As the Demand for Online Services Grows, Will The Product Based Business Fade Away?

New Services EconomyAs more people turn to online services for entertainment, education and music, Avangate has conducted a survey to gauge their actual influence. The cloud commerce provider asked 1,046 U.S. adults questions pertaining to their online services use, as well as their product use.

What Avangate discovered was a large interest in online services from Americans – approximately 63 percent of the people surveyed claimed that they used services based on the Internet. About 61 percent they used them for entertainment, while 41 percent said they utilized them for work purposes.

“You see the signs around you every day, whether it is listening to your Internet radio, virtually hailing your Uber limo ride, finding and paying a flat-fee for legal document creation instead of by the hour, we are surrounded by services,” said Michael Ni, CMO/SVP, Marketing and Products at Avangate. “They have become so pervasive, we don’t even think of them as we use them. Services are being productized and are now more accessible and easy to consume.”

Upon concluding its survey, Avangate made the bold statement that “products are dead,” but is this really the case? Will people of the future only need to turn to the Web for all of their personal and business needs?

Marketing and Digital Services

The marketing automation industry is expected to grow by 50 percent come 2015, and many people in the industry are already using online services to achieve their marketing initiatives. Everything from lead capture to email campaigns can be simplified through the use of Internet-based services, but have products actually been taken out of the equation?

Consider the mobile market and its rapid growth. Companies that provide marketing tools online are ensuring that their customers can use their services on the go through apps – HubSpot, Marketo and Pardot have all capitalized on this opportunity.

But how are people utilizing these services?

The answer is through their phones. Approximately 58 percent of U.S. adults own a smartphone. Many people use their mobile devices on the go to conduct business, which highlights one key fact – online services subscribers still need a product to access their services.

In sales, the situation is similar. The biggest provider of customer relationship management service is Salesforce, and its slogan is “No software.” Salesforce prides itself on being an Internet-based service provider, offering security and peace of mind to its customers with the cloud, but even Salesforce cannot take products out of the equation.

Salesforce has developed the Salesforce1 application to give its customers the option of accessing its features on their mobile devices. This means that subscribers need a smartphone or tablet to utilize Salesforce1, highlighting the need for a product in order to function.

The Evolution of The Product

While some may claim that the product is “dead,” it’s worth taking a step back and examining how online services have impacted it as of late. As Salesforce1 and other mobile apps on the market have shown, the product is still very much a part of how we do business. However, the magnitude of its role is subject to change.

In its research, Avangate gives the example of the wearable technology – the survey determined that only 10 percent of people use wearable devices, and 80 percent of them do so for fitness, but what if they did more?

About 55 percent of respondents said that they would use wearable tech if it gave them the ability to make bill payments on the go and serve as a personal shopping assistant. This means that the functionality and features of a given product impact its value.

Product design influences buyer behavior as well. Don’t believe me? Just look at the 2 million plus iPhone fans that pre-ordered their iPhone 5 in late 2012. 58 percent surveyed said they’re top reasons where extended battery life as well as being impressed by the new look, according to a survey discussed in an article on The Next Web.

The product is far from dead, but its value fluctuates on a constant basis.

That said, the market opportunity for online services currently represents at least 50 percent of the U.S. GDP, which is the equivalent of trillions of dollars. However, products have not been squeezed out just yet. For this reason, it may be in marketers’ best interests to see how they can tap into the potential of their technological investments rather than eliminating them to alternative market opportunities altogether.

Interested in learning more? Avangate published an infographic highlighting their survey findings here.

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