A couple of weeks ago, I was reading an interesting blog post on using “User Personas” when creating new products. The article argued that this was important for product development because products are a one-to-many creation. That is, you create a single product that must serve the needs of many people simultaneously. Given this, the author argued, you need to categorize users into personas so that you can make strategic decisions about your product. You can’t design one product to satisfy absolutely everyone, but you do need it to satisfy a large group of people. Therefore, it’s critical to chose that specific group, and understand that group intimately when creating a product.
The article went on to say that this was a big difference between products and services. Services, it was argued, could be tailored to suit an individual client. You can customize services on the fly, so the need to build up an understanding of customers and their personas is not as urgent as for products.
While I agree that there are important differences between products and services, I don’t believe there is quite the difference that most people believe. In fact, I think the most successful service companies in the world are successful in large part due to the fact that they develop their services the same way product companies develop manufactured goods.
In this post, I’m going to explain why products and services are alike, and how service companies can improve their services by treating them more like products.
The difference between products and services
Most people think of products and services as being two sides of the same coin. Some companies sell stuff, and others sell things like experiences, information, or expertise (i.e. non-stuff). While that dichotomy isn’t wrong, per se, I believe it oversimplifies the complexity of what companies develop for offerings to their clients. It’s more accurate to think of a company’s offerings as falling somewhere on a spectrum.
On a product/ service spectrum, there are extremes where offerings fall on one end or the other – totally product or totally service. For most offerings, however, they’re actually a bit of both.
On one end of the spectrum, things like desk lamps or chairs are mostly products. You purchase these items without much help from sales staff, and once you get them home, you’ll generally never interact with the product supplier again. However, even in these instances there can be an element of service to these products. For many items in the “mostly product” category there are warranties. A warranty is a service that the product supplier uses to augment the product. Another example is customer support offered over the phone to help people use and troubleshoot products.
In both these examples, services are used to improve the overall experience of a given product, even though the product itself is what contains the bulk of the value of what all is being offered.
On the other end of the spectrum are offerings like management consulting or banking, which are almost completely services. The point of working with a consultant is not to acquire some sort of physical good. The point is to acquire knowledge, reduce risk, or to help make some sort of decision. Services are characterized by the lack of physical stuff being exchanged and the inherent variability in what is being offered. As a consultant, it would be a bad idea to give the same final report to every client – you have to adjust to suit the specific needs of the project.
All this being said, there are still important product components for most services. Many consultants, for example, still provide their clients with physical reports. They might also create digital products for their clients, like a financial modeling template, for example. These products augment services in ways that are very important for clients.
Another important thing to recognize about services is that even though the results of those services may be tailored to each individual client, good service providers have standard ways of delivering their services. These companies have procedures, templates, processes, and policies to govern how they do their work. In this way, they are able to offer their clients better consistency, efficiency, and effectiveness. Essentially, this makes services a lot like products.
Part Product, Part Service
Somewhere in the middle of the spectrum are things that are both product and service. Imagine a burger joint, for example. Yes, you get the physical meal, so there is a product component. But you also get someone to cook it for you, likely customized to your specifications, which is definitely a service. This is tough to pull off. Look at McDonald’s as an example. They’ve successfully created products that are enjoyed by millions all over the world (e.g. Big Mac, Quarter Pounder), created local customized products for niche markets (e.g. the McLobster where I live), and created processes to cook and serve these foods that can be replicated anywhere in the world. This is an incredible feat and has led to that company’s dominance of the fast food industry.
The take-home message here is that services and products aren’t so different as you might imagine, and not so disconnected either. In fact, I believe that they are more alike than different. This provides an interesting opportunity for service providers to improve their offerings by treating themselves like a product organization.
How Service Providers Can Improve Their Offerings
Use user personas – While it’s true that service providers can customize their individual offerings to anyone who walks in the door, it’s important to understand the different groups within your customer base. A user persona is basically an avatar, a representation of a customer typical of one of those groups. Once you establish your personas, you can make sense of how well your offerings match the customers you serve. You can also decide which personas you want to double down on and which ones you don’t want to serve moving forward.
Establish strong operating procedures – While the results of your services won’t always be the same, it’s important to have a way of approaching your work. You can use processes, policies, templates, checklists, and procedures to establish consistency when delivering your service. This is how services get “productized”. If A customer knows what to expect every time they do business with you, then they’ll grow comfortable with you and will want to continue doing business with you.
Augment your offering – If you offer services, then try adding a product element to it, or improving the product elements. It doesn’t have to be much. The mint on your pillow and your newspaper outside your door at the hotel is something that a lot of people really look forward to.They’re small things that can make a big difference in your overall service experience.
Establish different versions of your offering for different personas – Just like there are different versions of many physical and digital products, (e.g. bronze, silver, gold versions of a software package), you can have different versions of your service. This can be a way to better serve clients who are looking for different levels of service while improving revenues, too.
If you’re a service provider, it’s important that you start thinking of your services like products in their own right. Product management applies every bit as much to services as it does products. How can you make your offerings more consistent and streamlined? Have a think about your own business and share with us the opportunities that you see using the comments section below. I promise to respond to every comment and question.
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