Updated: Oct 3
More and more companies are facing increasing pressure to provide their customers with lower cost, lower risk deployment models. Customers are increasingly expecting SaaS products to be ready ‘out of the box’.
But here’s the good news!
There is a shift for SaaS companies away from traditional professional services towards packaged services that can in some cases be productized and sold as such. As the market moves from ‘growth at all costs’ to ‘profitable growth’ - productizing services is a mechanism to drive repeatable revenue and more profitable operations.
Ready to learn more? In this guide, we’ll dig deeper into
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WHAT IS A PRODUCTIZED SERVICE?
A productized service brings together the skills and expertise of a service provider into a standardized package for a clearly defined target customer. It’s the same offering for all customers, often with a fixed price and standardized delivery method. The end result is a high quality repeatable service that requires less effort to sell.
Want to learn more? Watch our video on productizing your services below, or visit our Youtube channel.
WHAT HAPPENS WHEN YOU PRODUCTIZE YOUR SERVICE?
Let's delve deeper, here are some of the steps involved in productizing services offerings.
Define the ideal customer profile you will solve an issue for
Problem statement: what is inconvenient for the customer, regardless of who does the task?
Standardize the steps you will take to solve the problem
Agree pricing that will make sense to you and your customer to solve this problem
This can help you to sell your services more effectively, because much of the previous ambiguity with bespoke, customised services has been removed. Customers can view your service packages on your website and know exactly what they’re getting from your description alone. It also allows you to sustain a consistent quality, with the help of internal systems and repeatable processes that do a lot of the heavy lifting.
In short, productizing your service offerings helps to simplify how and where you drive value for customers - these packages are easier to sell and more digestible for customers to consume.
Custom vs Productized Services
In Modern SaaS, the best companies are combining productized services with the SaaS product or platform. Custom professional services are still prevalent in Enterprise Software where those services are needed due to the complexity of the delivery or the customer requirements. However increasingly even enterprise software companies are trying to better package their services to provide faster deployments for their customers because they see challenges with delayed implementations that lead to rising costs for the vendor and create greater churn risk in tandem.
Below is a quick comparison of professional services vs. productized service offerings.
Scope of Work
Custom scope of work which is created for each new project
Fixed scope with defined outcomes and goals
Bespoke waterfall delivery with static staffing profile, e.g. 50% or 100% utilized project team
Repeatable, agile services delivery where delivery team work across multiple engagements concurrently
Fixed Price or Part of Subscription (ARR)
PS Revenue & Margin
Time-to-Value, ARR and Expansion Advocacy & Revenue
COMBINING SAAS WITH PRODUCTIZED SERVICES
SaaS companies are looking for ways to combine product and services offerings - you may be rolling out paid services for the first time or looking for ways to better monetize your services, support or CS offerings.
If you are looking to better integrate your product and service packages then consider how these two components will work together to drive value for your customers. If you sell an average ACV of $250k and have a very complex solution then potentially a $20k quick start package isn’t appropriate for that type of solution.
We often refer to a core product and a whole product. A phone is a core product that solves the need to communicate. By adding a SIM card, battery charger and a phone case, you get the whole product, which meets the customer’s overall needs most effectively.
Productizing Services for SaaS therefore begins with defining the whole product. There needs to be clarity on what the customers’ needs are across the customer lifecycle to derive as much vale as possible out of the product. in their entirety to derive as much value as possible out of the product. Think about what the operational run state is for your customer once you have deployed your solution - what should that in-life experience be for both your customer and you.
MOVING TO PRODUCTIZATION
Identify the Process
A key part of productizing services is standardizing processes associated with servicing your customers. By identifying the friction points for customers in getting value from your products, you can begin to map out the tasks that you and your customer undertake and are there areas where there is a lot of manual effort on both sides. Key steps in your process might include:
Evaluation and procurement
Staffing and resource allocation
Configuration and solution build
Within each of the steps in the customer journey, the best companies map out the steps that both parties take and the effort required.
Automate the small stuff
Once you’ve mapped out your entire process, you can begin to work out what you can digitize in a very simple way. Start with one at a time, and of course you start at the beginning. What is the first manual task that could be automated? Often, this will be elements of implementation such as creating project plans or sharing onboarding documentation and materials. Video content is a great way to create additional scale in your team and in educating customers on what they need to do and when.
Many companies find that their initial packages are not as successful as they hope. There are a few common challenges:
Packages are too complex
There are too many packages
Sales doesn’t sell them or doesn’t understand them
The idea is great but our delivery execution is poor
It is important to iterate, start small and refine your offerings over time. In Precursive, our customers create project templates for the delivery of packages with have the relevant tasks, timelines, owners and dependencies pre-built - often companies will refine and simplify these templates over time. You will learn through initial stages of rolling out packages where bottlenecks occur and take those learnings to build better offerings over time. Rome wasn’t built in a day!
Productizing your services can play a huge part in growing your company by helping you standardise how you get customers to realise value from your products. For many SaaS companies, productizing your services will help you to drive initial and then ongoing value for customers in a more repeatable way - ultimately leading to recurring revenues.
Think about what is inconvenient to your customers, irrespective of who does the work today? By mapping back from outcomes, customers are getting the ‘right’ set of services.
However, every business is different and it will always come down to the specific needs of each company. Neither method is objectively better, and you must decide for yourself the solution that will take your business forward and drive growth for years to come.
Want to understand more about how you can productize your service offerings? Our new playbook, How To Productize Services Delivery, is the free, detailed guide to what you need to do. This playbook covers:
Frameworks to design, build and sell services packages
The metrics that are used to monitor success
Sales enablement toolkits and pricing strategies
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Visit our Precursive Products page to discover how we can help you deliver a great productized service to your customers. Alternatively, book a demo today to see it in action for yourself.