Part - 3 Identifying Core Services: Can All Services Be Productized?

In our journey of learning about productizing services, we will explore the first critical step toward our goal: identifying the service(s) that can be productized and pinpointing the core service around which the entire product will be created.

It is important to remember that not every service is a good fit for productization. Let’s discover how to identify the services that can be productized. We will also discuss the core monetizable service, value add-ons, and pricing of those add-ons that can enhance the product offering. Often, it is a bundle of offerings/services rather than a single service.

A Core Question: Is It Possible to Productize All Services?

Short Answer: No. Not every service can or should be productized. Why?

• Customization: Sometimes, services are too bespoke or designed to meet the specific needs of a customer. The level of customization does not allow for standardization of the services. For example, consider the design of a hospital. While a standard service offering might seem to have a certain value based on the size of the plot where the hospital is to be constructed, the actual value will differ from one customer to another and have a huge number of variables governing the price.
• Complexity: If your offering is niche, it is often better served bespoke. Services that are niche, rare, and complex may not be suitable for productization. For example, a new marriage event planner might be happy to productize their service by offering a standard package, but a more nuanced and accomplished event planner may be better off offering services tailored to the customer's taste.
• Market Demand: If the market is small or highly fragmented, it may not be viable to convert the service into a product and hope for mass adoption. It is crucial that there is enough space/customer demand for the 'product' being created. I was working with a startup founder who built a service (product) for Genomics in TB. While the product was spectacular, the overall market size was only ~3,000 genomics happening in the country, leading to no lab showing interest in buying the product. Labs, on the other hand, were happy to subscribe to the service and use it as and when required.

How to Identify Core Services for Productization

Identifying your core service is easier said than done. You may start with Service X, but over the years, it may change to Service Y. In simple terms, this is the service for which your customers will be evaluating you and will be willing to pay.

For example, in Telecom, the core service was calling until about 10-15 years ago. The bundles were all around calls; users paid for the number of minutes they called, and the bundle included some SMS and VAS. Today, calls are taken for granted and are considered a base service, worth only a few hundred (in India). The core service is data, and pricing changes according to the data one subscribes to for a month/quarter. The bundle now includes SMS (why?) and other value adds like OTT, etc. The core service in the product has changed.

The following pointers will help you identify which services can be transformed into products:

1. Assess Demand:
2. Evaluate Repeatability:
3. Determine Scalability:
4. Analyze Profitability:

Monetizable Services and Add-Ons

Once you have completed the market research and know what your core service is, you need to look at monetizing it. The services on offer can be divided into two parts: core and add-ons, and then a bundle which is a variation of the level of core service and add-ons on offer.

• Core Services:
• Add-Ons and Enhancements:
• Bundling:

Invest Time in the Process

Proper identification of the service will ensure that you avoid rework later. It will also ensure that you are investing your resources, time, and energy in creating products that are scalable, profitable, and in demand. It is all about grinding the axe before getting to work. Work smart and then hard.

Endgame:

• Pinpoint High-Demand Services: Focus on services that solve common problems and have broad market appeal.
• Create Standardized Processes: Ensure that your services can be delivered consistently and efficiently.
• Develop Profitable Products: Choose services that can be monetized effectively and scaled without significant cost increases.

Must Remember:

Identify the right service for productization. This is a crucial step that can make or break the business and significantly impact your speed of growth. Not all services are created equal. Focusing on and choosing the right ones, and segregating them as core and add-on, will set you up for success.