Software vs. Services: Why Striking the Balance is Just the Beginning | ExtensionEngine, LLC

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Global Product Management Talk‘s insight:

Lah describes a typical early stage VC-backed startup as having a “3-1-6″ model, in which

30% of revenue is from the core software product,

10% is from support fees, and the remaining

60% from professional services.

a mature product company will often have a “6-3-1″ model which is almost the inverse distribution.

60% from core software product

30% from support fees

10% from professional services

The key takeaway is that your professional services team can have as much of an impact on your customer’s brand experience as your product itself. In fact, for the first part of the engagement, your professional services team IS YOUR BRAND. You’ve got to balance the mix between service and software so that you get the numbers right.  But getting the people, process, and culture right is even more important. In the end, if your customers have a positive experience with your services organization, they are likely to buy more products.  And if you don’t take the right approach with this important 10% of your business, you could be screwing up the remaining 90%.

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