Are you selling a product or a service?
Recently, someone asked a question in a Slack community of Product Managers:
What’s the difference between a product and a service? At some level looks like you can convert a service to a product (e.g. use AI to answer customer calls) leading to better scaling, etc. When that happens all of the wisdom of a PM can be brought to bear. But what about when something is just a service? Is the boundary blurry?
It was a simple question but one that has not been answered well, especially with relevance to the current world. The definition at Archives.org defines products as:
Products are tangible and discernible items that the organization produces, including digital file-based output.
and a service as:
A service is the production of an essentially intangible benefit, either in its own right or as a significant element of a tangible product, which through some form of exchange, satisfies an identified need. Sometimes services are difficult to identify because they are closely associated with a good; such as the combination of a diagnosis with the administration of a medicine.
First of all, a product is much more than a tangible item. It is the whole experience your offering provides. It includes your brand, pricing, channel, expertise and messaging as well. In a lot of cases, you don’t even have a tangible item to sell. Then, isn’t it just a service? This is where the confusion arises and I can offer some clarification.
Imagine you own a salon and have hired a few hairdressers to cut hair, shave beards, do hair spas, etc. Many will argue that you are running a service but I will argue that you actually have a product. Your hairdressers’ expertise, salon’s infrastructure, Yelp reviews, brand name, price for haircuts, website messaging, customer loyalty program, all of these contribute to your customer’s experience and can be called as your complete “product offering”. However, what your product offering does for the customer is the “service” you provide. Your hairdressers help the customer look better, your infrastructure helps the customer feel comfortable outside home, your loyalty program helps the customer save money, etc, etc.
Notice that I don’t say “your hairdressers cut hair” because we are trying to look at what job the hairdresser is doing for the customer based on Clayton Christensen’s Jobs-To-Be-Done theory (More on this later!).
Think of every product as a noun and every service as a verb. Therefore, what you sell is your product and what your product does for the customer is the service you provide.
So, the next time someone asks you if you are selling a product or a service, say both and then, point them to this article.
Do share your thoughts and comments below.