Why you need to productize your services (and how it works)
Give me a lever and a place to stand and I will move the earth.
Archimedes was a Greek mathematician, philosopher, scientist, and engineer. He claimed he could move the earth with the right lever (and a place to stand). And it turns out that - at least in theory - he was right. You'll need a (very) long lever. And finding a place to stand is a little problematic.
You have levers to move your business, too. But if you're in a service business you don't have many of them. And you can't move them very far.
Except if you productize your services. Let's look at how that works.
What are productized services?
Let's start with a definition:
Productized services are services that are packaged, sold and delivered just like products.
Imagine that you're going to the supermarket to pick up a box of cake mix. When you take the box off the shelf, you see:
- on the front cover: a catchy name and picture of a perfect chocolate cake;
- on the back: the recipe – a list of ingredients and instructions for making the cake;
- on the left side: information on the serving size and nutritional value;
- on the right side: company information, client testimonials, and a phone number to call for inquiries; and
- either on the box or somewhere else prominent – the price.
A productized service has many of the same characteristics:
- a catchy name and description of the outcome (and possibly a captivating picture);
- what the service contains (ingredients);
- a predefined process (the recipe) for delivering the service;
- a fixed scope (serving size);
- defined benefits (nutritional value);
- testimonials and contact information; and
- a fixed price.
When you're looking for cake mix, it's easy to see what's on display, compare the different types and select the one that looks like it's going to deliver the cake you're drooling for.
Productized services are packaged and sold just like products. They are easy to identify, select and buy. And while the results may not be as predictable as cake mix, they're way more defined than open-ended services.
Why should you be thinking of productized services?
If you're running a service-based business you should be thinking of productizing your services. Here's why:
In a service business, you have only 2 levers that determine your revenue potential: your time and the rates you charge.
- Your time lever: You're delivering a service and that takes time. You can work more hours, but there's a limit to that (even if you don't sleep). And you want to have a life as well, right?
- Your rates lever: The rates you can charge have a ceiling. Experience and reputation can help you increase your rates; the exclusivity of your service as well. But you don't want to compete on rates, and let's face it - it won't be long before cheaper alternatives are around.
So you want more leverage. More levers, or longer levers. Here's how productized services can help:
- You can automate and outsource. All of your admin, setup, onboarding and other non-core things can be automated or outsourced. This gives you more time to spend on revenue-generating stuff. Or surfing. Or whatever tickles your fancy.
- You can invest in getting faster and better. As soon as an activity is well defined, it becomes a candidate for improvement. You can invest the time and energy in doing things faster and better, saving you time and delivering higher quality.
- You can charge more. A product has predefined outcomes and deliverables. This switches the conversation with your client from your rates and how long it's going to take to how this will help your client solve their problem. And that's a lot more valuable than your time.
How do you go about productizing your services?
In my how-to guide Productized Services I provide detailed instructions for productizing your services. Here's the process in a nutshell:
1. Design a product roadmap.
There are two parts to the roadmap:
- The Product Ladder: The idea with a product ladder is that you want to make it easy for clients to buy your first product (or service). Entry-level products establish the trust your clients need to have in you to spend more on your flagship products.
- The Three-prong Strategy: Over time you want to expand the market you can address - and build passive revenue. So you want a mix of products where you work with your clients one on one, webinars or workshops where you work with multiple (potential) clients at the same time, and ebooks or info products you can use to build passive income.
With a decent product roadmap, your clients have an easy place to start, you broaden your market reach and (eventually) you start building passive income.
You don't have to start with all three kinds of products - some businesses do very well selling just one kind of product. But you do need the roadmap so that you know what your future looks like.
2. Detailing your products
With your roadmap in place, you need to start detailing your products. This is where you list the ingredients, define the recipe, design the packaging, and make sure the outcomes are presented in such a way that your client can be assured their problems are going to be solved.
It's useful to divide your products into three phases:
- The Offer Phase starts when your client is ready to buy from you and ends when you're ready to start working with the client. This phase takes care of all the client setup, getting billing details, adding them to your accounting system, and sending the first invoice.
- The Delivery Phase covers all of your work with the client. This includes meetings, reviews, delivering your services and anything else you need to do to solve the client's problem. The delivery phase ends when your work is done, you've delivered all your stuff and the client has paid the final invoice (if that's how you bill).
- The Follow-Up Phase is designed to ensure that you follow up with the client after the work is completed. This is where you get to show that you care about their business and offer them the opportunity to purchase more of your services.
In each phase, you want to list the things you're going to do (I call them activities). For each activity, you want to make a list of the inputs (the things you need to perform the activity) and the outputs (the things you deliver to your client).
If you get these lists detailed enough you have a blueprint for delivering the same service, with the same quality, over and over again. That's productization at work.
When you start out, you will probably be doing most of these steps manually. But once you've delivered your product a couple of times using these blueprints you can start automating, outsourcing and improving.
And that's how you make your levers longer.
But my services can't be productized!
My previous accountant (he's retired now) had the productized service thing down pat: for a fixed fee, he would do my corporate tax as well as my and my wife's personal taxes. So I know that productized services work in the accounting world. For different fees he would do different stuff - I picked the one that worked for my circumstances.
Many creatives claim their creativity can't be productized. And they're right in the sense that creativity (just like insight) can't be productized. But you can productize everything around it - getting clients on board, scheduling meetings, review sessions, and so on.
And I usually challenge creatives with the following:
How much time can you spend on the creative process for each of your clients? We already know the answer is not "unlimited". So it is finite. And if it is finite you can put a time box around it. In fact, to run a profitable business, you have to put a time box around it. And if you can put a time box around it, you have just one more ingredient in your product.
I've seen lawyers productize services. I don't know how successful they are, but I do know that one of the biggest fears in engaging lawyers or accountants is that there's no limit to what they're going to charge me. And the savvy ones will see the client fear and address it by creating fixed-price services.
Can lawyers productize everything? I don't know - but if you're reading this you're probably in a market that will benefit from it.
Example: Worstofall Design
Worstofall Design is a badass branding company (that's how they label themselves). They've literally written the book on how to go from a traditional branding agency model to a highly productized one. And they're doing very well because of it, thank you very much.
Branding is a very creative process - but Pia and Steve have this process very productized with entry-level and flagship products. Check them out - they're inspirational (and very good at what they do).
Rootstrap have their application road mapping productized. The idea with the road mapping is to provide their clients with clickable prototypes working over an extended 3- to 4-week workshop.
Their clients include Snoop Dogg, Anthony Robbins, and Spotify - and they produce really good stuff. Check out their 4-phase process on their web site.
Productized services are a way to add more leverage to your service-based business. Done right, it will allow you to earn more, work less and provide better value to your customers.
There is a methodology for productizing your services. I described it in a nutshell above - the links below will give you more information.
I haven't yet come across a service that can not be productized. If you think you're one of those, I would love to hear from you.
Make a longer lever
Archimedes knew he could move the world if he had a lever and a place to stand. You can add that lever to your service business by productizing your services.
The process is not as difficult as it may seem, and you will benefit from easier sales, faster implementation and having more fun doing the stuff you're good at.