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What is productization? How to sell your service like a product
As businesses grow, their services often become more complex and diverse. They may offer a range of services to various clients. But managing those services can be overwhelming.
This is where productization comes in.
Productization is the process of turning services into repeatable and scalable products to market and sell more easily. By packaging services into products, a service provider can improve efficiency, reduce costs, and streamline operations. With streamlined processes, your business can benefit from higher ROI. In contrast, inefficient operations can cause you to lose out on 20% to 30% more revenue.
In this blog post, we'll explore what productization is, how to identify services that are conducive to productization, productization strategies, and designing pricing models. We’ll also discuss marketing strategies and tips for growing your business through successful productization.
What is productization and why does it matter?
Productization transforms a service or intellectual capital into a product that can be standardized, packaged, priced, and sold to a wide customer base. The rise of productization has emerged as a crucial trend in business, particularly in the service industry, aimed at establishing consistency and predictability of services to clients. Productizing services aligns them with customer demands and the shifting business landscape, and companies that fail to make this shift risk being left behind.
A productization strategy matters because it allows businesses to scale and optimize their services by introducing new and predictable revenue streams to their operations. Companies can leverage the increasing trend of customers preferring products over customized services to their advantage. Additionally, productized services offer immense benefits to your current clients. Compared to traditional personalized services, productization offers standardization of processes, scalability, and cost-effectiveness.
Productization is especially useful in other industries that rely heavily on providing services that follow established processes and procedures. Services with established norms, frameworks, and clear objectives are easier to productize. For instance, in consultancy, legal, and accounting, where projects typically follow established frameworks, productization can result in better project management, streamlined processes, and predictable outputs. Productization allows businesses to deliver valuable client work while remaining competitive and adaptive in the ever-changing business landscape.
How to identify services that are conducive to productization
Productization is becoming increasingly popular as more and more businesses strive to expand their offerings beyond their traditional service model. Productization is a great way to increase efficiency while generating new revenue streams.
Before productizing your services, you need to identify which ones are most conducive to this process. Services that are labor-intensive and require significant customization should be prioritized for productization. Services that are highly repetitive and well-defined are also great candidates for productization. Ideally, services that have a well-defined scope, a standardized delivery system, a predictable outcome, and low barriers to entry are perfect for productization.
Identifying the right services for productization can be accomplished by engaging with your customers and assessing which services they are most dependent on. You can also evaluate your services to determine which ones are most costly to deliver or have the highest margins. Additionally, you can assess the processes you use to deliver services to determine their scalability and repeatability, which can help you identify opportunities for productization.
Understanding which services are best suited for productization requires carefully evaluating services, processes, customer feedback, your business model, and financial considerations. By finding the right business idea or service to productize, businesses can enhance their offerings while increasing their bottom line.
Productization strategies: packaging services into products
To successfully productize services, you must first identify the core services that your business offers. Once you have determined the core services, break them down into their essential elements. Next, evaluate which of these elements are packaged currently in a way conducive to productization. Identify which client problems these elements solve and classify them as complementary or stand-alone products.
After you have determined which services will be packaged into products, it's time to consider how to best package those services. You will need to consider the needs of your clients. You’ll also have to factor in the industry in which you operate and your target market. You may consider packaging services into a subscription-based model, a one-time purchase model, or a hybrid model that combines both. Subscription-based models are best suited for services that require ongoing engagement. Meanwhile, the one-time purchase model is suited for services that require only a one-off effort.
In addition to identifying the right services and packaging them appropriately, you'll need to think about designing the product’s pricing model. Consider the value that your product delivers to your clients, and price it accordingly. If your product saves your clients time, energy, or resources, pricing it higher may be justified. But let’s say your product solves a relatively minor problem. Then pricing it too high may be unrealistic.
As you consider promoting your productized services, think about your marketing strategies. Successful marketing can help you raise awareness of your new products by letting you connect with potential clients and ultimately drive sales. Social media campaigns, email marketing, webinars, and podcasts are all effective strategies for promoting productized services. Remember, establishing a clear value proposition is key to successful marketing. You also want to have an authentic voice that connects with your target audience.
Designing product pricing models for your new products
Pricing is an essential component of successful productization. Without pricing, you cannot generate revenue. Designing a pricing model involves several considerations. These include the value the product offers, the cost of production, and the size of the target market, among others. With productization, existing services are repackaged into products that offer more value to a specific target market. Note that pricing a product requires a different approach than pricing a service.
When creating product pricing models, you must determine the product’s value. As a rule of thumb, product pricing should reflect the value proposition. So the more valuable your product is? The more it can command a higher price. Additionally, product pricing should consider the competitive landscape since products are most often sold in a market where other, similar products exist. That’s why you should research the market and identify the price range of similar products.
One of the significant benefits of productization is simplified pricing models. When services are standardized and turned into products, pricing becomes more predictable and scalable. Most productized services have a defined scope, meaning pricing can be upfront and transparent. Customers can understand what they are getting for what they are paying. And this leads to more trust and fewer issues with billing and cost overruns.
Another pricing consideration when productizing services is bundling. Offering packages of products or services can create additional value for customers and increase revenue for your business. When bundling, consider the market and the customers' needs. What products complement each other and can be sold together? What price point does the target market respond to? These factors will determine how to create bundles that are appealing and profitable.
Marketing strategies for promoting productized services
Marketing strategies for promoting productized services are critical to the success of any business. A productized service can revolutionize how a business delivers services to its customers, but without effective promotion, it will be challenging to reach the target market. Ineffective marketing will lead to a waste of resources and missed opportunities. Therefore, having a well-planned marketing strategy to promote productized services is necessary.
Positioning it as a solution
You can begin marketing your productized services by positioning them as a solution to customers' problems. Customers should see the productized service as the ideal solution to their problems. It is vital to use customer-centric messaging that communicates the benefits of the productized service in a language that resonates with the target audience. Also, creating content, such as blog posts, social media posts or videos that promote the product's benefits can help to establish it as a reliable solution.
Building brand identity
Another marketing strategy element for promoting productized services is to focus on building a strong brand identity. A strong brand identity helps differentiate the product from the competition and improve brand recognition among customers. A strong brand can create a significantly higher value proposition for customers who recognize it. A distinctive brand identity that prominently features the benefits of the productized service can make it easier for potential customers to identify what sets it apart in the marketplace.
Using digital marketing
Leverage digital marketing channels and platforms to reach potential customers. You can use effective inbound marketing strategies such as search engine optimization (SEO) and content marketing. You can also utilize email marketing, pay-per-click (PPC), social media advertising, influencer marketing, and other digital marketing techniques. A well-rounded digital marketing approach that incorporates SEO, content marketing, and social media advertising can help increase awareness of a productized service, drive website traffic, and generate leads.
Tips for successful productization and growing your business
Successful productization can be a game-changer for businesses looking to expand their offerings, increase revenue, and streamline their operations. But to achieve this success, it is important to heed advice from experts who have done it before.
Evaluate and adapt products
One key tip for successful productization is to continuously evaluate and adapt your products to meet the needs and expectations of your customers. Understanding and responding to customer feedback can ultimately lead to increased customer loyalty and business growth.
Another important tip is to invest in effective marketing strategies that highlight the unique value and benefits of your products. This can include creating compelling marketing materials and utilizing social media to promote your products. You can also develop strong partnerships with other businesses or influencers in your industry. By effectively promoting your products, you can generate greater visibility and demand, ultimately leading to higher sales and greater profitability.
Businesses should develop strong partnerships with suppliers, vendors, and other industry stakeholders. By building trust and loyalty with these partners, businesses can secure better pricing, higher quality products, and more reliable delivery times. This helps to reduce costs and improve the overall value proposition of your productized services.
Finally, staying agile and embracing change is critical for successful productization. In today's rapidly evolving business landscape, competition can emerge quickly, and customer needs and preferences can change rapidly. Staying nimble and adaptable can help businesses stay ahead of the curve and seize new opportunities as they arise. By continuously refining and improving your productized services, you can build a more sustainable and profitable business over the long term.
Scale your service offerings with B12
B12 is a scalable online platform that makes it easier to productize the services you offer. Built-in tools and features like SEO, email marketing, forms, and online scheduling enable you to reach your target audience and promote your offerings.
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