What is the Difference Between Positioning a Product and Positioning a Service?

Good advice becomes harmful when applied to the wrong context. Understanding the contextual differences between products and services allows us to properly interpret advice about positioning and avoid mis-applying it.

On that note, this is a good place to remind you that I am writing for a very specific context: the solo indie consultant. Some of what I advocate is useful outside that context, but not all of it.

Let's start with the differences between products and services.

Products Are More Quickly Malleable Than Humans

If a product with a team of 10 engineers absolutely needed to ship feature X, it could happen in weeks (for many common features). Notice how quickly social media companies deployed audio chat features when Clubhouse became very popular in late 2020/early 2021. Those are bigger companies, but the general principle holds: software is more quickly malleable than humans.

By contrast, how quickly could you or I cultivate new expertise in some area? I don't mean how quickly could we become "Twitter conversant", but how quickly could we cultivate real expertise? With intention, focus, and work it can happen, but not nearly as quickly as a modern product company could develop and deploy a new feature.

I admire Jonathan Stark's point of view: "Hourly billing is nuts". It's powerful and elegant at the same time. How quickly could you cultivate a similarly powerful and elegantly-stated point of view? (Possibly pretty fast with the help of my 2-month workshop, but still, it takes time. :) )

As indie consultants, our humanity and our personality imposes both superpowers and limits.

You could hand me a stack of 10 thoroughly validated, awesome business plans, and I would run every one of those businesses into the ground within a year if they required the owner to be highly detail-oriented and systematic. That's not my strength, and as a result, I'm constrained in the kind of business I can successfully run. We all are, and that's fine, because there's just as much opportunity out there that does fit our personality's constraints and whatever our head start in life turns out to be.

This is the first big difference between positioning for products and for services. Products are often the output of teams, and teams can do things that individuals can't or won't, and they can change the product to move it into a desired market position more quickly than a human can change to move into a desired market position.

Scale Differences in Sales and Marketing

April Dunford has written a book describing how to apply the positioning concept to software products. It's the best book on the market for this question. When she describes the part of the process where you test things, she describes having your sales team become part of the testing feedback loop.

This points out another difference between positioning for products and services.

How many sales conversations do you have per year, dear indie consultant? The clients I work with average 10. Obviously this depends on project size, level of customization in your work, and so on, but if the number is closer to 10 than 100, then you have a limited ability experiment or test stuff via sales conversations.

Beyond that, testing stuff during sales conversations can cause problems because that's one of our prime opportunities to build trust with prospective clients, and throwing stuff against the wall to see what sticks during a sales conversation can undermine our ability to earn the confidence of our prospects. (Later in this article I will point out that some folks are so good at building trust through conversation that they can do this kind of testing with good outcomes, but my point here is that we have a limited number of sales conversations/year during which to test things, and so if we don't have that preternatural trust-building ability, we'd better avoid stuff that could lower our win rate across that limited number of opportunities.)

Additionally, many products have substantial marketing budgets. These budgets, deployed in the media environment that most of us inhabit, can be used to position the product in the collective mind of the market.

The amount of trust required to sell products is relatively lower than what's required to sell consulting services. Additionally, either via Amazon's effectively-no-questions-asked return policy or the built-in trialability of SaaS products, product customers are able to gain trust via the trial process. This trialability is hard to replicate with services.

There are exceptions to all of this, but in general the differences in how services are marketed and sold mean that services lack several "levers" -- rapid testing feedback loops, scalable marketing, and easy trialability -- that can be used when positioning a product. Even with these levers, there are limits.

As April Dunford points out in this tweet thread, large-scale product buyers are buying current capabilities, not dreams.

Positioning isn't an expression of your vision, strategy or mission. It defines why and where you win the market today. Positioning is the foundation of everything we are doing in sales and marketing. Bringing too much of your vision/strategy into sales pitches is dangerous 1/— April Dunford (@aprildunford) May 7, 2021

Source: https://twitter.com/aprildunford/status/1390656680963317765?s=20

Contrarywise, consulting services have one powerful lever that products lack. Some folks can build trust crazy fast through a conversation, and in some cases, that can lead to half a year or more of revenue for an indie consulting business.

With consulting, you have a bigger possibilities envelope you're working with, and therefore room for more aspirational positioning. Some of us can literally talk our way into revenue, and products can't do that, even with their sales and marketing scale advantage.

Feedback Loops and Beachheads

Services have a strong positive feedback loop between narrowness of focus and expertise. The smaller your focus, the bigger it is (in terms of potential impact and depth of expertise). Products have a weaker version of this feedback loop, or none at all.

Of course, like all simple ideas, there are exceptions in the real world. I think of https://www.semanticscholar.org/. This is a narrowly-focused product, and I imagine their narrowness of focus does facilitate a strong positive feedback loop that benefits their expertise in semantic search for scholarly publications. That said, they have a team and funding. They don't need absolutely every advantage like we solopreneurs do. If they needed specialized expertise, they could hire for it, whereas we indie consultants get that expertise as a byproduct of narrow focus. We need the strongest possible feedback loops supporting that expertise.

One similarity between positioning for products and services: businesses in both contexts can benefit from finding and owning a beachhead. "Beachhead thinking" can be a useful approach throughout your entire career as an indie consultant, but with products involving investors, the niche approach will eventually need to be abandoned.

What Does All This Mean?

My hope is that you'll take from this article a nuanced way of thinking for yourself about any positioning advice you happen across out there in the big wild world of advicegivers. But if you want some of that thinking done and neatly packaged for you, I will oblige:

  1. Positioning a product can be done with money, which means it can be done quickly. A good market position for a services business is something you earn, and educating your market about how to think of you takes time.
  2. Products are built by teams, and the features/capabilities that support a product's move into a better market position can be shipped quickly. Indie consulting expertise -- and the powerful point of view we aspire to -- are built through experience and lots of reps in the "mind gym". This takes time.
  3. The positioning for a product needs to closely match its current capabilities. Through some combination of earnest but ambitious vision, ethical bullshitting ability, and magic, some indie consultants can talk themselves into opportunities that far exceed their track record. Nimble, bold services business have more flexibility in positioning.
  4. At some point along an ambitious growth path, products will need to abandon the narrow focus strategy. Consulting services, on the other hand, have a strong feedback loop between narrow focus and deep expertise, usually across the entire lifecycle of the business.

Final Thoughts on the Differences Between Positioning Products and Services

Starting with this question will clear up the vast majority of confusing cases: are we talking about something that benefits from being a commodity (standardized, modularized, producible at scale) or not? Most products, including SaaS, do. Positioning works significantly differently in that context compared to one with a strong positive feedback loop between narrowness of focus and depth of expertise.

I hope that this article has helped you understand the differences between positioning products and services. If you're looking for more context and detail on specialization and positioning, then read my free guide to specialization for indie consultants.