Sell products, not services

If you want a scalable or sellable business then consider standardising your services in to products.

I love services: creating them, pricing them, selling and delivering them.  But they have their challenges: the perils of time based billing, continual client tailoring and the need for more sophistication around staff engagement and management.

Two recent experiences got me thinking about delivering services as a product: pro-vices or ser-ducts anyone?

1.  John Warrillow’s book Built to Sell is a recommended read for SME owners. The story addresses the common issue of business owners being the fulcrum around which everything revolves and is reliant. This may be fine until the business wants to seriously grow or contemplate a sale – and the issue is magnified in smaller services companies.

Warrillow’s test for a scalable business is as follows:

Is what your business does teachable? (easy for other employees or technology to deliver) Is it valuable? (specialisation allows you to maintain a high price point)
Is it repeatable? (provide for recurring revenue).

But can your business scale? Google, predominantly a product company, can while McKinsey (being a services company) struggles.  As Alex Taussig puts simply, “if you have to add operating costs (sales, marketing, administration, R&D, etc.) at the same rate you grow revenue, then your business does not scale.”

2.  I recently completed a strategic planning programme for technology business, Navitas.  The directors, John and Steve, had been struggling to build scale over the last 10 years.  With broad technical expertise and quality output, large clients relied on them to deliver complex, bespoke software.  And therein lay the problem.  They were actually offering a service: highly customised, highly consultative, time billed solutions.  They built it once… and sold it once.

While working on diverse projects across multiple technologies was stimulating it wasn’t getting John and Steve closer to their personal goals.  Specialisation, although daunting, was needed. Previous experience and success within the energy industry and a strong competency in metering related software led to the identification of a natural niche.

Navitas are now transitioning to a product based mindset.  One of their goals is to ensure  the next enterprise level project is built once and sold at least four times.  To support this transition further strategies around industry thought leadership,  funding and sales and marketing have been developed.

So, do you have a service offering that could be standardised?  Consider starting by:

  • creating a step by step process for its delivery
  • give the offering a name and a brand promise
  • fix its price
  • provide for only minimal customisation and
  • ensure no individual (including yourself) is integral to the ongoing delivery of the offering.

Develop it once, sell it multiple times – your challenge for Q2!

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This entry was posted in General Business, Owner Managers, Privately Owned Businesses. Bookmark the permalink.

One Response to Sell products, not services

  1. Devika Kumar says:

    Excellent article Simon.
    Devika

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