How to Deliver Your Service as a Product
Delivering your service as a product can be very beneficial to your business, enabling you to generate its steady sales revenues. Here is the recipe for how to turn your service into a product and start delivering your service as a product.
What are the differences between a service and a product?
A lot of times services are things that a very ill-defined and can lead to a lot of problems when trying to estimate costs, timelines, how many types of employees that you’re going to need, and the skill sets that you’re going to need because of scope creep. I think anyone that’s worked on a service has faced that problem, and it can be really daunting. It can actually sink projects pretty quickly. Whereas a product doesn’t have that problem. There is defined scope. When you buy a phone, you get one of the available models. There isn’t really something that you go back and say, “Hey, phone company, I would like that phone, but instead I’d like it with a different screen, maybe a different operating system, throw in a different processor.” It changes the scope. So, the scope is very defined in a product, and it is not in a service.
Because the scope isn’t really defined, you can’t define the cost. You can’t come forward with a service a lot of the time and say how much it will cost to produce because, quite frankly, you don’t know. Whereas if you have a product, you can. You already know all of the inputs that are going to take place. You already know the overhead, so you’re able to bid things a lot more accurately.
One thing that a product has that a service doesn’t is it actually has a name. Many companies that provide services do it on an ad hoc basis, they throw things together, and they don’t really know how to turn that service into something that’s easy to talk about. It’s easy to talk about a MacBook Air. Everyone knows what that is because it’s defined. If I were to say a construction project, that’s all sorts of things. Are we talking remodeling? Plumbing? Roofing? That makes it makes it very difficult to name because have what you’re offering described, you can’t describe it in a single phrase.
Defined product or production time
Services just don’t have this, and products do. You can improve production time because you’re repeating the same process all the time. You can eventually get better at it, you can find economies of scale, you can find shortcuts, and you can do all sorts of things along those lines. Ultimately what this really gets down to is scalability. Products are scalable, and services are not. The only way to really scale a service is usually by adding more people to do the work. Unfortunately, that work is usually diverse which makes it hard to hire the right person to do it. This makes your cost go up just as fast as your revenue, and that’s not a good way to become more profitable. You don’t get economies of scale in the way that you do with a product.
Why turn a service into a product?
It makes for a cleaner and easier sale because you have a clear price and delivery date. People face enough uncertainty when they’re making the choice to buy a product or a service already, and services even more so because most services have so much uncertainty. So, if you can remove the uncertainty, that’s a huge benefit to a lot of businesses because they’ll feel a lot more comfortable with a sale.
You can also turn your service into a subscription product for more profit. If you already know what’s going to go into it, it’s easy enough for you to set a price based on the pieces of the subscription. But if you don’t know what’s going to go into the service to begin with, there’s no way that you’re going to be able to offer a subscription. The cost of obtaining new clients is much more expensive than continuing to sell to current clients.
So, if you can take your service and make it more like a product, then you can take that product, and knowing the cost and time involved with it, you can give your clients a monthly price that will make it simple to continue working with you. This also allows you to charge upfront instead of charging for billable hours. This may not seem like a big deal, especially for bigger companies, but it allows you to have the money up front and be able to hire the people needed to complete the work.
How would you turn a service into a product?
Steps, Modules, and Flow
First, you need to identify something you can replicate. Start with just a few steps that you do in a service every time. Document each step of those things you already do. The cool thing about doing this is that usually you can combine multiple steps into modules. Eventually, you’ll be able to combine the modules into a full flow. So, if you think about this process like LEGOs, the steps would be individual LEGO bricks, modules would be LEGO kits, and the flow would be how you could combine the kits in any way that you choose. Eventually, you’ll want to combine your steps into modules and modules into a consistent flow that you turn into a checklist that can be replicated every time.
Only offer your product
Another big thing that you have to be sure that you’re doing when you are trying to deliver your service as a product is stop offering things that are not your product. Understand the difference between an option and a new product. When you buy a car, you can customize certain features that car companies allow such as color or leather seats vs cloth, but you don’t switch out the engine, transmission, or body molding without serious expense because there’s a big difference between customization and a new product.
So, you’re going to create a custom graphic for each website that you design, but they’re always going to be in set sizes like 64 pixels x 64 pixels for a Favicon or 1000 pixels by 300 pixels for a banner image. If you follow a set of guidelines, the customization is going to be what is in the guidelines. If you custom build a new website for a client with a different size and number of images than the sites that you normally build, you’re not giving that client customization, you’re giving them a whole new product. You have to learn to say no to these kinds of things because they will be outside your scope.
One of the really great things about delivering a service as a product is that the odds are that if it can be repeated, technology can handle the process for you. If you continuously do the same steps, you may be able to find a computer program (or custom build a program) that can do those steps for you saving you very valuable time in the process.
The other thing that can really help is the repetition of data collection. If you know the seven pieces of information that you’re always going to need from a client, just get those seven pieces right away, every single time. This way you won’t find yourself in a situation where you’re held up because you don’t have a piece of information that you already knew you would eventually need.
With a product, you can also get feedback every time that can improve the process. You can’t do that with a service because services are unique every time and have tons of variables that will make the feedback on one project irrelevant for improving another. Your goal is to remove variables when turning a process into a product so you can get more consistent feedback for improving the process.
Stick to your process
This is the big one. This is the one that people really struggle with. Stick to the process that you build. Don’t build it, congratulate yourself for how awesome it is, and then stick it in a drawer and never use it, or even worse, use part of a process and ignore the other part of it and still end up doing services, not products, by doing all sorts of special work and then ask why it didn’t work. You cannot judge or improve a process if you don’t use it.
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