Consulting services: move from a service to a product model

1. Differentiate the product model from the service model

Before understanding the steps that allow this transition, let's start by clearly defining what we're talking about. 

a. What is the service model?

The service model is focused on personalization and tailor-made. Even if there are similar types of customers, in the end each remains unique and requires a heavy investment of time to create a relationship of trust .

Take the case of a consulting company: each client is assigned one or more dedicated consultants, account managers or even customer success. 

In this way, the service model is truly based on the availability of company resources, requiring a high level of expertise in recruitment and training. In addition, the quality of service quality of service variable depending as it does on the specifics of the project.

Consequently, the activity of a company with a service model turns out to be quite irregular and its income difficult to predict . This not only complicates the management of its cash flow but also its sustainability .

b. What is the product model?

Unlike the service model, this one is based on standardization .

The objective is to offer a global offer , easier to sell on a large scale .

This operation makes it possible to reduce costs by limiting the time employees are involved in order to extend the sales target. Indeed, once the product is marketable, the effort remains the same whether it is sold 50 or 200 times.

In the digital world, the product model takes various forms: a tangible product such as a file (like ebooks), software or even a subscription. 

Estimating a turnover then becomes much more accessible because it corresponds to the number of sales to be made.

As a result, scaling a business is much more feasible with a product model.

c. How to differentiate a service model from a product model?

Consider this diagram: 

• The role of technology

As observed, the greater the degree of productization, the more technology it involves. Automation then takes on a crucial role, especially for repetitive and low value-added tasks, thus generating considerable time savings.

Selecting the appropriate tools and training teams in these new methods is therefore crucial. Effective use of CRM tools and the selection of activity management software like Stafiz become essential.

• Greater perceived value

Comparing two qualities of service is not always easy as they depend on the project, the context, the client, the period, etc. The tangible product allows for a clearer comparison and the perceived value remains generally identical over time.

• A certain continuity 

If the services and products seem to oppose each other, the line actually turns out to be blurry. Indeed, both are progressing in the same direction but to different degrees . This reality is also represented on the diagram from which 4 forms emerge:

• Personalized service
• The productized service
• The product
• The product as a service

Some companies choose to be halfway between several models.

2. Why move from a service model to a product model?

a. Improve your efficiency

A company moving from a service model to a product model sees its efficiency increase. Indeed, once the product has been developed and the sales strategy defined , the offer is ready for use : it takes shape in the same way for each customer. This limits meetings and different back and forths.

This transition is therefore often accompanied by a gain in productivity , making it possible to concentrate on tasks with higher added value such as research, product development or even taking into account user needs.

b. Allow more granular division of tasks

In a service model, the sales cycle is strict to ensure maximum consistency. Each step depends on the previous one. 

With a product model, each skill or service can be divided into modules . Thus, the customer selects those who interest him without having to pay for a full service. This allows you to reach a larger number of potential customers .

c. Increase your turnover

The product model offers better profitability compared to the service model.

In fact, it allows you to charge more without incurring more costs. The effort is the same, while the number of sales increases, providing the possibility of a larger margin .

In addition, the improvement in productivity mentioned above frees up time to approach clients with higher budgets. 

d. Improve your cash flow management

By moving from a service model to a product model, you improve your cash flow management. Indeed, income is more regular and can more easily be anticipated . As a result, it makes it easier to anticipate cash flow and sustainably improves the financial stability of your business.

e. Strengthen your customer relationship

The product model, although it limits personalization, does not prevent a trusting customer relationship. 

Indeed, the product model involves payment for results, and not for time spent. 

Each party therefore has every interest in seeing the objective fulfilled as best and as quickly as possible.

Both the customer and the service provider see themselves as winners, with reinforced mutual trust .

Making the transition from a service model to a product model has many advantages , both for the daily work of the teams and for the company's finances . However, this change requires some upheavals , such as the evolution of customer relations, the modification of the organizational structure of the company or the need to evolve the commercial discourse.

3. How to transition from a service model to a product model?

a. Understand your customers' needs

The first step is to understand your customers' needs and how you currently meet them. Moving from a service model to a product model does not necessarily imply changing customers, but methods .

To do this, you can use several tools that will help you identify the essential features to keep during your transition:

• Returns to customer service
• Exchanges during commercial negotiations
• Reviews of your business 
• Conversations with your customers 
• A dedicated questionnaire 

Don’t hesitate to ask your customers directly about their expectations.

b. To prioritize 

Once you have made a list of all the features, you will need to prioritize. 

Ask yourself the questions that seem essential to you: 

• What is my customer's goal when using my service?
• What problems is my customer trying to solve ?
• What solution can I build to address his problem?
• Am I sure that the solution I propose provides a satisfactory answer ?

c. Determine the structure of your offer

Moving to a product model can take many forms. Indeed, some companies simply decide to add a product line to their current model, while continuing to offer their services. In this specific case, it is not a question of replacing , but of building a complementarity of the offers proposed.

This structuring step is crucial in building your product and requires in-depth consideration. You should not only consider your clients' goals, but also think about your own ambitions .

d. Identify tasks that can be automated

Automation plays an important role.

Consider all the features to integrate into your product.

List all those that can be automated or facilitated . Many tools are being developed every day, do not hesitate to monitor them regularly.

Studying the competition will also allow you to identify relevant technologies .

However, remain vigilant: if the use of technology is intended to save time, it must not alter the quality of the service delivered .

e. Build a standardized product offering

• Analyze your competition

Studying your competitors in detail through a benchmark will not only allow you to identify important features to include, but also to get an idea of market prices . Test their offer, contact their customer service, consider their sales pitch by presenting yourself as a potential customer.

• Involve your teams

The shift from a service model to a product model impacts the entire business . Therefore, involving your teams is essential since they will find themselves directly involved.

Asking your employees and maintaining a high level of transparency will maximize their commitment : their loyalty will be reinforced. In addition, this will stimulate the spirit of initiative and dynamism within the company.

Eisha Armstrong’s book “ How to Transform a Services Culture and Successfully Productize ” should help you on this subject. 

Furthermore, you will collect the information necessary to create your offer thanks to the collaboration of all of your teams: from customer service to marketing, including technical, finance and administration.

• “Simple is better”

Stay as functional as possible. Offer your customers a smooth transition by offering them a clear and easy-to-use product . You will probably have to evolve it later thanks to developments in your market, but start simply , even if it means iterating quickly.

While moving from a service model to a product model will certainly expand your customer portfolio, the idea is to maintain the trust you have already acquired. Make sure the transition supports the quality of service you are known for.

• Develop an offer tailored to your business 

Build a product offering that not only fits your customers, but also remains consistent with your company's image and values .

Indeed, this change in model generates many questions, particularly regarding the long-term vision of the company.

Another dimension comes into play: price . The prices charged by your competitors may already represent a lead. Take the time to identify the right price at which to offer your product. It must allow you to ensure profitability while remaining consistent with the expectations of your target.

4. Examples of companies that have successfully transitioned to a product model

a. Productized service

Several companies straddle the line between service and product, thanks to the development of technological tools . Here are two French examples.

• Moka.care

The company specializing in corporate mental health offers a variety of services ranging from setting up coaching for managers, to employee support and crisis management. 

However, the startup has also developed physical products to support this mission: a chatbot, a dashboard and a set of on-demand training courses.

These digital tools allow it to support its growth . Its customers become more independent, Moka.care then has greater bandwidth to expand to a larger number of customers.

• Ignition Program

This agency specializing in recruitment and training combines human expertise with technology. The company aims to support both recruiters and candidates.

To fulfill this mission, it develops HR resource tools helping its contacts to best prepare for discussions. Needs are determined in advance, everyone saves time , the agency can deal with a wide variety of profiles.

The professional alignment barometer, for example, helps the candidate to know themselves better. The recruitment profitability simulator allows recruiters to determine the real cost of recruitment. 

b. Product 

Some companies or entrepreneurs whose specialty is personalized support have chosen productization . These players have not made a 360° turn but continue to offer two offers which then become complementary.

• Maud Alavès and Thibault Louis 

Content creators Maud Alavès and Thibault Louis with their Linkedin manual are an example. These two entrepreneurs, particularly renowned on Linkedin (64,000 and 90,000 subscribers respectively) used their knowledge and notoriety to develop this project. Sold for around fifty euros, it fulfills several objectives:

• Generate a regular income
• Establish their credibility in order to generate requests for individual support, billed several thousand euros

c. Product as a Service (PaaS) 

Other companies have adopted the approach of a subscription offering, while continuing their consulting services. 

• Piano Analytics 

This digital platform, and in particular its French branch AT Internet specializing in digital analytics, is powerful software but can be complex to use . Its customers access it through a subscription, thus generating regular income.

However, the implementation and the need to carry out specific analyzes or even train internal teams sometimes prove necessary. The consultants then intervene, both on short-term and long-term missions, providing another source of income for the company.

Many software publishers have opted for this model: Adobe, SAP, Salesforce, etc. 

• Swapfiets

This Dutch bicycle leasing company offers the provision of a bicycle against a monthly subscription . The user benefits from a state-of-the-art product, always in good condition thanks to the repair services included.

Swapfiets has truly adopted the “product as a service” model by focusing on recurrence , thus ensuring regular income . The company then responds to the needs of its users: the provision of a bicycle.

More and more companies are adopting this model, driven by ecological motivations. This is the case of Homie , dedicated to the leasing of household appliances.

Unlike a classic model which favors the product, Product as a Service highlights the benefit provided . The software thus offers a global and scalable experience rather than simple access to the tool. For example, Figma makes its software available, but also a community, training, and new features. The software evolves with the needs of its customers. The pricing system goes from a fixed price to a personalized rate depending on the needs sought and the number of users.

How do I scale my consulting business?

Finally, ultimately, isn't the subject: how to scale companies with consulting activities ? This is the question we originally asked ourselves and this is Stafiz’s mission.

How can you save time and avoid repetitive tasks to concentrate on the essentials of your activity?

Companies with consulting activities lose productivity and scalability for the following reasons: 

• Failing collaboration (missing information, communication by email)
• Lack of visibility on the activity . We cannot monitor and improve what we do not measure precisely.
• Data compilation & manual tasks (double entry, file updating, faulty connection of management tools)

To scale your consulting business, it is essential to optimize the processes that cause you to lose performance:

Pre-sale, resource planning and capacity planning

• Anticipate the needs, missions and deals that will be signed in the coming weeks. Without this well-done process, we cannot organize and pre-staff our talents optimally. Stafiz helps you manage your pre-sales to better organize your projects in advance.

• Build the best project teams for today and tomorrow. How to anticipate your resource needs, how to identify them and associate them in a relevant way for each of your projects? Stafiz allows you to efficiently and automatically organize your capacity planning as well as your resource planning .

• Resource allocation. How to simply monitor, modify and optimize the planning and workload of your employees: avoid overloads, underloads or long inter-contracts? Stafiz allows you to be more efficient with unified and always up-to-date views. No more exchanges by email or chat.

Learn more about the resource planning with Stafiz

Monitoring of projects and budgets

• Unforeseen events happen, the schedule and profiles allocated to the project are modified, cost items are added, how to follow all these items and not forget anything? Stafiz allows you to track all costs.

• Financial monitoring. You would like to know the financial impacts of the measures you are thinking of taking or that you have taken, Stafiz presents your KPIs, always up to date and at the end of the projects. This means that these KPIs are constantly recalculated based on your actions. You can therefore compare your scenarios and carry out a gap analysis (and be alerted in the event of a risk of deviation).

• Overall monitoring of your project portfolio. How to compare your projects and choose the best? How to align strategy with operations? Stafiz gives you dedicated views for quick decision-making.

  Learn more about project management with Stafiz

Billing and cash management

What should be billed? What hasn't been billed yet (and should have been)? What has not yet been resolved by your customer?

Stafiz allows you to track all of this in an automated way: invoice deadlines and triggers, reminders and reminders, mass invoicing, purchase order management. Learn more about invoicing with Stafiz .

Final thoughts

Moving from a service model to a product model represents a major project within a company. However, the benefits are worth it: better profitability, an improvement in your cash flow and above all, the possibility of scaling your business on a larger scale. To successfully make this transition, we strongly recommend that you take the time to prepare .

Involve your teams , your customers , analyze your market, think strategically with a long-term vision . Use technologies to support you in this strategic change: automation tools, but also project management, activity management or resource planning like Stafiz to support you in your decision-making. Finally, keep it simple : “good design is as little design as possible”!

Stafiz is a modular or all-in-one ERP allowing you to manage your portfolio of projects and clients even more efficiently and profitably. Stafiz is primarily dedicated to consulting firms and more broadly to professional services.

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