I attended back to back conferences this fall that included both professional services firms and product based companies sitting side by side. After hearing from, and speaking with, many product based companies, it is clear that what worries them the most is the commoditization of their products. Why? Because commoditization drives price down and erodes margins.
Margin erosion and increased competition can spell doom for many companies. The creative, forward looking companies are figuring out that profit and growth opportunities are in developing and delivering services to their customers. HOWEVER, their services portfolio must be seen by the customer as adding value to their business. Companies define value in many different ways. For some, value is a decrease in costs. For others, it is improving your customer’s ability to serve their customers more effectively. However you define value, it is clear, based on all the information and technology available to us, customers are demanding increased value from their vendors at lower costs.
As services based companies once borrowed principals from product based companies, like “just in time” inventory practices and developing repeatable offerings, product companies are now looking to services firms to unlock the secret to being a top performer.
For all companies out there that are developing or evolving service portfolios, here are some of the key lessons services firms have learned over the years:
- Innovation is the key to your survival! You must always be looking ahead. Technology is changing our world at lightning speed. If you are not considering how to offer the next greatest thing to your customers, you will quickly become irrelevant.
- Focus on your customers’ customer. If your solutions improve your customers’ customer experience, then you will always be relevant.
- Always have a focus on attracting and retaining top talent. In the services industry, firms need to differentiate themselves to attract top talent. What is it that makes someone want to work for you? Now once you’ve got the right people, constantly consider what will keep them with you.
- Encourage openness in your work environment. Some of the best ideas come from the most unlikely places. If you keep your ear close to the ground, you will learn a lot about what is going on within your company and your customers.
I have been part of the Professional Services industry for most of my career. It has always been a fascinating industry to me. So much has changed over the last 15 years. Competition is fierce and globalization and technology have forced us to view how we go to market differently. What is your company doing to evolve its services portfolio? Does your firm have unique ideas or lessons learned on how to develop compelling services for your clients? Would love to hear from you.