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📝 Intro

Services are usually trickier to sell than products. It’s unclear what the need is, and what the company can offer.

For example, would engaging a PR firm be a good way to grow awareness of Ariyh? How would they do that? And for how much?

This vagueness creates friction and is a strong barrier to sales.

Now, what if a PR agency approached me with this offer: 

“With our Starter Package, we will get you media mentions in 3 publications with a relevant audience (e.g. Adweek). It can take up to 60 days and costs $3,500.”

This is a ‘productized service’.

It has a clear message, outcome, and price. It allows me to make a calculated decision to purchase this service or another.

And because we hate risk, I would likely choose this agency even if a different one had a better reputation and might give me better results.

Today’s study shows us how to productize our services, and what the advantages are.

P.S.: This paper inspired me to start productizing my own service.

I’ve been giving personalized recommendations in a step-by-step process, but I realized I’m not communicating that.

What do you think of clarifying it with the graph below on my website?

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Previous insight: People remember print ads better (All insights here)

Frame, brand, and price your service as a clearly defined product to make it easier to sell

Impacted metrics: Customer satisfaction | Customer acquisition | Customer spending
Channels: Product | Marketing communications | Sales team
For: Both B2C and B2B
Research date: September 2021

📈 Recommendation

Clearly define, brand, and price your service (or parts of your service) into an end-to-end ‘product’, rather than an open-ended vague service.

For example, don’t sell a “gym personal trainer”. Sell “The Abs Destroyer: a 60-min high-energy ab focused workout, for $39”. The latter has a clear value proposition, outcome, brand, and price. Customers know what they’re buying.

Framing your service as if it’s a product makes it easier to sell, is more satisfying for your customers, and allows you to raise prices.

🎓 Effects

• Services can be more or less productized. A service is highly productized when it’s:

  • Defined: it’s clear what will happen and what the process is (e.g. a 3-hour team-building workshop where you will learn about different types of coffee and make your own blend)

  • Branded: it has a name or logo that makes it stand apart (e.g. the Personal Website Hosting package)

  • Priced upfront: clearly and based on the outcome (e.g. candlelit dinner on the beach with a starter, main course, dessert, and bottle of champagne for $179)

• Productized services have several advantages because they are:

  • Easy to explain. This makes them simple to communicate and understand in sales calls and marketing material

  • Upfront about their outcome and process. This reduces risk perceptions for potential customers and makes it more likely that they’ll buy and even pay more (similar to the flat-rate bias). It also increases customer enjoyment because they need to put in less mental effort during the experience

  • Simple to replicate. This reduces the risk of failures, which increases customer satisfaction, and makes them easier to scale rapidly

• The downside of productized services is that they can reduce creativity and feelings of authenticity. This makes them less suitable for some artistic, cultural, and adventurous experiences.

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🧠 Why it works

• In general, we find it harder to visualize a service than a physical product before buying it. That makes it feel like a riskier purchase.

• Clearly defining a service and its outcome for the price we’ll pay makes it easier to picture it, and more likely that it will meet our expectations once we do.

✋ Limitations

• This study is a conceptual paper that does not directly test the benefits of productizing services. Instead, the expected results are based on previous research. This means it’s less clear in what exact situations the advantages materialize - or don’t - and how big they are. For example, should you really always be upfront and transparent about pricing, even when selling B2B?

🏢 Companies using this

• Several companies offer services that are highly productized, such as:

  • SaaS that offer specific plans and tiers (e.g. Bluehost’s Managed Wordpress website plan)

  • Travel insurance (e.g. different well-defined coverage option packages)

  • Spas (e.g. couple romantic spa treatment)

⚡ Steps to implement

• Define your service (e.g. website design), or parts of your service (e.g. landing page tweaks) into clearly defined ‘products’ (e.g. Luxury-Dining Website package, Landing Page Leadgen Optimization package).

• Brand your productized services with names, logos, and descriptions that signal to the customer what they should expect (e.g. the Luxury-Dining Website package entices customers to your gastronomic journey even before their palate experiences it).

• Price your options clearly and upfront. Of course, this also means you can easily run promotions too (e.g. this week only the Landing Page Leadgen Optimization package is 50% off at $1,495)

  • Make sure to set boundaries and tiers of what’s included and what isn’t (e.g. basic includes 1 revision, premium includes 3 revisions). You can have extra charges for special cases that spill out of the allowance

  • You can also give productized services away for free, as part of a wider product (e.g. Beach Candle-lit Dinner as part of a luxury all-inclusive resort package) or even to generate growth (e.g. refer 3 friends and get the Landing Page Leadgen Optimization package for free)

• Once you have created your productized service, prepare your marketing material and train your employees (e.g. sales team) around it.

🔍 Study type

Review of existing research.

📖 Research

Wirtz, J., Fritze, M. P., Jaakkola, E., Gelbrich, K., & Hartley, N. (September 2021). Service products and productization. Journal of Business Research.

[Link to paper]

🏫 Affiliations

National University of Singapore; University of Cologne; Turku School of Economics, University of Turku; Catholic University Eichstaett-Ingolstadt; and University of Queensland. Singapore, Germany, Finland, and Australia

Remember: Because of the groundbreaking nature of this paper, it could be disproven in the future (although this is rare). It also may not be generalizable to your situation. If it’s a risky change, always test it on a small scale before rolling it out widely.

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