Services revenue growth has outpaced technology product growth and, as a result, service leaders are increasingly challenged to monetize their service capability. Additionally, service offer portfolios are converging and a lack of formal process is negatively impacting offer performance. The role of service offer leaders in this ongoing industry transformation has never been more critical, and the organizations that will be most successful will need new offer management capabilities to rise to these challenges.
Service Offer Management is one of several terms used to describe the process of creating and maintaining technology service offers. Typical examples of such service offers include Support and Education Services, Professional Services, and Field Services. Service capabilities are increasingly packaged in converged service portfolios like good/better/best Customer Success programs and Managed Services offers.
In the technology industry, the term "product manager" is most often used for this role when the technology is the product. As the industry has shifted toward selling customer outcomes, product management organizations have typically remained focused on technology capabilities, releasing technology products, and informing the Services team rather than integrating service capabilities directly into the offer value proposition. The "product" being managed is still primarily the technology.
Service offer management has often been an afterthought within businesses led by technology products. As services revenue growth has outpaced technology product growth, service leaders are increasingly challenged to monetize their service capability without formal "services product management" roles and often without the formal offer management processes that underpin most technology product management teams. TSIA research shows that such offers are often developed without a formal process, in many cases, within a single service-line silo.
Creating sustainable offerings requires diligent market discovery that leads to deep understanding of target customer personas and their business challenges. Sales and marketing teams must be enabled with clear and compelling value propositions for specific customer personas, and the ultimate customer experience must reinforce the value delivered on an ongoing basis.
Key Trends in Service Offer Management
In TSIA’s Service Offer Management research practice, we track key service offer trends, some continuing from years past and maturing over time, and some newly emerging.
The top 3 trends we have seen most recently are as follows:
1. The monetization of customer success offerings remains a challenge.
TSIA defines monetizing customer success as the practice of charging a fee above and beyond your technology and services that focuses primarily on the adoption motion and explicitly calls out the accelerated value. TSIA research establishes that charging for customer success services is correlated with increased customer Net Promoter Scores (NPS), increased revenue expansion rates, and improved renewal/retention rates. And yet the percentage of customers monetizing their customer success offerings across the industry hovers steadily around 50% over the past five years.
2. More service portfolios are emphasizing remote/virtual capabilities.
The COVID-19 pandemic has forced suppliers and customers to adapt quickly to more remotely delivered virtual services. It is logical to assume there will be some post-pandemic return of the preference for on-site, in-person services. However, given the cost advantages for the customer and the supplier, and the stability of NPS with increased virtual service delivery over the past year, innovation in remote/virtual delivery capabilities is likely an opportunity for many organizations to build incremental value into their service offering portfolio.
3. Collaboration between technology and service offer management is increasingly critical.
TSIA research demonstrates that customers are willing to pay for, and increasingly expect, offerings that require a creative fusion of a supplier’s technology and services to deliver a specific outcome for the customer. An optimal handshake between the service and technology offer functions is critical to the development of complete offers, and we see organizational structure shifting in response. Organizations with the capability to break down value creation silos, with or without an ideal organizational structure, gain the advantage in bringing a broader set of company capabilities to the offer creation process.
Each of these trends creates opportunities to infuse profitable, predictable recurring service revenues into your business model. For more on the state of service offer management, you can access the latest research in The State of Service Offer Management: 2021 report.
Top Service Offer Management Challenges
What are the biggest challenges facing Service Offer Management?
Typical inquiries from our members include:
- What are the best practices for launching new service offerings?
- How do we monetize our Customer Success offers?
- How do I create fee-based customer success offerings that customers need and are willing to pay for?
- What are the capabilities I need to build in order to connect new service offers to customer business value?
- What are best practices for defining and developing outcome-based service offerings?
- How do I create premium/platinum support offerings that customers need and are willing to pay for?
- What are the best practices for harmonizing the support portfolio after acquiring a new company?
- How do I move from a free to a fee-based support services model?
- How do I benchmark my company's recurring service revenue performance versus the industry?
Service Offer Management Best Practices
Here are some of the top best practices implemented by pacesetter companies that manage their service offers successfully based on TSIA benchmark data.
- Develop service portfolios using a formal lifecycle process like TSIA's Offer Value Creation framework.
- Build powerful, cross-functional teams that provide governance across the lifecycle.
- Design offers to impact key performance indicators relevant to customers.
- Create offers collaboratively in-market, often with pilot programs.
- Launch offers in tight cooperation with Marketing across a range of demand generation tactics.
These rapid changes, trends, and business challenges have prompted TSIA to now offer Service Offer Management research and advisory to help members navigate these industry transformations.
What is TSIA's Service Offer Management Research Practice?
TSIA's Service Offer Management research and advisory practice is designed for the executive who owns the portfolio(s) of service offers attached to technology solutions. TSIA provides members with industry-validated research and advisory for effective monetization of customer success, maintenance and support contracts, and the creation of optimal converged service portfolios.
Unlike strategic consulting firms and industry analysts, TSIA offers deep data insight on proven practices for designing, packaging, positioning, and monetizing differentiated services that maximize customer value realization, and an executive peer community to accelerate the growth and profitability of the complete service portfolio.
The role of service offer and portfolio management has never been more complex, and it has never been more important. TSIA's Service Offer Management research practice helps service offer leaders identify and build the pacesetter practices they need to create tangible, differentiated service offers and manage them within a diverse portfolio of outcome-based offers.