Why Your Tech Startup Should Also Consider a Services Business Model

Take a peek at the strategic environment in any business-to-business startup as it works to develop a new product, and you’ll find it has probably settled into an awfully familiar routine. The founders and development team have likely started out by working to identify the pain points that potential customers have through a process that involves a lot of listening and asking pointed questions. After determining where that pain lies, a minimum viable product is then built, and beta customers are recruited to try it out.

The startup then waits. Management anticipates early feedback from those beta users, should they be inclined to share it. A more progressive company may have even decked out this product with all manner of instrumentation to help automate this process. Analytics will tell them who is using what feature for how long, where errors are arising, and so on. AI tools may be tasked with predicting where additional resources should be focused to improve the product or expand its capabilities. Finally, at some point, a survey may be used to generate a Net Promoter Score, which will help make the call as to whether the product is viable enough to merit additional resources, and whether it should be released and marketed on a broader scale.

So, here’s a question: Is that company leaving money on the table? I’ll argue that it is, and here’s why. Even if the product is a runaway success, almost any enterprise can benefit from leveraging services to add value—  and revenue— to a product offering at almost every stage of its life cycle.

Providing services means something different to each enterprise— and even to each of its products— but the upshot is that an enterprise can use services to continue to engage with customers on a human level throughout the lifecycle of a product, while collecting fees along the way.

Consider the case of a company that develops a software product that’s designed to answer regulatory questions germane to a specific industry. This app may be built using a simple form of AI, populated with raw information, then trained based on common questions that are asked about these regulations. Essentially it’s a high-end search engine, though it stands to address a genuine problem for the company’s customers.

In a typical development, the company may roll out the product, wait for reviews to come in, then simply tweak the product over time in an attempt to improve its accuracy and helpfulness. But let’s consider how services could be used in conjunction with this product. Could the app include a button where a human being could be called upon to add context to the information in a search result on a pay-per-call basis? Could added-value services be offered that allow the company’s regulatory professionals to offer individualized guidance on how the customer might avoid legal headaches?

A similar scenario presents itself with financial-related products, such as those that deal with taxation. Your app may well answer a question about how much money the customer should pay— or it could offer up your own experts, making them available to answer questions, double-check the customers’ assumptions, and fine-tune results on an individualized basis. In other words, you’re telling the customer: Our product will show you where your risks are, then you can either take things from there yourself, or hire us to do it for you. Many are likely to take you up on that offer.

Again, all of these services should ideally be offered with revenue generation in mind. And because the company’s employees are interacting directly with users, there’s a secondary benefit here: The company gets additional, unfiltered information about ways to improve or expand the product, additional pain points customers are facing, and ideas for features that might be automated somewhere down the road.

There’s no hard rule about exactly how and when services should be offered. They could take the form of initial training, general support, or value-added consulting—  or all of the above. You can offer services only during the beta period of your product launch, to help you refine your value proposition, or as part of an ongoing, long-term strategy. Consider that the nature of most B2B software is much more complex; it’s typically not the “download and go” convenience of consumer applications. There may be work needed to configure the product, integrate with other systems or implement within an organizational workflow. Why not be the guide your customers need as they learn to use and get the most value from your product?  

Services, even those provided only temporarily, can be quite profitable because they often needn’t add any additional expense. For most startups, offering services should not mean staffing a large professional services team. In most cases, the product team is your early-stage professional services team, with developers and product managers doing double duty as service providers. If the strategy works out and becomes a significant source of revenue, you can always hire and dedicate additional people to it later.

Key business strategies such as leveraging automation and developing a minimal viable product are still valid, but it seems the pendulum has swung too far toward these ideas and away from the value that your own experts can provide as services, both to learn and generate additional revenue.