Are you missing an opportunity in services revenue? Does it feel like Services revenue is often an afterthought? In your KPI reporting, is the focus on “Core Products”?

If the above is true for you, you are not alone – but the trend is shifting. To skip to the juice, Download the Packaging Services for Revenue Growth Assessment Tool.

 

When we hear “services revenue” we often think of professional services packaged on top of recurring SaaS products. Break that mindset. Services revenue can exist across many (if not all) Go-To-Market models. For the sake of simplicity, we will discuss three models:

 

  • Service Only (e.g. business services, professional services and consulting)

     

  • Product and Service (e.g. customization services on top of software products)

     

  • Product Focused (e.g. manufactured products)

     

Services is often a secondary focus – particularly transactional services revenue in SaaS companies. In one sense, this is valid – enterprise value is deemed higher with recurring SaaS revenue vs transactional services revenue. One point often missed: services revenue typically indicates a stickier customer with higher lifetime value. On the flip side, decreasing service revenue is an early indication of impending customer churn. So how does service revenue get the attention it needs? Packaging.

 

Creating the right packaging makes a customer feel good about the product. It drives customer acceptance of the product and the purchase decision.

 

Grow Services Revenue By Overcoming These Six Buyer Obstacles

 

Put yourself in your buyer’s shoes (ideally, via a persona!) Switching vendors or taking on a new vendor has both emotional and logical objections.

 

On the emotional side, your buyer is likely feeling impatient – how long will this transition take? Insecure – what if the vendor that I chose, fails? And ignorant – I don’t know much about this process, that’s why I have a vendor solution.

 

On the logic side, there are goals to hit. Implementation timeline. Employee adoption. Regulatory standards. A product that supports resolutions to these objections is valuable. That value can be captured through services packaging.

 

Emotional

 

  • Impatient: Overcome via service professionals who have project plans, processes and change management experience.

     

  • Insecure: Overcome via vendor service professionals who have implemented at XYZ reference company, integrating into the same system.

     

  • Ignorant: Overcome via full access to experts to help proactively train and bolster competence.

     

Logical

 

  • Implementation Timeline: Overcome via service contractors that can shorten a timeline in a risk-controlled environment.

     

  • Employee Adoption: Overcome by win-win proactive training, usage monitoring and reporting (here’s where services overlaps with Customer Success.

     

  • Regulatory Standards: Overcome with the support needed to ensure the business process is supported, not just the software. Product alone rarely meets regulatory burdens.

     

When you know your buyer, you can package services to increase value, and thus deal size. We recommend using market feedback to test and validate your packaging (e.g. win/loss calls ), experimenting via A/B testing, customer advisory boards, pilot customers, etc).

 

 

So You Think Packaging Services Does Not Apply To Your Business Model?

 

Let’s look back at the three main product operating models and how to get more revenue via packaging service:

 

  1. Service Only (e.g. business services, professional services and consulting)

     

    • Your buyer may have a fear of “consultant fatigue.” New packaging option: include a project manager as a service to act as a quarterback between vendor and customer.

       

    • Your customer has a turnover problem and does not have the resources to match the service provider. New packaging option: staff augmentation FTEs as a service.

       

  2. Product and Service (e.g. customization services on top of software products)

     

    • Your buyer is an early adopter and unsure of the technology. New packaging option: embedded service support and 24/7 direct access phone line.

       

    • Your customer has a training center and trainers, but none that know the product. New packaging option: challenger model of embedded trainer plus train the trainer program – A/B test for success.

       

  3. Product Focused (e.g. manufactured products)

     

    • Your buyer is an adapting your product to a new use and unsure of the success. New packaging option: professional engineering services and installation. (with a guarantee, if they maintain service contract!)

       

    • Your customer fears a “bait and switch” on sold capabilities vs real-world performance. New packaging option: remote monitoring and timely break-fix.

       

       

Great, We Sold More Services, Now Who Can Deliver It?

 

There is one key assumption that must be recognized – that you have an excellent Services Organization. If you can achieve 20-25% of revenue from services but leave your services organization undeveloped, you are at risk for customer churn and creating detractors in the marketplace.

 

The old paradigm of Services-As-An-Annoyance is over. The new paradigm is Services-to-Capture-Full-Opportunity. The value is there: go package it!

 

Download our Packaging Services for Revenue Growth Assessment Tool to evaluate 10 Packaging Services best practices, rate your company performance based on these best practices, and find your company’s weak areas in Packaging Services.

 

 

 

Additional Resources

 

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ABOUT THE AUTHOR

Mike Spence

Works with clients to uncover evidence and determine actionable insights for consistent growth.

Mike is the sleuth of sales. He brings his analytical investigative approach to a diagnose root causes impacting a company’s ability to grow. His experience spans high tech start-ups through billion-dollar financial services companies. He spent four years in Accenture’s Health Care Strategy and Operations practice, making certain health insurance companies had products, market position and internal processes to thrive in the new paradigm after the Affordable Care Act. He marries academic rigor with real world applicability to ensure adoption.

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