In the early stage of a startup’s product development phase, your R&D efforts may look like professional support and services. Utilizing professional services engagements for R&D efforts should focus on building features that have the potential to be relevant to other customers.
Wrap professional services into a subscription
Any subscription service is basically support when the product doesn’t exist yet. It’s important to get the customers on a subscription contract early on (instead of billing professional services hours) so they’ll have access to future product releases. This ensures high retention for the long term. Never sell professional services without a subscription license.
As the R&D team spends time supporting customer needs, they will gain valuable insights that serve as the basis for proprietary product features.
Practical implications:
- Companies can provide consulting services (hourly rates).
- Support should only be sold through a subscription contract.
- With a subscription, customers have access to proprietary features for free. There is no discount for not using the product.
- It’s okay to do things that don’t scale - don’t worry about too much support with early customers. Just make sure it isn’t consulting work.