Products vs. Services

There is much talk on the differences between Products and Services. In reality, it is rare in a B2B environment to have a pure “Product” – there is always a “Service” element. Anything manufactured will need to be installed, users trained and all the rest of it. Even a commodities business often has a consultancy or advice element for configuring or selecting the best materials, and also needs to deliver them. In reality, these “service” elements are very often the most important parts of the “Offering” to the customer in any business; for example, late delivery can cause massive costs to customers and your reputation will really suffer.

Throughout this website, we have adopted the convention of using the word “Offering” to mean Products and Services – or, indeed a combination, which is most usual.

The whole concept of a service lends itself to significant differentiation and therefore potential pricing power. This is why SCM (Supply Chain Management) in customer organizations often attempts to turn everything into apparent “Products” – pure commodities.

So, a large part of your role is to focus on the service elements – internally to make sure they are reliable and fit for purpose – and externally to remind your customers of the complexity and expertise required to do what you do. Consider these thoughts:

• Ensure the service elements (if they are good, of course) form the core value of your brand.
• Create tiers in your service, and ensure you don’t over-deliver from low tiers: this is a classic error in consultancies, particularly highly technical ones, as we all “want to do the best”
• Decide whether key individuals are part of your brand. This is a difficult decision to make; customers often “buy the individual”, but what if they are busy in on another job (or if they quit)? Developing project oversight roles for named individuals is a useful half-way house.