David Cummings on Startups

Consulting Services Within Product-Based Startups

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David Cummings

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Recently I was talking to an entrepreneur that had a working product and a handful of paying customers. We got to talking about the market and amount of custom, one-off services required to on-board a new customer. Halfway through the conversation, he paused, looked down, and said something to the effect of “I wish we could automate more of our functionality but it’s going to require serious consulting services for each new account.” Without missing a beat, I responded that there’s nothing wrong with needing a services component to make customers successful. While entrepreneurs dream of everything being automated, self-service, and high margin, plenty of super successful companies have a required services component.

Here are a few thoughts on consulting services within product-based startups:

  • Productize the services whenever possible to ensure consistency and scalability
  • Make sure the consulting fees relative to monthly fees are inline (see our lessons learned with Post Mortem on a Failed Product)
  • Consider partnering with other consulting firms or independent contractors to grow services capacity without more in-house staff
  • Allocate product engineering cycles to add functionality that reduces the amount of consulting effort over time, if possible

Consulting services are common even within product-based startups. Entrepreneurs would do well to embrace services to make customers successful and find a balance between consulting and product revenue.

What else? What are some more thoughts on consulting services within product-based startups?

Comments

4 responses to “Consulting Services Within Product-Based Startups”

  1. Anand Thaker Avatar
    Anand Thaker

    I’ll add, to remain scalable, avoid the need for custom services for on-boarding.

    Having been on either side of the relationship, I appreciate your statement on partnerships. Mutually beneficial relationship helps perpetuate referral oppotunity pipeline. The right consultative partners product-based solutions can generate significant percentage of your revenue.

    Also, prepare to have that consulting partner be able to articulate your value prop as well.

    Reply
    1. Mike Gomez Avatar
      Mike Gomez

      Hear! hear! Right on target Anand. Like the article and advice David.

      Reply
  2. Josh Austin Avatar
    Josh Austin

    I had really good luck partnering with consulting firms to offload any work that was not directly related to the product. In my case our product/service was often used to deploy web services that powered web applications or mobile apps. Our customers often wanted help building the UX for the web app itself and we passed that work along to our consulting partners.

    It started to seem like a really great idea when our consulting partners started selling our products to their own customers. They were required to use our products when we referred business but was really neat to see them use our products with their own customers because of the value it provided.

    Reply
  3. Mike Lewis (@MikePLewis) Avatar
    Mike Lewis (@MikePLewis)

    I was surprised about this. When we started Kapost we had no services and didn’t want any. As we have grown we have found that putting extra effort and people into onboarding makes a huge difference in the level of success.

    While it’s nice to have pure software as your product, when you’re selling to enterprises, it’s not always the best way to get adoption.

    Reply

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