Service Transformation

What is Service Transformation?

Service transformation refers to the process of expanding an organization’s focus to include new service offerings in addition to their product offering. When an organization decides to broaden their services portfolio, they not only bring more value to customers, they also open new streams of revenue outside of traditional product-generated revenue.

What Drives It?

As markets become more saturated and products become commoditized, it is increasingly difficult for businesses to grow, maintain a competitive edge, and justify their value to customers. Today’s consumers often prefer services over pure product offerings – think digital service subscriptions over outright product ownership. These factors, along with the rapid introduction of new technology, drive businesses to undergo service transformation.

Key Elements of Service Transformation

Service transformation is a huge and complex undertaking. Here are just a few key aspects organizations must consider.

Business model transformation: Organizations committed to service transformation must examine old business models and rethink how they bring products to their customers. This might include:

  • developing new monetization and pricing strategies
  • targeting new customer personas
  • applying new technologies across the customer lifecycle
  • collecting and applying user data in new ways
  • or bringing on new partners

Operational transformation: Developing value-added services will require an overhaul of operation processes and structures. For example, organizations may need to form new teams or restructure existing departments like sales and product.

Cultural transformation: Shifting the focus to services means the entire organization needs to shift to a customer-centric, service mindset. New skills sets may need to be hired for or existing employees need to be retrained. Also, management will need to set an example of innovation and risk taking.

What Does It Mean for Product Managers?

Product teams play a huge role in service transformation. Product managers hold the keys to customer data, industry trends, market research, and competitive intel. These insights will help product managers identify and prioritize high-value service offerings. Product managers will analyze qualitative and quantitative data from a variety of sources including product usage metrics and customer interviews to understand customer pain points and spot areas in the customer lifecycle that need to be optimized.