David Ogilvy, the famous advertising pioneer, described the biggest problem with a service business in a memorable way. 'The assets go up and down the elevator every night," he said.
Because people are the main asset of most service companies, these businesses are vulnerable to human frailties: At times we all get sick, tired, cranky, fickle, and jealous. This makes the management and operation of a service business somewhat unpredictable—which makes selling it all the more complicated.
When you go to sell your business, a buyer will be looking for predictability, which is why service businesses can be tough to value.
To create a service business you can sell, do whatever you can to make your business look like it has a product and a formula that predictably delivers results.
For example, Peter Turpel went from consulting with companies about how they used their phone systems to developing the 'Phone on Hold Marketing System,' which offers businesses various options for handling customer calls (e.g., music, call routing). Turpel moved from consulting personally with customers to creating products around his knowledge so that the business appeared more tangible.
So what makes a good product? Proctor & Gamble is arguably the granddaddy of product marketing, so I picked up a bottle of Tide before writing this article. To productize and package your service, follow the Tide formula:
Tide is the brand and is always written in the same font. Having a consistent name avoids the generic, commoditized category label of 'laundry detergent.' Do you have a name for your service?
We use the '2 X Ultra' version of Tide, which is packaged in a unique bottle with two pour spouts. The depression knob spigot allows us to carefully measure out a dollop of Tide, whereas the twist cap provides quick flow. Do you have a consistent and unique way your customers interact with your product physically?
Write instructions for use
Tide gives customers instructions for best washing results. If you want your service to feel more like a product, include instructions for getting the most out of your service.
Provide words of caution
My Tide bottle tells me that the product 'may irritate eyes' and is 'harmful if swallowed.' Provide a caution label or a set of 'terms and conditions' to explain things to avoid when using your service.
The barcode includes pricing information. Publishing a price and being consistent will make your service seem more like a product.
P&G includes a very small © symbol on its bottle to make it clear that the company is protecting its ideas.
Once you have 'productized' your service, consider changing the way you talk about your business. Replace the words usually used by service providers with their equivalent used by product companies:
- Change 'firm' to 'business'
- Change: 'client' to 'customer'
- Change: 'engagement' to 'contract'
- Change 'Principal' to Vice President'
- Change 'Associate' to 'Manager'
Package up your service like a product and you'll have more buyers for your business when you're ready to sell.
John Warrillow is the author of Built to Sell: Turn Your Business into One You Can Sell. He has started and exited four companies. Most recently John transformed Warrillow & Co. from a boutique consultancy into a recurring revenue model subscription business, which was acquired by The Corporate Executive Board. In 2008 he was recognized by BtoB Magazine's 'Who's Who' list as one of America's most influential business-to-business marketers.