When your customers are able to realize the value your solution can bring to their operation, they’re more inclined to stay loyal and renew their contract. (Tweet this!) The process of ensuring your customers are successfully using your technology to achieve their desired outcomes are called adoption services, and more PSOs are offering them to drive customer success with their offers. So, how can highly product-oriented technology suppliers increase their success when making the transition from Level 2 to Level 3 while also becoming good suppliers of adoption services? In this final post in my blog series about building a successful PSO, I’ll be going over a concept you can immediately start thinking about that will help a great deal: business domain expertise.
Where Customer-Supplier Communication Needs Improvement
What typically prevents a customer from receiving the best value from their suppliers is that while suppliers know their own products inside and out, they often won’t know the best way to apply them to the customer’s operating environment. Conversely, the customer has an intimate knowledge of their own jobs, but may not be familiar with how to map the product’s features to it in an optimal way. In short, in order to ensure successful adoption of their products, suppliers have to have a much better business domain expertise, but how do you get it? (Tweet this!)
Why PSOs Should Leverage Industry Experts
At TSIA, we will periodically conduct a comprehensive Professional Services (PS) Compensation Study, which also doubles as a benchmark for how PS businesses are staffed with various skill sets and levels. With regards to business domain or industry expertise, we’ve found some PSOs have a position called “industry expert”, sometimes called “subject-matter expert” or “business domain expert.” This role is defined as follows:
“The industry expert provides the specific industry expertise required to assist customers and partners to create and implement successful and innovative solutions. This role also provides support and feedback to product marketing and service marketing on the specific needs of customers within a specific target industry.”
Typically, individuals in this role must have at least 5 years of experience in a target industry, such as manufacturing, finance, real estate, health care, or whatever the relevant business domain may be. Essentially, this role is intended to bridge the gap in communication between a PSO and their customers within specific industries to ensure a solution is appropriately, and effectively, implemented to yield the best results. Seems like a role that pretty much every PSO should have, right?
How Many PSOs Have Business Domain Expertise
Unfortunately, according to the results of our recent study, only about 25% of companies have employees who fit this job description, and even then, it may be only a handful of people. In the case of one of the larger companies in the study with a multi-billion dollar PS business, they had zero industry experts in their organization, while 25% of the delivery staff of another PSO of the same size were industry experts. While it seems like practices are, on average, all over the map, industry experts still only constitute only about 2% of PS delivery staff.
What this Means for You
As PS organizations begin transitioning from product-oriented to outcome-oriented, it’s imperative to have business domain expertise. PS businesses already tend to handicap their ability to offer specific Level 3 services with weak or non-existent domain expertise, but they are also leaving money on the table by not taking the initiative to understand the operating environment of their customers.
According to the results of TSIA’s most recent PS Market Rates Study, the compensation rates for industry experts are typically on the high end, while discounting is typically on the low end, even for product-oriented, classic professional services. This is primarily because technical and business domain expertise is obviously a value combination for which customers are more than willing to pay a premium if it means it will help them achieve their ROI.
To bridge this gap, suppliers must stop spending their budget hiring PS employees from other tech suppliers and start hiring more experts from the industries they serve. (Tweet this!) While suppliers generally have plenty of existing training material on their products, they don’t often have adequate training materials on the business processes that are unique to the industries they serve. It is recommended that suppliers hire for that specific industry experience and train for the product knowledge to better serve their customer base.
More About Adoption for Professional Services
Be sure to register for my upcoming webinar tomorrow at 8:00 AM PST, 11:00 AM ET, called “Optimizing Professional Services for LAER,” where I will use TSIA’s LAER customer engagement model of Land, Adopt, Expand, and Renew, to explain how professional services are uniquely positioned to take the lead in increasing revenue and overall company growth. I’ll be talking more in-depth about adoption services for PS and what your organization can do to gear up to be essential players in the customer engagement lifecycle. Even if you can’t attend the live event, register anyway and we’ll send you the on-demand recording. As always, if you have any questions or comments, feel free to reach out to me at firstname.lastname@example.org. Hope to see you tomorrow during my webinar!
Read other posts in the "3 Tips for a Successful Professional Services Organization" series:
About the Author
Bo Di Muccio is vice president of professional services research for TSIA. He is also the chairperson of the TSIA Professional Services Advisory Board. Keep the conversation going with Bo by emailing him at email@example.com.