From Service to Process to Product
October 21, 2006
Case categories include: Marketing Sales Strategy & Planning
By Robert Sher
For many years, Ryan McGredy, CEO of Media Net Link in San Ramon, was solving his customer's problems by creating customized solutions. Sometimes his team was buried with work, and at other times they had excess capacity. Having built all his code in a flexible, stable platform, he came to the realization that if he could start selling the code he had built in the past over and over again – in effect to productize it – he would have a nice underlying regular income stream.
He focused on a mass e-mailing application, but the market was already full with off the shelf products. He didn’t want to differentiate on price. His team started looking at all the features they could add to increase its perceived value. But many of the features would miss the mark for most users, and several even made the software more difficult for some.
In early summer, he came to the realization that thinking of his offering as a product wasn’t right. Ultimately it was a process – that tied into each client’s business operations differently. Their unique advantage was to combine the pre-written code with his team’s ability to understand customer needs at a deep level, and to modify small aspects of their process (or code) to work ideally for each customer.
What are the key issues when marrying a product with a service to create a process offering?
Become an expert in your client’s industry
The customizations required for each client mean that you must deeply understand each customer’s business and how your process would solve the client’s problems. This takes a significant amount of time. As Media Net Link began learning one company’s specific challenges, they found they could leverage this knowledge to other non-competitive players in the same industry. Non-profits, education businesses, and local rock and roll bands have all become specialties of Media Net Link’s e-mailing process. Clearly specializing by user group or industry made great economic sense, and is a path well worn by others.
Qualify prospects carefully, then invest the time
Another important issue is that customized services, products or processes carry with them a much longer sales cycle. The investment of time required to understand the client’s needs is spent before the sale is closed. So carefully qualifying prospects early on is essential, since significant sales time will be lost if too much energy is put into the wrong prospects.
Build flexibility into your product so customization is efficient
Customizing in itself is relative. In many cases, clients need variations, not entirely new products or processes. Building tools and systems that allow you to very efficiently create minor customizations is key to keeping costs and pricing down. In Ryan’s case, it was software built the right way – maximum flexibility with a minimum of hard coding.
Approach it from their perspective, not yours.
One of the big secrets of this approach is listening attentively. That’s the starting point in understanding the problem to be solved. Approaching the problem from this perspective – the customer’s perspective – is the most honest and powerful starting point. With all of the realities facing the customer in the forefront of one’s mind, the process provider then designs a process that is ideally suited to solve the problem. Don’t think about what you have to offer – it can box you into a suboptimal solution. The last step is to assess the difference between the product you already have designed and the ideal solution the client needs. Closing the gap is the part that must be customized.
The mass market is always crowded --- lot of big companies producing a highly standardized and low cost product. Likewise, the high service end of business relies on highly trained technicians and experts that are hard to find, hard to retain, and every dollar of revenue requires is earned an hour at a time. The idea of selling a process – blending product with service ---- is ideal for mid-sized businesses (both for sellers and providers). It offers excellent solutions at lower costs, while giving the seller a more dependable stream of income (like a product) over time.
• Invest time in learning your customers’ businesses.
• Build flexibility in your products and services to offer maximum value.
• Really listen to your customers and approach solutions based on their needs.
Robert Sher is principal of CEO to CEO, specializing in assisting CEOs and business leaders as they navigate critical passages. He is the author of The Feel of the Deal; How I Built a Business through Acquisitions. He may be reached at Robert@ceotoceo.biz.
Company and Case Facts:
Company: Media Net Link, Inc.
Person: Ryan McGredy, CEO
Business Founded: 1994
Annual Sales Volume: $1.5 million in 2006
Head Count: 15
Service: Web application development
Typical Customer: Cisco, HP, Tyco
Written: October, 2006
Address: Media Net Link, Inc., 2010 Crow Canyon Place, Suite 390, San Ramon, CA 94583