Traversing through an idea or a concept to manufacture a product is a fulfilling but often exhausting process. 

It takes many failed attempts. 

It asks for many mental miles across the same territory to arrive at the desired destination. 

When you finally package the concept into a product, it is easy to forget the sacrifices it took you to perfect and solidify the idea. 

The skills, knowledge, and expertise you invested to come up with a high-converting product have a high price. 

Service productization is even more challenging and more rewarding. 

When you productize a service business, you deal with an intangible value you cannot always precisely grasp but with an almost limitless growth potential. 

More to the point, the technological landscape shifts fast, and you somehow find yourself left behind a few milestones back at every corner. 

So, what seems to be the main problem?

Is it possible that the problem is rooted in the business model itself?

In this blog post, we dig deeper into the characteristics and challenges of the service-based business model and give you a step-by-step guide to productizing your service business.     

What is a Service-Based Business Model?

A service-based business model is a type of business model where a company primarily offers services to its customers rather than physical products. 

In a service-based business, the value is created and delivered through the expertise, skills, knowledge, and labor of the company’s employees or contractors.

  • ⇒Expertise is an in-depth acumen in a specialized field that includes time spent on building reputation and authority in the relevant sphere. Expertise is usually built through research and occupational experience.
  • ⇒Skills are usually learned and based on the ability to perform certain activities and tasks well. A skillful person is excellent at putting theory into practice even if the practical task at hand involves theoretical proficiency at some level.
  • ⇒Knowledge is having vast information about a particular topic, subject, or field. Knowledge is often mixed with experience and expertise but it is neither. Experience simply means that someone has completed a project many times, while expertise means that they have acquired knowledge and improvement through repetition. Experts have “beyond the obvious” informational resources about a topic.  
  • ⇒Labor is occupational time-based or result-based work done for a wage. 

The point of this differentiation is not to define common truths but to discern the sometimes subtle differences that can eat away the resources of a service business and create more stress.

If you are thinking about productizing your service business, regardless of the type of services you provide, you should always start from the strategy. 

Does your business have all the necessary components of a successful service productization strategy? Let’s find out.  

Demystifying the Process: How to Productize a Service Business through its Components 

Here are some key characteristics and components of a service-based business model, as well as some common problems that arise from trying to scale it:

Intangible offers. 

The rule of thumb is that service-based businesses provide intangible solutions or experiences to their clients.

So if you want to productize a service business, you need to transform the intangibles (services) into tangibles (products) by specialization, personalization, and streamlining.

Learn more about Service Productization for any type of digital business. 

Client-specific. 

The focus of a service-based business is typically on meeting the specific needs and requirements of individual clients or businesses. Services are often customized or tailored to address the unique challenges or goals of each client. 

Is there an end to customization? No.

The purpose of productizing your service business is exactly that – to put limits on endless customizing so that you pick up only the ideal clients and work with only those that are a great fit because you are the best person to help them due to your unique skills and expertise.

Learn more about unapologetically setting work boundaries.

Expertise and skills. 

A service-based business relies on the expertise and skills of its employees or contractors.

These individuals are often highly trained and experienced in their respective fields.

Therefore, they are difficult to find, they quit often, and are expensive.

Learn more about how to scale a business with expert freelance talent.

Client relationship management. 

Building and maintaining strong client relationships is crucial for service-based businesses.

Repeat business and referrals often come from satisfied clients who trust and value the services provided. 

In fact, one of the key components of scaling and growing a service business is client satisfaction and loyalty built through optimizing and continuously improving the service behind the product offerings.

Learn why the difference between growth and profitability is essential to scale your service business. 

Service-based revenue generation models. 

Service businesses generate revenue by charging clients for the services they provide.

Pricing models can vary and may include hourly rates, project-based fees, retainer agreements, subscription models, or performance-based compensation. 

Pack and price your services as products with automated sales funnels. 

Click below for instant free access:

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Labor-intensive work. 

Since services are delivered through human effort, service-based businesses can be labor-intensive.

You need to put in the hours, and your most precious resource is scattered beyond repair.

Managing and optimizing workforce productivity is essential for profitability. 

Scalability. 

While service businesses can scale, they often face challenges related to scaling because they rely on the availability and expertise of individuals.

Expanding may involve hiring more employees, contractors, or subcontracting.

Client acquisition and marketing. 

Service-based businesses need effective marketing and sales strategies to attract and acquire clients. 

Word-of-mouth referrals, online marketing, networking, and building a strong online presence are common marketing approaches.

However, they don’t necessarily yield the results you crave. 

 

Quality control. 

Maintaining consistent quality in service delivery is crucial to building a positive reputation and client retention.

Quality control processes and standards are often put in place to ensure service excellence. 

A rock-solid quality assurance system helps you stay profitable even during serious business shakeups, for example, when your Senior Software Architect decides to leave your team and you immediately need to hire a replacement because the client expects timely project delivery. 

 

Watch the video below to learn more about how to productize a service business and turn it into a sales machine:

The core value proposition of service-based businesses remains rooted in providing expertise and personalized solutions to clients.

From Services to Products: Mastering the Transition

Productizing a service business involves turning your services into tangible, repeatable products or packages that can be sold more efficiently and scaled more easily. This can help you streamline your operations, increase revenue, and create a more predictable business model. 

In a nutshell, when you think of how to productize your service business, think of tangibility, repeatability, scalability, and predictability. 

Here’s a step-by-step guide on how to productize your service business:

1. Start by identifying the core services your business offers.

Break down these services into their component parts to better understand what you’re delivering to clients.

2. Look for commonalities and patterns among your services. 

Are there recurring themes or elements that can be standardized and packaged into productized offers?

3. Package your services into standardized offerings that address specific client needs or pain points.

Each package should have a clear, well-defined scope.

Consider creating different tiers or levels of packages to cater to different customer segments and budgets.

Ask yourself: Who are my main leads and what problems I am solving for them?

4. Develop a clear pricing strategy for each service package, including factors like cost, market demand, and competition.

Your pricing structure should be transparent and easy for clients to understand.

5. Clearly define what clients can expect from each service offer package.

Specify deliverables, timelines, and any limitations.

Have clear contracts and agreements in place with clients that outline the terms and conditions of your productized services.

Use Service Level Agreements (SLAs) to set expectations for quality and response times.

6. Streamline business processes.

Identify and standardize the flows necessary to deliver each service package efficiently.

Invest in tools and technologies that can help automate repetitive tasks and improve productivity.

Create templates, automate work, and save 4-10 hours per week with our AI-Powered Template Builder.

Start below: 

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7. Implement quality control measures to ensure that service quality remains high.

Now, this is really important: Train your team members to deliver services consistently according to the productized packages.

8. Develop a clear and compelling value proposition for each service package.

Create marketing materials (Facebook or LinkedIn ads, emails, landing pages) and messaging that highlight the benefits and outcomes of choosing your productized services.

9. Consider subscription-based pricing models or retainers for ongoing services to create recurring revenue.

Train your sales team to effectively sell the productized service packages.

Be open to iterating and refining your service packages based on client needs and market changes.

10. As your productized services gain traction, explore opportunities to scale and expand into new markets or offer additional services.

One option is to partner with complementary businesses to increase the quality and scope of your service offerings and better respond to client customization and specialization requirements.

11. Don’t forget to monitor and measure. 

Implement key performance indicators (KPIs) to track the success of your productized service offerings.

Regularly review and adjust your strategy based on the data and feedback you collect.

12. Provide excellent customer support to maintain client satisfaction and build long-term relationships.

Consider hiring a Customer Success Manager to engage with clients to identify upselling and cross-selling opportunities.

13. Develop a strong brand identity for your productized services to stand out in the market.

Consistently communicate your brand values and the benefits of your services to potential clients.

Productizing a service business may take time. 

Building a strong reputation for reliability and quality is crucial for the long-term success of your productized service business.

It’s essential to stay flexible and adaptable as you refine your offerings based on client feedback and market changes. 

Productize your services with an automated B2B sales funnel. Click below to get started: 

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