Imagine if, before joining Sky, you got a list of all the TV channels you offered and you had to pick every one you wanted seperately.

Imagine if you got a separate bill for each one every month. Would you get confused by the 335 channels the company offers? Would you sign up to as many channels as you would with the pre-packaged bundles? Would you even bother?

I would probably say no to the last two questions, as would a lot of other people. That would mean Sky was losing hundreds of pounds per customer compared to what it gets now. So, Sky is now gaining hundreds more pounds from selling packages than it would get from selling the channels individually. A whole greater than the sum of its parts.

Make products, sell products, make money

This is productisation – turning services and everyday things into priced, packaged products that can be sold as a unit. If you’re making a big product of smaller products, that’s reproductisation, or packaging.

You can productise services almost as easily as items. Imagine Sky’s TV packages or take a look at my Pay as You Go websites. Both include a lot of different things that work together.

The secret is to pick a selection of services and/or products that a customer might like to buy together, that they might benefit from buying together and that feel naturally associated. My example might be a website, an email and the support to keep both online. There’s no point packaging a website with a sponge cake, for example. Then brand the product, give it an attractive price – usually less than its constituents would cost to buy separately. Then advertise it like any other product.

How can packaged products and services help my company

It’s easier for you and your customers. As I mentioned, Sky subscribers don’t have to sort through hundreds of products and services thinking of which ones they might use. My customers don’t have to learn about website admin to know what needs doing for them and I don’t have to talk customers through what they need every time I build a site for them. I just talk about my budget, standard and premium packages and everybody pretty much understands.

You can monetise your quality better through products than hourly charges If you’re good – you’re efficient, you get results, you produce good work. If you charge by the hour, it’s hard to capture that value, especially when you’re competing with people who do a poor job for a fraction of the price. And if you improve your efficiency, you lose money! If you have a product that provides better results in half the time, people will be happy to pay more for it and you’ll earn much more.

Customers are happy to get everything they need in one place. It’s fast, easy and you can find a single brand to rely upon. It’s the reason why British Gas has moved into electricity, boiler installation and boiler care – fast, easy and reliable!

Products are easy to advertise. Have you ever had a conversation with someone offering a bit of this, and some of that, and that other thing you need, until you’re put off by complexity and boredom? That never happens with well-crafted products. The buyer gets a set selection of stuff with set benefits at a set price. It’s much simpler and more attractive. Compare the woman who can look after all of your businesses IT for £50 a month with the IT guy who can make your laptop run faster, sort your virus protection, look at backups or help with your cabling, just as long as you book and pay for a new service every time you need something.

I have had many conversations with both of these types of people while networking and I’m sure many of you have too. We can probably both agree that the first person’s offering is much more easily understandable and useful than the second.

Everyone knows what is being sold. With a little help, the buyer can quickly make an informed decision, and that decision is more likely to be a positive one.

You can target a product at each type of customer. I’m not going to lie – productisation isn’t perfect. You can’t tailor a pre-made product to each customer. You can design a product for each type of customer and sell it to them quickly and easily though.

Products are the first step on the road to big business. Products can be replicated, standardised and others can be trained to deliver them easily. You don’t get a Big Mac with the wrong burger in it and you don’t get a Sky package that is missing a channel. That’s because they are standardised, replicated en-masse, with employees trained to deliver them. This is essential to scaling and developing an effective business.

There are many ways to make extra money from packaged products and services. If packaged products are well designed, they’re usually more attractive to the customer than the things they’re made of. That means you will sell more. You can make the package sound fantastic with little extra real time and money invested by adding more in. £5 million of health cover on a holiday insurance plan sounds great, but virtually no-one uses it, even if they are unlucky. 24/7 phone support is great, but few staff are needed relative to the number of customers because few people generally call.

When you have your products designed and set out, you can take further strategic steps to increase your income even more. I’ll discuss these profitable strategies, including three-level pricing, in next month’s blog.