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Service Offer Management

Best Practices for Service Offer Management

Why Service Offer Management Is Becoming More Important and Ways You Can Capitalize on It

4 min read
By Hal Stanley
Service offer managers are increasingly expected to deliver services revenue growth with a healthy margin. With a global pandemic accelerating the market toward customer-outcome-based offers, having a well-designed service portfolio is more critical than ever.

As the industry shifts, supplier operating models continue to adapt. Suppliers are taking more responsibility for customer outcomes and offers must change as a result. It’s no surprise that we’ve seen a rise in the importance of service offers and service portfolio management.
Table on Changing Economic Engines that highlight the point made above.
Changing Economic Engines

Our target as offer leaders is an offer portfolio that is simple, standard, and scalable; a diverse portfolio of complete offers that deliver tangible value. Complete offers creatively bundle the value of technology, services, data, and analytics to fully solve a specific customer problem. That value becomes tangible when it can be measured.
Complete Offers and Tangible Value graph.
Complete Offers and Tangible Value Graph

Over the past year, TSIA's Service Offer Management research practice has focused its efforts on the foundational processes and most critical roles of service offer management. In a tumultuous time for the technology industry, we’ve seen pacesetter service offer leaders stepping up to their expanding roles and more assertively aligning charter across other business units around shared strategic goals. This results in deepening market awareness and a tightening of offer/market fit, often packaging a broad variety of services to address well-understood customer problems.

Given service offer management’s increasingly important role, here are four ways your team can optimize and improve how service offers function.  

1- Create a Formal Service Offer Strategy and Follow It

Service offer leaders often must  start at the beginning, thoughtfully building out a new, formal service offer management process. It seems such a fundamental concept–follow a formal, documented process–and yet TSIA data continues to demonstrate that service offer management process is informal and immature for many technology providers. Rigor around product management for technology solutions continues to evolve and deepen, while service offer management is often an afterthought in the business strategy.
Polling results for whether companies use formal, informal, or no processes for bringing in collaborative partners when designing service offers..
Service Offer Process Polling Results
 

2- Get to Know Your Market and Your Customers

Effective market discovery for service offers requires ongoing, creative ideation around customer business problems and KPIs. We often hear members report that Sales doesn’t understand the value of service offers, or they don’t know how to match a prospective customer to the best service offer for them.

While we often can do better at sales enablement around service offer value propositions, the core issue is often that service offer leaders lack a detailed, segmented view of their target market and customer problems within that market. Service portfolios tend to be aligned to customer spend with a “good-better-best” spectrum of service package options. The typical naming conventions for service (especially Support) portfolios demonstrate that greater value realization is possible from a “Platinum” versus “Gold” package, but don’t necessarily identify the characteristics of customers who are more likely to thrive with one package versus the other.

Some providers are having success with more descriptive service offer names, often focused on the maturity of the customer with their solution. Is the customer getting started? We can offer a starter package to get them to that first value realization. Are they starting to see value and want to accelerate deployment? We deliver a rapid growth package focused on solution adoption and expansion. Does the customer want us to manage their business challenge directly, with all necessary services provided in line with industry best practices? We deliver robust managed service offerings.

As service offer leaders tap into deeper insights about market requirements, they unlock more specific value propositions that can be communicated concisely in Sales and Marketing plays. TSIA recommends a broad range of market discovery activities, including structured customer interviews and the active participation of customer advisory boards. In our workshops with members we help offer teams develop deeper market insights primarily through two creative brainstorming processes: outcome engineering and service offer journey mapping:
  • Outcome engineering is a vital tool to use in documenting how offers add value within customer workflows, as measured by customer KPIs. Read more about outcome engineering and best practices to implement it in our research report “A Primer for Outcome Engineering.” 
  • Service offer journey mapping remains critical as offer leaders envision the next evolution of service offers. If you’re unfamiliar with journey mapping, a great place to start is by reviewing our “Helping Customers Succeed” research report (focusing on pages 6 through 9.)    Many companies perform broad customer lifecycle journey mapping; this is a useful strategy but typically leaves the service offer leader short of the detailed insights they need to spot the service consumption patterns. TSIA advocates a variant of this process that segments existing customers based on their success realizing value with existing offers. Working closely with service portfolio leaders and their service delivery, sales, and marketing peers, we use offer journey mapping to identify new buying/influencing personas, new opportunities to add or reinforce value, and specific customer KPIs that we might influence to justify the return on investment in our solutions.
Bar Graph charting value realization.
Stages of Service Offer Journey Mapping
 

3- Simplify Offer Portfolios Using Services Convergence

As an industry, we tend to produce massively complex service offer price lists. Technology providers tend to emphasize customer choice versus portfolio simplicity, often resulting in customized offers that  require significant go-to-market effort just to structure the right offer for each customer. Not simple, not standard, not scalable.

One solution is for service offer leaders to embrace the trend toward services convergence  to reduce portfolio complexity. In the paper “Primer on Services Convergence,” TSIA provided the following definition:
Services Convergence: The merging of previously independent service lines into organizational structures that improve the customer experience and reduce the cost to deliver.
It is a fundamental challenge for the service portfolio leader to maintain balance between customer choice and portfolio complexity; to develop creative multi-service packages/bundles aligned to the business problems of well-understood customer personas. As service offer leaders document their customers’ workflows and identify the customer metrics their offers influence, they no longer have the luxury to apply service delivery capabilities from only one service line to the customer problem. They must increasingly exit operational silos to package a diverse set of service deliverables into new standard offers.

4- Keep an Eye on Ways to Monetize Customer Success

Using service convergence, Customer Success offers are demonstrating that creatively bundled service packages drive customer adoption and consumption of value. However, monetizing Customer Success remains a challenge, with just under half of the customer success portfolios in-market being monetized. Customer Success leaders are struggling to fund delivery operations that often operate at a loss; monetizing their offer portfolio is the most straightforward funding method. But, as mentioned previously, many companies are struggling to formalize their process of taking these Customer Success offers to market.
 

 September 29, 2021

Hal Stanley

About Author Hal Stanley

Hal Stanley is the senior director of service offer portfolio research for TSIA. In this role, Hal is responsible for the research agenda that informs his engagement with member companies offering them best practices and data-influenced research for creating compelling service offers. Hal has over 20 years of experience in the industry. He has held various roles where he was responsible for developing customer success strategies, customer experience tuning, strategic planning, and services product management.

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