The difference between a capability-based Professional Services (PS) business and an outcomes-based business from a customer’s point of view is quite stark. We have interviewed several hundred technology buyers over the last few years including software, hardware, high-tech and near-tech firms. We have also been involved in designing hundreds of “Outcome Based Solutions”. In this discussion, we want to reveal how the relationship and responsibility of PS with the customer evolves as a company moves to becoming more outcomes-centric. The distinction is demonstrated through the following two scenarios:
In both scenarios, the typical product buying/implementation cycle in no way ignores the impact or the valuable work performed by PS to support a product implementation. As a general principle, PS allows companies to overcome product limitations, customer misunderstandings, customer problems, etc. Also, PS facilitates the relationship building within the functional end users of a customer.
However, in these scenarios, we want to highlight how the customer leadership team (product buyers above the line of safety) interacts with and views PS:
Scenario #1: Customer is buying a product and its capabilities.
- A company determines it wants to buy a technology-based product. This might be because of:
- a business need,
- a replacement or upgrade, or
- just the psychological need to be part of a tech wave – cloud, etc.
The customer team performs research, selects vendors, evaluates products, and works with sales teams, and eventually purchases a product. PS might make a cameo appearance in the sales cycle but is not strategic to the decision. Unfortunately, often the customer is unaware of what the implementation will require from them.
- The implementation begins. The PS organization pushes the customer to get organized and allocate staff for their part of the team. Although PS is heavily involved at this point, the customer executive leadership is relatively uninterested in what PS is doing and does not build an intimate relationship with them.
- The product is implemented, and the customer accepts the product limitations. This is an important nuance about customers and products – customers are predisposed to accept that the product may not live up the hype. Post-implementation, PS exits, and they are often forgotten by customer leadership.
- The Product sales team wants to sell more, and this process starts again, and may be even more difficult if the previous steps were difficult and not frictionless.
Scenario 2: Customer is buying an outcome.
- Customer is looking for one of two things (depending on the maturity of the idea for the outcome):
- A partner who understands the idea better and more clearly and can therefore transmit that understanding into the customer organization, and/or
- A partner who can best demonstrate how to make the idea work in the customer’s organization.
Either way, the customer is looking for a partner who leverages their PS business as the key to achieve the outcome.
- The customer selects a partner based on their differentiation of the offer and perceived ability to create the Outcome (interestingly price rarely impacts the final decision). PS is heavily involved and must be both the mouth-piece of the offer and the partner that the customer is choosing.
- The program begins. The PS business is front and center, interacting with buying executives. The PS team is viewed as “the experts,” and the customer relies on them to get them through the program. Usually, there is an effort to validate the solution – pilot, or one of several other methods. This is a paid-for effort and is important to tailor the solution to this unique customer business situation and adjust/plan for customer shortcomings. This information will be the input for developing a detailed and informed implementation plan. In an outcome-based practice, it’s important to build the implementation plan and validate the solution. Because unlike a product purchase where the implementation is somewhat assumed away by the customer, the effort to achieve the outcome is strategic and the reason for the initiative.
- During implementation, there will be problems and challenges. Maybe the customer talent is not as efficient as expected, or customer anti-bodies to change exist. Leveraging their consulting abilities and customer-management skills, the PS organization serves as the ‘interrupter of the issues’ and the ‘creator of work-arounds’. These issues often increase scope with the appropriate increase in fees. The PS team is not a peripheral player to the executive team, but rather the central authority on how the executive team can achieve their desired outcomes.
- Once implementation is complete, it is time to evaluate the value received. The PS team is central in this evaluation and explains where the customer is on the outcome value journey and what needs to be done to increase the value or continue the transformation.
- Rather than starting a new sales cycle, PS has been able to position the next product/service pull-through during the course of achieving the first outcome.
As you can see from these scenarios, the customer moves from, hardly interested in the PS organization during a technology product purchase to dependent on the PS organization in an Outcome Journey.
Written by: Dean McMann
About the Author: Dean McMann is a Founding Partner at McMann & Ransford with 35+ years of experience in consulting and professional services. He is a sought-after expert and speaker on topics of: B2B differentiation, professional services best practices, and overcoming commoditization. In addition to his extensive experience in the Professional Services space, Dean also serves on the board of various non-profit organizations.