Why Service Companies Need to Productize

We’re all familiar with “scope creep,” which is why selling services requires defining parameters and delineating borders. Consultants need to limit what’s expected of us, at least if we want to be able to deliver quality work for the agreed-upon price. Usually the best way to set limits is to generate a detailed proposal and then negotiate with clients any time changes come up. It always ends with a business outcome exchanged for a fee.

Now let’s say that your prospects all want more of less the same thing as each other, so you end up sending slightly tweaked proposals a lot of the time, and your proposals are consistently accepted. Sounds like a product purchase, doesn’t it?

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Productizing, or productized-consulting-as-a-service, as it’s sometimes called, means offering a specific consulting service with a pre-defined scope for a flat rate. Consulting products are generally presented to the public as the modular services they are, with product specs listed on product pages that site visitors can browse to decide if they want to purchase or not. Productizing cuts some of the most cumbersome aspects of consulting out of the picture – no more manual chasing leads, individual proposal generation and bid processes, matching the client to the terms of the contract at the point of sale.

Many see the elimination of these early, unpaid portions of the sales cycle as the biggest benefit of productization. Experienced consultants know the frustration of time-draining negotiations – or waiting for a response from a client that hasn’t even decided what it wants.

The Pros and Cons of Cut-and-Dried Scope

Specialized offerings not only give you efficiency advantages, but also allow you to focus your business on the service product that you are most comfortable providing. This, in turn, effectively strengthens your ability to deliver quality service – quickly, easily and scalably.

Fast delivery of a productized service raises your effective rate of pay, since the price is fixed. You can also adjust the flat rate upwards as your skill develops, your demand increases and the customer recommendations and testimonials begin to accumulate.

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The flipside, of course, is that if you have to correctly identify what service to productize in order to see this benefit, you can only do so with a service that you’re capable of delivering with maximum efficiency. In short, when you aggressively promote a productized service that ultimately isn’t scalable, then you run the risk of effectively lowering your profits per hour.

Because it pigeonholes the provider, moreover, productization also keeps consultants from trying out new things. If you discover something you’ve never done, but it’s in your area and you think it could be a big part of your future, you’ll think twice about whether or not it’s worth your time, simply because it isn’t already part of the conveyor belt.

Crystalizing the Identity of Your Business

Some consultants may not want to deliver the same service repeatedly.

But for many, the variety of clients and offering other services, productized or not, provides plenty of variety to keep life interesting. It shifts the focus from holistic workflow pipeline management to simply feeding the top of the funnel, which is a source of major comfort for many.

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Some consultants might worry about creating extra competition if all their ideas and sales pitches can be viewed on their website. Market share is not necessarily a concern, however, once the hours you spend working effectively all become billable hours.

Relatively Easy to Implement

If productization seems like it could be a good match for your consultancy, getting started is within reach.

Like any process that’s worthwhile, productizing your service is far easier to describe than it is to execute. But if you follow these four steps, you’ll be well on your way.

  1. Identify the right kind of service. It should be part of your core business, something you want to do, and something that is taking individual sales processes to arrive each time at a similar arrangement.
  2. Assign a dollar value to what you do. Base this on either increased revenue or decreased cost, and based on this how much to charge. Figure out how long each similar project takes you (do not guess). If the first amount divided by the second pays you what you are worth, that’s your initial price.
  3. Write a pitch. This will stand as your proposal — that explains your value proposition, or the common problem along with the solution you are selling, and defines the project’s scope and price. This is typically, though not necessarily, a sales page on your website.
  4. Consider it a work in progress. Launch your productized service by publishing a product page, setting up email automation for nurturing captured leads, and promoting the page with advertising and organic social media posts. Just don’t forget to adjust the details of your productized service package as your business evolves.

Your Consultancy, Your Brand, Your Product

If you have a skill that you find yourself repeatedly tapping into for delivering a specific kind of project, you may be able to improve your business model with productization. You can spend the time you used to spend drawing up proposals and negotiating fees actually doing billable work – the kind of work that you enjoy doing most, and for a rate that you have predetermined to provide the profit margins you want.

It might be time to revisit your consulting service portfolio and decide if there’s something there that should be repackaged as a product. If there is, you can increase your work-cycle efficiency and exert new levels of control over your business growth destiny.

 

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