Productized Services: Your Key to Growth in 2023?

Aaron Marco Arias
/
22.9.2022

There are many challenges to starting a service business. Some are symptoms of being new. For instance, getting very few leads, or having the founding team absorbing tons of work.

Others are "yacht deck problems" - that is, problems that you'll encounter after becoming successful. But there's a third category: Problems that you can carry with you for years, while you grow. They're not exactly growing pains. They're problems that can appear at any scale. And the larger you are, the more that can go wrong.

One of these problems is scope creep. And, as an agency co-owner (and someone who routinely advises founders), I've found that the best way to prevent it is through service productization.

In this post, we'll take a look at:

  • What's scope creep (and why it's an issue)
  • Why service productization is an antidote to scope creep
  • 4 other reasons why you should productize your services
  • Some pointers to get started

Without further ado, let's dive in!

What's Scope Creep?

"Scope creep" is what happens when a project/service becomes more comprehensive than initially intended.

This is often due to:

  • The person in charge's inability to say no to the client
  • The person in charge perceiving that they don't have the power to negotiate favorably with the client

Over-dependence on the client

  • Unclear project scope

Saying no to a client can add friction or make you look like you don't care about their project enough. So, in your early days, it's common to accept to do a little extra. But as your company grows, doing free work becomes more expensive. Especially if a large client gets accustomed to getting stuff for free.

On the other hand, being overly permissive with a client because they're large is symptomatic of a wide commercial problem: Client concentration. While you'll always have large clients, you'll want the power dynamic to be as even as possible. You probably like saying yes to your best clients. But detect when you're beginning to jeopardize your bottom line.

It goes without saying that unclear project scopes are the gateway to negative margins. If scope creep comes from decision-makers not knowing if something actually is within scope, your processes and costs are at risk of becoming untrackable.

However, what if there was a simple strategy that could solve scope creep and its underlying causes?

An Antidote to Scope Creep: Productized Services

Service productization consists of structuring your services with the same clarity as you'd structure a product.

That involves:

  • A laser-focused value proposition
  • Clear pricing structures
  • Optimized onboarding, feedback-gathering, and cross-sell processes
  • The systematization of fulfillment processes

In short,  productization turns your services into discreet, well-defined solutions, rather than vague, infinitely wide promises.

4 Reasons Why You Should Create Productized Services (aside from preventing scope creep)

Aside from scope creep, there are several reasons why you should look into service productization.

In this section, I'll dive into my favorite 4.

Creating productized services:

  • Improves your positioning
  • Helps you develop more effective messaging
  • Makes your services more scalable
  • Increases predictability, making it easier to develop a sound business strategy

Clearer Positioning

Some time ago, when working with the founder of an IT company, he told me something that stuck with me. We were discussing productization and he said "What I'm selling to my clients is my ability to say 'yes'". And most businesses selling services (especially digital services) work under that premise.

A dry lead pipeline, thin margins, or what amounts to a "scarcity mindset" forces leaders to accept any and all requests. That's how "swiss knife" agencies are born. And that's "swiss knife" agencies' greatest weakness.

By productizing your services, you'll necessarily have to reduce your catalog to just a handful of winning solutions. That’s how creating productized services can help you detect and strengthen your most profitable solutions.

Clearer Messaging

Obscurity and vagueness are the most common messaging weaknesses in service industries. And it makes sense. If you're delivering a hyper-targeted, custom-made solution for every new client, you can't dive into specifics. "Specifics'' will be uniquely designed after the discovery call.

By turning your services into products, you're working with a standardized set of features and benefits that you can actually explain to your prospects.

Scalability

Productized services are easier to systematize (and therefore, scale) than hyper-customized ones. By always following the same blueprint, you'll be able to:

  • Detect shortcomings
  • Optimize your workflow consistently
  • Get a sense of what team and tools are needed to provide each service
  • Get an idea of consistent KPIs and success indicators

Predictability

Predictability is strongly related to scalability. When you have a product, it's much easier to build scalable pipelines, forecast your sales, and plan for the future.

How to Productize your Services

At this point, you may be wondering how to get started with service productization.

There's no magic formula. But here's the closest we can get to one:

  1. Analyze your existing services
  2. Think like a minimalist
  3. Decide which services can be delivered as one-off solutions
  4. Decide which services can be turned into monthly subscriptions
  5. Market accordingly

Analyze your Existing Services

First, you need to understand what services can be productized. Basically, any service that can be standardized can be productized.

Ask yourself:

  • What kinds of solutions are we providing?
  • How much does each solution vary from client to client?
  • What steps does your team take when providing your services?
  • What are the goals of each step?
  • What steps do all your processes have in common?

You probably have groups of clients getting variations of the same service. Detect them, and within each group, look for clients that are:

  • Highly satisfied with your service
  • Profitable
  • Held in high esteem by your team

Find how the processes involved in those accounts differ from those of less satisfied or profitable clients.

Embrace Service Minimalism

It’s natural and desirable for there to be some variation between the solutions you provide to each account. But, productized services minimize that variation to make you more efficient.

In most cases, what’s making your services unique, custom-made solutions, is an anxiety to control as many variables of your client relationship as possible.

Once you’ve analyzed your existing solutions, separate the essential tasks that bring the most value to your clients from the extras.

For instance, let’s say you run a small company providing WordPress site maintenance. For some clients, you may just:

  • Update themes and plugins
  • Perform a weekly backup
  • Check for any broken links or technical SEO issues

But, for other clients, you may also:

  • Send a Google Analytics & Search Console  report covering website performance
  • Update copy
  • Make small design changes
  • Manage email marketing-related integrations

In this case, what tasks are providing the most value?

Probably:

  • Updating themes and plugins, which protects the site against security vulnerabilities
  • Performing weekly backups, which preserves your clients from losing their greatest marketing asset if something goes wrong
  • Checking for any broken links or technical SEO issues, which can help your client’s SEO team to act fast and protect their rankings.
  • Sending automated performance reports, which helps your client to stay on top of their site’s health and effectiveness.

In this hypothetical case, those features would be great for a starter plan. But, how about clients who request content or design-related changes on a regular basis? Good news: They’d be on your second tier.

It's not about removing things, it's about finding what really matters and doubling down on that. If you invest most of your time in highly impactful tasks, instead of obsessing over the extras, your clients will see better results, and your team will be less stressed.

Build New Processes

The next step is to document your process. This is where you'll outline the steps you take to provide your service and the resources you need. It's also important to identify the customer's journey, and detect if there are any steps where there’s room for optimization.

Short-term and One-off Solutions

Some of your services will be one-off solutions. For instance, if you run an SEO agency, your technical SEO audits may be one-off services. Additionally, some of your services will be "Foot-in-the-door" offerings. That is, low-commitment, one-off products that can help potential clients to test the waters before moving on to a retainer plan.

Detect which services can serve that role, and design them accordingly.

Retainer Subscriptions

Retainer subscriptions are long-term agreements between you and your clients. At this point, you probably already have retainer clients. While they’re the lifeblood of your company (no doubt about it), a retainer without a clear scope can drain your resources, demotivate your team, and stunt your growth.

But, turning your retainer relationships into productized services is great for:

  • Designing a marketing message that targets people/companies similar to your existing clients
  • Creating a customer journey that’s scalable and trackable
  • Semi-automating repetitive tasks and elevating your customer experience effectively
  • Making sure all your clients can benefit from service improvements
  • Facilitating upsells

Tip: Keep an eye on the SaaS sector for inspiration and good practices.

Market Accordingly

As I mentioned a couple of paragraphs above, one of the greatest pros of productized services is that you can make marketing more specific.

When trying to scale with completely custom services, you’re always operating in a world of friction and vagueness. That friction and vagueness can leave you vulnerable to specialists with more tangible value propositions.

But productized services allow you to simplify and refocus your marketing. For instance, you can tap into tried and tested SaaS marketing strategies, something that’s not efficient for companies with unscalable messaging.

TL;DR

Turning your diverse catalog of tailor-made solutions into productized services could be your key to growth next year.

Productization involves:

  1. Developing more efficient services, guided by the needs of your best clients
  2. Detecting the tasks that are bringing the most value to your clients
  3. Standardizing & optimizing your processes
  4. Crafting a more transparent pricing strategy
  5. Communicating your value proposition in a concise and clear way

Are you wondering if service productization may work for you? Do you need help to make it happen? Pre-book a workshop.