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If you're in the service industry, you know that things are changing fast. Software-as-a-Service (SaaS) products are disrupting the way businesses operate, scale and interact with customers. In the past, service-based businesses relied on a simple time-for-money exchange model. But now, companies need to take steps towards productization if they want to stay competitive.
Companies like Netflix and Hulu changed the game for video rental, and Uber and Lyft completely transformed the taxi industry. These are examples of SaaS companies that are both B2B and B2C. These companies transformed traditional service models into scalable, profitable businesses by thinking outside the box.
As a service-based business, it's crucial to consider how you can productize your services to meet the evolving needs of your customers, and your ever-rising human capital cost. By following a methodology to productize your service-based business, you can create scalable, profitable products that deliver value to your customers and drive long-term growth for your business. Trust me, it's worth it.
In this post, we'll explore a methodology I developed for productizing a service-based business, which we are using on our own service-based business. It’s called the STOP Methodology.
Though STOP is an acronym for the steps, it is also what needs to be done before launching anything. So let’s stop, and initiate the launch sequence.
The methodology involves four key steps:
By following this methodology, you can transform your service-based business into a scalable and sustainable product-based business. If you are further along in this journey and have your minimum viable product, then I recommend reading T2D3, it's the playbook for go-to-market strategy for SaaS companies, written by my co-founder at Kalungi - Stijn Hendrikse, and our product lead at Kalungi - Mike Northfield.
Let's get into the methodology:
Step 1: Standardize
The first step in productizing your service-based business is to standardize your processes. This means creating clear and consistent guidelines for how you deliver your services to customers. Standardization helps to ensure that you are consistently delivering high-quality services and meeting customer expectations.
One key aspect of standardizing your processes is to document all of the steps involved in delivering your services. This includes everything from the initial consultation with a customer to the final delivery of the service. By documenting these processes, you can identify areas where you can streamline and optimize your workflows.
For example, a law firm might document their process for conducting legal research, including the steps for identifying relevant case law, statutes, and regulations, and the tools and resources they use to gather this information.
Establish consistent guidelines:
In order to standardize your processes, you'll need to establish consistent guidelines for how you deliver your services to customers. This includes setting clear expectations for your team and establishing protocols for handling common scenarios.
For example, a coaching company might establish guidelines for responding to customer inquiries, including a timeline for responding to emails and phone calls, and protocols for handling complaints or requests for additional information.
Implement quality control measures:
Standardization also involves implementing quality control measures to ensure that your services are consistently delivered to a high standard. This might include conducting regular reviews of your service delivery processes, gathering feedback from customers, and conducting training to ensure that your team is up-to-date on best practices.
For example, a design firm might implement a system for reviewing design work before it is delivered to a client, including having multiple team members review each project and providing feedback to improve the final product.
Create templates and checklists:
Finally, standardization involves creating templates and checklists to ensure that you are covering all of the necessary steps in your service delivery process. This can help to reduce errors and improve efficiency.
For example, A consulting firm might create a template for preparing a proposal for a new client, including a checklist of all of the information that needs to be included.
Step 2: Templatize
The next step in productizing your service-based business is to templatize your processes. This involves creating templates and frameworks that your team can follow when delivering your services, as well as turning these templates into digital products that can be used internally and sold to customers.
Public use (free or paid):
One key aspect of templatizing your processes is to turn your templates and frameworks into digital products that can be used internally and sold to new or existing customers. This can involve creating digital versions of your templates, such as Microsoft Word or Google Docs documents, or creating interactive software tools that guide users through your processes. By creating digital products, you can easily scale your business and reach a wider audience.
Benefits: Brand reputation and non-time-bound revenue. This will enhance your brand presence by giving away value and demonstrating expertise, but it also opens the door to the beginning stages of breaking the time barrier, where new revenue is not tied to hours allocated.
Digital products can be used internally to streamline and automate your service delivery processes. For example, you might create a digital tool that guides your team through a customer consultation process, prompting them to gather the necessary information and ask the right questions. This can help to improve efficiency and reduce errors.
Benefit: internal efficiency. This does not show on any ROI report but will show on your bottom line, and if you don’t abuse that efficiency, employee satisfaction as they are feeling more productive, spending less time on inefficiencies, and likely having a better work-life balance as a result.
Customer use (free or paid):
Digital products can also be sold to customers as a way to provide them with the tools and guidance they need to deliver your services. For example, you might create a digital course that teaches customers how to use your templates and frameworks to deliver your services on their own. This can be a scalable and profitable way to sell your expertise and knowledge.
Benefits: Client relationships and non-time-bound revenue. This will enhance your customer relationships by adding additional value for no extra cost and leaving something behind beyond your engagement, but it also opens the door for more of that revenue that is not tied to additional efforts per sale.
Here are a few examples of how a professional service company might use digital products to templatize their processes:
- A marketing agency might create a digital tool that guides users through the process of creating a marketing plan, including prompts for gathering information about their target audience, setting goals, and developing a strategy.
- A coaching company might create a digital course that teaches customers how to use their templates and frameworks to deliver coaching services to their own clients.
- An accounting firm might create a Microsoft Excel template for preparing financial statements, which can be used internally and sold to customers as a way to streamline the process of preparing financial statements.
Step 3: Optimize
Once you have standardized and templatized your processes, the next step is to optimize them. Optimization involves identifying areas where you can streamline and improve your workflows, as well as introducing new ways of doing things that can drive efficiency and effectiveness.
Improve existing templates:
One way to optimize your processes is to improve upon existing templates and frameworks. This can involve identifying areas where you can streamline your workflows, eliminate unnecessary steps, or automate tasks. For example, you might use a tool like Zapier to automate certain tasks within your workflows, such as sending a notification when a customer completes a form on your website.
Introduce new ways of doing things:
Another way to optimize your processes is to introduce new ways of doing things. This might involve introducing new tools or technologies that can improve efficiency, or adopting new best practices that can drive better outcomes. However, if you introduce a new way of doing things, it's important to templatize these new processes so that they can be consistently replicated and scaled.
Here are a few examples of how a professional service company might optimize their processes:
- A consulting firm might introduce a new project management tool that allows them to more easily track progress, assign tasks, and collaborate with team members.
- A marketing agency might adopt a new content creation process that involves using artificial intelligence to generate ideas and headlines, which can save time and improve efficiency.
- A coaching company might introduce a new method for delivering coaching sessions, such as using video conferencing instead of in-person meetings, which can save time and make it easier to work with clients remotely.
Step 4: Productize
The final step in productizing your service-based business is to turn your services into a product. This involves packaging your services in a way that makes them easy to sell and deliver to customers.
Before you begin the productization process, it's important to ask yourself a few key questions: What is your product for? Who is it for? And why should customers choose you? Answering these questions will help you to determine the best way to package and sell your services.
These are the 4 evolution stages in the productization of a service:
Level 0 product: Service package
By following the first three steps of the productization framework (standardizing, templatizing, and optimizing), you should be making more profit by now. By creating service products, you can streamline your selling process and increase your conversions.
Service products can be packaged by:
- time (the least scalable option)
Level 1 product: Template
At this level, you are selling templates or frameworks that your customers can use to deliver your services. This is a more scalable option than a service product, as it allows you to sell your expertise and knowledge to a wider audience.
Level 2 product: Knowledge
At this level, you are selling your expertise and knowledge as a product. This can be done through seats (e.g. live training sessions), courses and certifications, or access to modules (such as private social media groups or live group training sessions). This is a more scalable option than a template product, as it allows you to reach a larger audience and potentially generate passive income through the sale of courses and certifications.
Level 3 product: SaaS (a minimum viable product, or “MVP”)
A SaaS (Software as a Service) product is a software product that is delivered to customers on a subscription basis. This is the most scalable option, as it allows you to reach a global audience and potentially generate passive income through recurring subscription fees.
It’s important to note that to get to this point, you need to develop the minimum viable product (MVP), so that you can go to market quickly and start learning and getting feedback from your early-stage users. There is a whole approach to this outlined in the T2D3 book.
Once you have productized your service-based business, it's important to "drink your own champagne" and regularly use your own products to ensure that they are meeting your standards and the needs of your customers. This can involve giving regular updates and providing positive reinforcement to team members who are using your products.
What happens next?
At all levels of productization, you need a go-to-market strategy and have clearly defined:
- What it’s for (what problem/challenge does it solve)?
- Who it’s for (who does it solve the problem for)?
If you get to the SaaS stage of productization (developed an MVP), then it’s time to go and demonstrate product-market fit (PMF). Again, I highly recommend reading (and applying) what is in the T2D3 book. It will help you learn quickly (with the success and failures), and give you the highest likelihood of success in the evolution of your business.
Productizing your service-based business can be a challenging but rewarding process. By following the STOP methodology, you can transform your service-based business into a scalable and sustainable product-based business and make major strides toward breaking the time barrier.
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CTO and co-founder at Kalungi, Fadi has helped SaaS companies grow with Inbound Marketing strategy and tactical best practices. as well as Marketing & Sales alignment to generate over $250MM in revenue for companies globally.