Service productization is not a new concept. In fact, many companies use this process of creating productized services to scale their offerings and grow their revenue. Chances are that you’ve used one of these services for your own business.
How is productization set up, and what are the steps to doing it yourself?
You’ll find it all in this blog.
Ready to learn more? Take a look below at the six steps to productizing services delivery that we will cover:
1. Research
2. Design
3. Build
4. Pricing
5. Sell
6. Monitor
Use the links above to skip ahead to the sections you’re most interested in.
The end-to-end framework for designing, building and selling service packages is similar to that of rolling out a new software solution, using many of the principles popular in product design and management. Let’s go through it step by step.
WHAT ARE THE SIX STEPS TO PRODUCTIZE SERVICES DELIVERY?
1. Research
Productization begins how all good projects should: with research. The initial research phase provides a stable and informed foundation for your service packages to be built on, helping you understand the ‘why’ of productizing your services.
The work done at this stage includes a rigorous analysis of the market and past customer engagements, with the goal of revealing which services will deliver the highest value to customers.
Activities to complete in the research stage include:
Market research: Understanding the market challenges and pain points that impact your customers enables you to build packages that provide relevant solutions.
Competitor analysis: By identifying opportunities to gain an advantage over your competitors, you can build service packages that differentiate your brand from your competition in terms of content, value delivered and price point.
Customer research: Customer research uncovers the value inflection milestones across the customer journey, helping you tailor your packages to these experiences.
2. Design
Once you understand the ‘why’, it’s time to determine the ‘what’. Next, you will plan your processes and construct your packages by choosing which services to bundle together. The goal here is to create the best offer-market fit.
Activities to complete in the design stage include:
Mapping customer outcomes: One of the simplest ways to guarantee your processes are customer-centric is to structure them around their desired outcomes.
Gaining stakeholder alignment: By bringing the right mix of stakeholders together early, you can avoid nasty surprises or delays later down the line.
Reviewing customer inputs: Reviewing customer data inputs collected by your customer success and support teams can reveal what issues customers are struggling with and which services can best solve them.
Selecting your services: The results of your research will inform which services to include in your offering.
Defining your activities: What steps are required to deliver the planned service package?
Deciding owner roles: It’s important to determine which teams and stakeholders are best placed to own which activities.
Customer research: If your ideal customer doesn’t see value in your planned packages, you’ll need to return to the drawing board.
3. Build
Now comes the time to bring your service packages to life by constructing their contents. It can be helpful to treat this stage like product development.
Here are some of the content types you may create in the build stage:
Datasheets: Also known as a spec sheet, datasheets ensure your internal teams understand your offers and can communicate these effectively to customers.
Project plans: A project plan outlines all the tasks that must be completed to successfully deliver the service package for a customer.
Contracts: Work with your legal and finance teams to prepare everything your sales team needs to get deals over the line as quickly and efficiently as possible.
Internal documentation: Ensure your internal teams have the documentation they need for an effective launch and store it in a central location that’s easy to access.
External documentation: External documentation relates to anything that will support your customer in making purchasing decisions.
Digital materials: Now is a fantastic time to produce evergreen digital content to support the sale of your service packages.
4. Pricing
When selecting your pricing strategy and building your offers, it’s important to focus on promoting the right kind of customer conversations. If your pricing structure is needlessly complicated, you could potentially block customers from taking further action.
Here are some of the pricing models you may want to consider:
A la carte: You provide a menu of options for customers which are consumed on a unit basis.
Service points: Your customer accesses services via a drawdown model and must use services within a given time period.
Subscription: You fold your service fees into the subscription and have one price for both products and services.
5. Sell
The activities outlined here will help you market, sell, and maximise the value of your packages by ensuring your sales teams have all the tools they need.
Here are some of the tools you may use in the sell stage:
Sales enablement: When launching any new package, you must provide your sales team with the right tools and information to have productive conversations with prospective customers.
Documentation: Selling services is different to selling products and will require detailed documentation that outlines processes and best practices for your customer team.
Training guides: Create detailed and supportive training that your customer success team can use to make the onboarding process as smooth as possible for customers.
Incentives: Consider how your sales team will be compensated for selling these packages. You want to encourage upselling and discourage discounting.
Feedback: Keep an open dialogue with your customers, and be sure to take on board any feedback from early adopters, as this will help them feel heard and appreciated.
6. Monitor
Following the launch, it’s time to refine your approach based on your experiences. Creating service packages is not a one-and-done exercise, and you should be building offerings quickly so they can be tested in the market. That means continually finessing your packages.
Here are some of the ways you can monitor your packages’ success:
Processes: The best companies regularly review their approach to service delivery and look for refinement opportunities.
KPIS: Track the performance of packages by measuring key performance indicators, from time-to-value to ARR growth rate.
Customer KPIs: Measure the impact of your offers for customers based on the value that you drive, monitoring everything from revenue growth to customer experience scores.
Automation: Packaged service offerings provide an ideal opportunity to leverage technology to automate setup and administration activities.
HOW CAN PRECURSIVE HELP PRODUCTIZE YOUR SERVICES DELIVERY?
Productizing your services may be the answer to your business woes, but it can be a daunting prospect to completely overhaul how you sell your expertise. That’s why we’re here to help.
Precursive is used by many different companies to effectively manage the sales and delivery of package services. Through Precursive, there’s a wide range of processes that we can help you improve.
Let’s go through how Precursive can support each of the six steps of productizing service delivery.
1. Research
Precursive is a Salesforce native PSA solution for professional services teams, first and foremost, but we also offer a wide range of free content designed to help customers (and non-customers) optimise services delivery.
During the research stage, it’s critical that you gain a solid understanding of what productization is and what is happening in the market right now. Our content helps you do that:
White papers: Our white papers provide insight into what the best companies are doing to grow their business, informed by ongoing research into customer onboarding, project management and capacity planning.
Precursive Perspective Podcast: On our podcast, Precursive founder Jonathan Corrie speaks to leaders across the world of B2B Tech, SaaS and Communications, exploring the key trends and challenges that people and companies are facing.
Blogs & playbooks: Our resource library is home to dozens of playbooks exploring industry trends and articles full of implementable tips and tricks (like this one).
2. Design
As you begin planning your packages, you must dig into your existing financial and customer data. The goal is to create the best offer-market fit, which means looking at which services currently deliver the best value to customers and offer the biggest opportunities for profitability. Then, you need to match the most beneficial services to customers’ desired outcomes.
Precursive’s PSA software helps collect critical customer and financial data that will inform your new package’s design. This software offers advanced reporting to help you interrogate your KPIs, including:
Time-to-value: How long does it take for your customers to realise the value they gain from a product? You want to identify and repurpose the services that have a shorter TTV on average.
Customer health: Which services deliver the highest levels of customer satisfaction?
Revenue and profitability: Which services offer the best profit margins and drive the highest revenue growth? Which services present the greatest opportunities for upselling?
3. Build
The build stage is all about securing operational readiness. That means creating all the documentation required for package delivery, including datasheets, project plans and contracts.
Precursive’s Project Management software lets you quickly define which tasks and deliverables make up individual services so you can clearly communicate these to customers and internal stakeholders. What’s more, this software allows you to build templatised project plans and automate their creation, which is especially helpful when looking to sell and consistently deliver complex packages at scale.
These documents will guide your teams seamlessly from implementation to renewal.
4. Pricing
If you get your pricing strategy wrong, your business will pay. Big time. That’s why it’s critical to use real data from existing clients to inform your package pricing.
With Precursive’s Project Management software, you can get an accurate view of each service’s duration, cost to the business and the effort required to deliver clients’ desired outcomes. And with the forecasting feature, you can ascertain what margin is achievable at different price points.
By taking this information into account, you can select the pricing model that maximises ARR while ensuring you can offer a reasonable price point to customers.
5. Sell
With your sales team armed with the tools and documentation they need to have productive conversations with prospective customers, you can better market and sell your packages.
Sales enablement is where the real power of Precursive comes into play. Your services teams can use Salesforce CRM’s customer pipeline to build the relevant projects and then automatically resource these plans in Precursive PSA. This streamlined process supports package sales, driving your demand forecast for resources and ensuring smoother handovers between sales and onboarding teams.
6. Monitor
Precursive helps your teams refine their approach based on customer feedback, telemetry data and revenue forecasting.
You can track the performance of your service packages using Precursive's reporting features, covering delivery performance, billable utilisation, time-to-value, profit margins and revenue recognition.
Product improvement is an iterative process, but by keeping a close eye on what’s moving the needle and what’s creating roadblocks, you can begin impressing clients, getting a leg up on the competition and winning big.
To see how Precursive helped productize project templates, managed activities, and aided collaboration with clients, for SaaS company Signicat, click here.
WHAT NEXT?
Professional Services is suddenly much more important than it was given the need for new revenue streams and the importance of making newly acquired or existing customers successful.
Every SaaS company is now under more pressure from their board and investors to have more fiscal discipline and so services organizations can no longer lose a lot of money and in most cases need higher levels of profitability.
The biggest shift in PS is the move towards High-Velocity Services Delivery for both implementations and for in-life customers - this is where there is an emphasis on accelerating time-to-value but also to reach 2nd and 3rd value milestones more quickly that unlocks expansion revenue. As a result the best in SaaS are looking to design, build and sell packaged services offerings that support customers throughout the customer lifecycle.
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
