For many B2B vendors, and especially for SaaS providers, adding a service offering seems an easy way to extend their portfolio. However, some offerings will resonate more with customers than others. If your team is developing a new service offering, it is worth your time to ask the following questions. Does it address a pain point the customer is struggling with? Will customers pay for it? And does the customer believe you can provide it?
B2B suppliers approach their services offerings with different objectives in mind. Some see services as a new revenue source that can help with growth demands as product sales begin to plateau. Others believe that services can increase customer engagement and the stickiness of their solutions.
Due to the relative ease of developing a service offering (compared to creating a new product), potential services offerings don’t always receive the same rigorous vetting and review that a new product does. Instead, anecdotal evidence from customer success teams or requests from individual customers can prompt ideas for new services. While the needs expressed in these channels are undoubtedly real for the specific customer they are tied to, they don’t always reflect a systematic need across the customer base.
Based on our twenty years of conducting research on new products and services, we see three categories of insights worth exploring.
- Core TAM/Opportunity analysis dimensions
- The nature of the services most likely to resonate with customers
- Services areas customers believe you can credibly provide
1. Core TAM/Opportunity analysis dimensions
Whether exploring the opportunity for a new product or new service, it is essential to understand three market dimensions.
- What job-to-be-done, or pain point, does the service offering address?
- How are customers accomplishing the task today? Internal resources? Workarounds? External resources?
- If the pain point is significant enough that the customer would be willing to invest to solve it?
These three dimensions represent the core conceptual insights of market sizing and opportunity analysis. The following two categories of insights layer on top of these foundational principles.
2. The nature of the services
Many service offerings evolve from the questions technical support reps and customer success teams receive from customers. Others stem from the product team noticing an underutilization of features or modules. These two situations provide a signal that customers are struggling with the product in some way. The question becomes: Why?
Customers don’t know they have the functionality
It is not unusual for customers to lose sight of the full range of features and functionality a product provides. This situation is why customers sometimes adopt additional point solutions. They don’t realize they already have the same or similar functionality in their current solution. The best way to address this problem may not be a service at all. Instead, a combination of marketing and proactive outreach by the customer-success team may be enough to expand customer use of their existing solution’s features and functionality.
Customers don’t know how to use the solution to its maximum
A consistent theme in the research we conduct across SaaS solutions is that customers often feel that the solutions they purchase rely too much on a belief that the customer knows the best way to set them up. Once the initial deployment is complete, they feel left on their own to optimize the solution for their environment. They often acknowledge that they are not experts in the SaaS solution or best practice processes.
Even when SaaS vendors provide consultative guidance during the initial integration, that process can be overwhelming. It’s not unusual for customers to focus on the core aspects of the initial deployment and let recommendations about optimization fly over their heads. Customers experiencing this situation will be more open to professional services that help them with best practices for integrations, processes, etc.
Customers don’t have the people to run the solution to its fullest
The leaders in a customer organization may understand the potential of your product and be knowledgeable about how to optimize their internal processes. However, they may lack the staff to take advantage of your solution’s breadth of features and functionality. These customers are likely to be open to solutions that address their bandwidth limitations for point projects.
3. Ability to Credibly Provide
The final category of insights to explore is to what extent customers view you as a credible source of potential service offerings.
Many SaaS vendors would like to position themselves as experts in the business process their solution helps with, e.g., financial management, HR management, sales management. However, customers do not always see their SaaS provider’s expertise extending beyond the product. In the research we conduct across multiple sectors, we often hear variations of the following from customers: My SaaS provider is a technology company. They know how to collect, store, and manage the data. They aren’t experts in what we do. We hear this often, but not all the time. Smaller customers tend to see their vendors as credible sources of business advice.
Before launching a consultative service offering, ask yourself: Do customers see you solely as an expert in your product? Do they see you as a business process expert? What services do they believe you can help with?
Collecting the Data
Uncovering the insights above requires collecting information from and about customers. This process can take many shapes and forms. One is to systematically gather anecdotal information from across teams, including sales, customer support, and customer success, to see what trends emerge and what customer issues appear to be one-offs. Looking at product utilization rates will help you understand what aspects of your solution customers use and what they are not. You can take it one step further and conduct qualitative in-depth interviews or quantitative surveys with customers to identify their challenges and test their receptiveness to new service offerings. Regardless of the approach, the goal is to identify the service offerings that most align with customer needs.
If you lack the time or expertise to conduct formal qualitative or quantitative research with customers, Isurus can help. If you’d like to learn how, please visit our contact page.
Check out the following posts for more of our perspectives on evaluating markets and understanding buyers.