You hear a lot about Product Management for software and products. You don’t hear a lot about product management in high tech services. I wonder why?
Imagine an assembly line in a factory. Rolling down the line are chocolates that you have to wrap, only the line is moving too fast for you to be able to keep up…
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High tech services are like the assembly line. Each chocolate is an instance of service to the customer. High-Tech Services Product Management means that as a Product Manager, you have to ensure the quality of each service experience; it’s like having to reinvent your product every day!
Services exist on a continuum from automated, tools based to manual, people based and from low to high touch. Cost in services can be most effectively contained by replacing people with tools.
With products and software, once you get over the initial “usage hump” and actually get someone to use your product, users are forgiving of product faults. Some users (unfortunately) even wear usability scars as badges of honor and evangelize products and software based on how hard they are to use (“Oh yeah?! Well I spent 4 hours troubleshooting my render farm in LightWave only to find the obscure line of configuration I needed buried in documentation from 3 releases ago! Obviously it’s better than your 3DSMAX software since they don’t just make it easy for you.”). With services…you are only as good as your last interaction with the customer.
When I worked at Cisco we had a large customer who we bent over backwards for on many occasions, even performing free services to retain and grow our business with them. They had high customer satisfaction and contract renewal time was approaching. One weekend, their Internet service went out (not our fault), and they called and get a junior tech on the line. He tried to do the right thing and appease the customer but there was no consoling a customer who was losing business. That one bad interaction sunk the contract. In a high touch service, it’s not enough to be good. You have to be perfect.
Services, like products, scale with repeatability. Repeatability is created through process and software that cuts down the remedial tasks, allowing the (expensive) people to focus on “value added” activities. At a low-touch service like the cable company, they have scaled the provisioning and delivery of television, and you have to work hard to get an expensive tech support person on the line. At a high-touch service like consulting, you can believe that they already have their report 50-75% pre-written before they walk in the door.
At my current company, our products have a significant service component embodied in our training and tech support, since we’re educating our market on a new way of doing business. Our customers buy partially on our reputation that we are not going to leave them hanging with a new and complicated product.
If I were going to start a high-tech services company, there are a few key lessons that I would keep in mind:
- Consider the services continuum, and push your service toward the high automation, high touch side. Low touch services are candidates for customers to do themselves. Low automation services have lower barriers to entry.
- For the non-automated parts of your service, have a written set of Core Rules of Engagement with your Service Delivery team that cover 80% of what you do.
- Create incentives/penalties for Service Delivery staying within the 80% sandbox.
- Define variables for the 20% that changes (customer gets X minutes of support time, customer has Y project hours available per month), negotiate with customers along these variables only.
- Monitor your Service Delivery’s team adherence to this sandbox religiously – if you give customer free service once, you’ll create a cocaine habit in the customer that is impossible to break. Note that this doesn’t mean you need a “Just Say No” culture. The answer should always be: “Yes, we can do that, let me have our Account Manager get back to you on the cost.” If you truly can’t or won’t perform the service, have the Sales person break the news, not Service Delivery.
- Train each member of the Service team and role play interactions with the customer until you are comfortable that they can handle the sandbox.
- Customers buy services for things they can’t or don’t want to do themselves. If you are performing a service, that means that you must have a unit cost advantage over Do-It-Yourself. This cost advantage is a primary selling point, especially when selling into Enterprises or IT, since most IT people believe that given enough time or money that they can do anything themselves, so religiously drive your costs down through software and process.
- Since services are delivered incrementally, they are usually billed incrementally. However lots of buyers hate paying monthly, and it increases your overhead. Consider a product billing model, where you bill for a year of service. You’ll have lower cash acquisition costs, better terms and cash flow, the ability to invest the against the spread, and more leverage. Note that public companies may only be able to recognize revenue as services are delivered due to GLB and other regul ations.