Service <> Product Pivots

Challenge your existing product or service business model by adopting best practices from the other side.

In our recent client work at ZeroWall, we’ve been exploring business model pivots focused on treating products like services, and services like products. The underlying theme is understanding how start-up ventures can merge the best of both worlds — customer relationships and high-touch service delivery, with efficiency and scale, for innovative value delivery.

Service Companies Becoming More Like Product Companies

Service companies typically focus on human capital, customization, and personal client relationships for sales and service delivery. And, if you’re doling a good job at it, you’ve got built in recurring sales frome xisting customers. But, people are expensive. To justify the value-add expense, service offerings must deliver tremendous value anchored on experiential metrics — provide great service closely aligned with your customer’s needs and you will thrive. Unfortunately, your resource requirements are closely correlated with revenue. And, so, the service business suffers from bi-directional scalability challenges — they are hard to grow and they struggle when demand wanes, even temporarily. Further, high COGs impact gross margins and diseconomies of scale in G&A/Ops hurt operating income.

Transition from delivering bespoke services to standardized, repeatable offerings

To grow, a service organization can work to transition from delivering bespoke services to standardized, repeatable offerings that can reach a wider audience without requiring proportional growth in labor. This is where the concept of?productization?comes into play.

One well-understood strategy is taking a service, automating parts of it, and delivering it in a standardized format to smaller customers who would could not be serviced profitably with a high-touch, bespoke offering. For example, consider a consulting firm selling services to enterprise-scale clients. Instead of billing by the hour or project for custom advice, they can pivot to a digital platform or freemium/PLG SaaS offering that solves similar problems in a standardized manner for smaller clients. This pivot leverages existing assets — credibility, brand, and expertise, into a product that can be marketed at scale through new channels, supported at scale with online self-service, and sold at a low cost, high margin, price point. Consider also of the rise of platforms like Maven, Teachable, and Kajabi which productize the service of training by giving coaches tools to deliver their offering with no travel and minimal live effort though pre-recorded videos and other static online content.

The key challenge is?scalability?without losing the human touch.

The key challenge is?scalability?without losing the human touch. Designing these productized services requires a deep understanding of user experience. It’s about taking what makes the service valuable — customization, problem-solving, and expert knowledge — and turning it into something intuitive, accessible, and efficient. It begins with approaching the customer value proposition with curiosity to understand real-world jobs-to-be-done, pains, and gains. Tools like journey mapping and the?Value Scene?can be fantastically useful.

Product Companies Becoming More Like Service Companies

On the flip side, product companies, those selling goods by the piece or by the pound, have a tremendous ability to scale. Once you’ve sunk your R&D cost and developed something that people want, you can sell more and more of it without a corresponding increase in your design costs. This is especially true for companies selling intellectual property, e.g. software. Gross margins are high and you’ve got built in economies of scale.

Product companies suffer from the problem of starting every quarter at zero

On the down side, product companies, especially those that do not sell a consumable like dish soap, suffer from the problem of starting every quarter at zero. Your sales engine has to get better and better, quarter over quarter, to shoe investors and stakeholders a reasonable growth path.

Modern product companies are increasingly adopting service-based models. Companies that deliver to customers an?ongoing value stream?beyond a one-time purchase will do better than their peers. Rather than relying solely on product sales, these organizations offer?subscription models?and?service-oriented offerings?to deepen relationships with customers and generate?recurring revenue.

The focus shifts from building brand and driving a single sale to deepening relationships and building continuous engagement.

While Apple is widely known for its physical products like iPhones, iPads, and Macs, they have pivoted to a service model with offerings like?Apple Music,?Apple TV+, and?Apple Fitness+?which turn what was once a one-time product purchase into an ongoing revenue stream, keeping customers engaged within the Apple ecosystem. And, even hard electronic products have been servicified and can now be bought on a monthly subscription with guaranteed upgrade to the latest tech when it is released. Consider also Zendesk, with its outcome-based pricing model, which pivots from a per-seat product license to a value proposition grounded in the service of closing customer service cases. By pricing on successful outcomes, Zendesk can sell to organizations both large and small and focus on providing great customer engagement and loyalty.

Ensure that the service components complement the product seamlessly

The pivot to a service-based model means delivering more than an an object or solution; it means delivering an evolving experience. From a design and customer experience standpoint, companies making this transition need to understand their customers deeply and ensure that the?service components?complement the product seamlessly. This demands greater investment in?customer success,?user support, and an ongoing dialogue with the customer base to fine-tune the offering over time.

Focus on the entire journey, from unboxing, to use, to becoming a net promoter

The user’s experience matters in profoundly new and different ways — not just in how the consume or interact with the product but in how they feel though the entire journey, from unboxing, to use, to becoming a net promoter and driving referral sales. The user journey no longer ends at purchase — it’s a cycle of renewal, support, and improvement.

The Rise of Hybrid Models

The line between product and service businesses is increasingly blurry. Service companies are borrowing tactics from product-driven models to scale efficiently and create standardized offerings. Meanwhile, product companies are embracing service-oriented strategies to build deeper relationships and ensure long-term value.

Balance scalable productization with personalized services that keep customers engaged

In this hybrid approach, value delivery is not one-size-fits-all. Successful organizations and product teams balance scalable productization with personalized services that keep customers engaged. Companies leading the charge in this space are those that can merge?operational efficiency?with?customer empathy. By leveraging automation and standardization where appropriate but maintaining a personal touch where necessary, these organizations can scale without sacrificing the customer experience.

To thrive in a competitive world, you need every possible advantage. At the end of the day, creativity is all about putting things together in new ways. When you can look at business models outside your core offering for ideas on how to compete, you’ve got an unfair advantage vs. your competitors.