5 Must Haves for Professional Service Firms Developing Digital Products
An advantage to working with companies developing a digital product from a service based view, is they have insights into the client’s needs in order to develop features and position the product into the client’s value chain.
Through the course of consulting over a few years I’ve had the opportunity to work with service companies looking to develop and launch a product(s). The challenge with developing products from a service oriented view, is that they are fundamentally different mind sets and value propositions.
My expertise are sought for adding outside perspective coaching and working through an internal team’s myopic views (I ask “why” a lot), analyzing market entry factors, then strategizing and prioritizing customer journeys and features, developing pricing models and planning for go to market launches.
In all cases with the companies I’ve worked with, their drive to develop a product was spawned from an internal tool they created in order to make both their consulting engagements more efficient (automating tasks they successfully deliver) as well as be able to add value to the clients by allowing them to access and analyze data or expediting a workflow.
Here are the 5 Must Haves which I’ve championed during service clients engagements to successfully develop and launch their digital products:
1. Create a team dedicated to the product
Professional service firms operate on the billable hour or per project model, however developing a digital product is an internal (read: absorbs time and overhead budget) activity. Plan to allocate time and budget for team members to participate and follow through on product activities including; product ownership (or steering committee), analysis, IT and marketing.
2. Conduct Market Research
A disadvantage to having insight into a customer’s needs and value chain is it’s easy to assume they’ll want the product and other potential customers will want it too. In addition, if the service company is looking at turning an internal tool into a product, chances are, others firms have as well.
Conducting primary and secondary research to understand who the competition is as well as surveying current and potential customers about their interest in using the tool as a product.
Brief case study: I assisted a B2B services company analyze market entry for their tool. In my research I found 15+ similar product offerings in the segment. However, in analyzing the market movement, we discovered the largest player in the market was dropping perusing sales and product support in the area my client was looking to enter, creating an opportunity for the product launch and costs of switching for the client look appealing (valuable). This data also supported us quickly arriving at a pricing model based on analysis of what the market would bear from the larger players.
3. Define the Revenue Model
Is this tool becoming a standalone digital product and/or will it be offered as a value add to client engagements?
While offering the product as a value add gives a company the opportunity to integrate it’s product with other systems making it harder to be replaced by competitors, launching the tool as a standalone product could drive inbound inquires for professional services.
Pricing strategies differ for both scenarios as product usage becomes one of the drivers.
If the product creates efficiencies and reduces billable overhead, pricing within a client engagement should be looked at as blended model. At the point the product is mature enough to enable analytics (or enough quantitative data collected it enables better decision making) the pricing model can shift to a transactional or usage based one.
Standalone (SaaS) digital products pricing is driven by the business model and complexity of the product offering, adjacent packages (e.g. support, training) and analyzing what the market will bear.
4. Develop Where and How the Product is Successful - longer term metrics (KPI’s)
As launching digital products are a risk and take varying amount of time to realize returns on investment, the value digital products are measured over the long term and are based on the product’s business model.
Measuring internal and external customer acquisition and retention as well as inbound leads for adjacent products & services are useful overall usage metrics to track. Operationally, analysis on break even points, cost of (external) customer acquisition, volume by customer type and cycle time to new feature releases lends data to measure effectiveness of business strategy and value achievement.
5. Design a Customer Support Strategy
If the tool is a standalone digital product (SaaS) supporting it is an exercise in change management for a services company. Whereas services companies are ingrained to respond quickly to customers (white glove service), support for a SaaS tool does not always need to be reactive. Developing a process flow for where and how customer inquires get routed (tools such as ZenDesk, FreshDesk and Groove are great for this) as well as speed of response and escalation of issues will allow customers to feel connected while optimizing time spent supporting them. Development of a robust FAQ (or self help content area) has been shown to reduce customer support inquires and overhead.
In my work, I’ve found it helpful to employ Design Thinking tactics into product ideation and strategy. Envisioning (and lots of white board drawing) of the business model, customer journey flows and identifying internal core competencies has mitigated risk in product development and launch for my clients. If you have other tips for these types of product development engagements, send them on.
Are you or your company looking for help developing or reinvigorate your product line? Reach out to email@example.com for an introductory consultation.