conclusion
To make a long story short, productization is most definitely worth it. The benefits of productized services bring success to your service-based business. Productized services allow you to have a more streamlined and systemized business.
If you’ve already implemented or are considering a productized service approach for your business, we’d be happy to discuss it further. Our experts can guide automating your operations and maximizing the sales and revenue potential of your productized offerings.
Feel free to schedule a meeting with us to explore how we can help improve your service-based business.
FAQs
- What are productized services?
Productized services are pre-packaged, standardized services that are offered at a fixed price, often with a defined scope and deliverables. They are designed to be easily purchased and consumed, similar to a product.
- How to start a productized service business?
Below are some steps to help you start a productized service business.
- Identify a specific service you can deliver effectively and efficiently
- Define your target market and pricing
- Create standardized packages and processes
- Market your services
- Focus on delivering a consistent, high-quality experience for your clients
- What is the difference between SaaS and productized services?
The main difference between SaaS (Software as a Service) and productized services is that SaaS is a software application delivered over the Internet, while productized services are standardized professional services offered as a packaged product, typically with a fixed pricing model rather than a recurring subscription.
