While listening to the presentation of a Finnish entrepreneur, I came across the word productization. It caught my attention and I went to research what it was in order to learn more and potentially use this method for my own projects. That’s how I came across the following definition. Productization is the transformation of an already established activity into a defined product. This definition is opposed to “customization”, which is proposed by some professions. For example, a web designer can choose to propose a custom price according to the client, but he will certainly not differentiate himself from his competitors. On the other hand, he can use productization to transform his customized service into a specific product. This is what productization is all about.
Why use it?
Using a specific offer instead of customization means reducing the choices for your potential customer. By reducing choice you reduce indecision. It is commonly said that reducing consumer choice increases conversion rates. It would be interesting to see if customization corresponds to unlimited choice and if therefore using productization would reduce choice and therefore increase conversion rate. In any case, productizing one’s service allows one to better define one’s offer, and by defining it more precisely, one can better communicate it internally and externally (Valminen & Toivonen, 2015). If you can communicate it better, the marketing only gets better, so you can expect to have more customers and stand out from your competitors.
But how to use it?
To be able to productize your service you first need to be aware of what a service is. According to wikipedia, a service is a service that consists in the offer of a capacity, physical or intellectual. It is work that is directly useful to the user or customer. Hairdressers, deliveries, education, insurance, health are all examples of services. They are well defined since we know exactly what we can get in exchange for a well defined amount. But how do you define such a clear offer for tailor-made services?
In order to define a clear offer and to produce your customized offer, you must be aware of what your customers ask for most often. You need to be able to identify the key actions you perform for each client, and identify the variable part. Once this is done, you should try to create packages including the fixed part, and make your variable part a fixed product with a fixed price.
It’s very important to know what you’re offering, whether you’re in physical or intellectual services.
In one of my projects where we do service design, I tried to implement productization in the definition of our offer. The difficulties I faced were that due to the few clients we had so far, it was difficult to productize the variable part. So I prepared several 3 different products. All including the fixed part and something else. Since we are working on the UX on the web, the customer experience in the real stores and outlets and the employee experience, that gives us 3 areas to work on with our clients. So I tried to define these 3 different services. The first is digital UX design, the 2nd is physical UX design and the 3rd is employee experience design. We are still hesitating to add a 4th service which would be company optimization consulting.
Each of these services includes the following fixed part (the prices are fictitious for the moment because the number of hours needed has not yet been sufficiently filled in):
– Meeting with the client
– Agreement on the work provided and preparation of contracts
– Exchange of information necessary for the practice of our service
– Analysis according to the 1st, 2nd and/or 3rd service chosen
– Pre-report and first observations, suggestions for implementation
– Connection with partners (if needed)
– Prototyping of ideas and implementation
– Final report including the impact of our work on our client
For all this, we have a base price of 5’000 CHF. Then comes the variable part, which has been productized as follows:
For the choice of a service, we charge the basic price of 5’000 CHF. For 2 services, we charge a total price of 8’000 CHF, and for 3 chosen services, we charge a total price of 10’000 CHF.
The digital UX service focuses on optimizing your website according to your objective. If you have an e-commerce website, we will use the latest strategies and studies to propose the best optimizations.
For our physical UX design service, we will analyze the current customer journey using questionnaires made especially for your establishment and qualitative interviews with your customers. Once this is done, we will focus on analyzing the results and finding the right solutions. We will implement the ones you want to put in place and we will put you in touch with the right professionals for the ones we can’t implement by ourselves.
Our employee experience design service focuses on the part that your customers don’t see, but that impacts the quality of the interactions they can have with your company. We will identify everything that can be optimized to improve the performance and well-being of your teams, while respecting your needs as a manager.
In the end, we have 3 different pricing packages, including 1, 2 or 3 of our produced services.
If you also want to transform your service into a product, I recommend this website because it offers a very complete procedure to achieve this result. I did not see the relevance of repeating the steps that are very well explained.
Ferriss, T. (2017, August 9). Reducing customer choice generates more sales! Retrieved from Entrepreneur Echoes: https://business.lesechos.fr/entrepreneurs/marketing-vente/reduire-le-choix-des-clients-genere-plus-de-ventes-312056.php
Valminen, K., & Toivonen, M. (2015, May 26). Productisation of services: What, why and how? Helsinki, Finland.