Guide to Productizing Your Services (Part 1)

For service providers like content marketers, SEO and web design agencies, bringing gross profit margins above 40% can become more challenging as they scale. In fact, businesses that sell products achieve much higher gross margins, at 60 to 90%.

If you’re a service provider, does that mean you’re in the wrong industry?

Not at all. By joining the growing wave of agencies that are productizing their services, you’ll reap the rewards that have traditionally belonged solely to companies that produce physical products.

The best part: A lot of your competitors are completely overlooking this strategy.

Take the example of Justin Gray, founder of LeadMD. When he started the digital marketing agency, which provides software that clients can license, the firm would have to reinvent itself for every client, he says. Clients also didn’t understand the full range of services that were available. A year later, the agency began offering packages of clearly defined software products that clients could easily browse through – and they never looked back.

Connex Digital Marketing, an SEO agency, realized that product offerings like its “SEO Audit” pack a much stronger punch than generic “SEO services.”

Other agencies have found offering a free product very helpful in drawing in clients – branding company WorstofAll Design gives clients a free one-hour online training.

This post is the first in a three-part series that will walk you through the whole process of launching productization. We’ll cover everything from technical decisions to how to share your new strategy with existing clients!

How It Works

Say you offer SEO services. Maybe you typically determine what you’ll do for a client, and the price of your services, after a phone consultation. You’re creating a new plan from scratch each time, and that takes a hefty chunk of time.

If you shift to productization, you might begin offering a set price for blogger outreach, a set fee for a certain number of pages optimized, and a set price for an 800-word blog post.

Face it; if you’re in the SEO business, your clients don’t know the rules of the game as well as you. Asking what they want won’t necessarily get them to where they want to be – offering standard services based on what works will.

You may still need to offer an element of customization, depending on how similar your clients’ needs are. Starting with a basic product model that you can expand on as needed will still boost your efficiency and simplify your initial conversations with clients.

The key idea Tilo Böhmann outlines in his book, is this:

Standardization captures learning curve advantages and economies of scale. It allows you to create high-demand products over and over, without reinventing the wheel every time.

It’s all about looking at trends in what your clients need and putting that into a service package that makes sense. You may tweak the offer a little for particular clients, but the results you’re offering are clear from the outset.

Likewise, many agencies are productizing their services while still creating custom solutions for higher value clients. In doing so, they’ve greatly simplified their consultation and design process, but nothing prevents them from picking up the phone and talking to a client as well.

Major Benefits

Here are a few ways of enhancing productization:

Industries That Are Productizing

A vast range of service agencies is productizing, although in many industries, it may not be the norm yet. The following are just a few examples of how agencies are implementing this sales strategy:

Plenty of other types of service providers are productizing as well, such as bookkeepers, accountants, and copyediting agencies. If you haven’t jumped on the bandwagon yet, this might be the moment.

Making the Switch – First Steps to Success

Ready to start productizing the services you sell? Start by looking at the types of clients you’re attracting already, and their projects.

Check if you have customers who tend to purchase particular clusters of services – these might be good candidates for packaging. Alternatively, ask yourself if clients would benefit from something they’re not thinking about. By including it in a package, you might encourage clients to try something new that will help their business take off – making them loyal customers for years to come.

With your productized offerings in mind you can start figuring out the optimal way to deliver those services, whether it includes heavier automation, re-training your team or bringing on outside contractors.

At the end of the day customers will gain confidence when they know exactly what they’re getting and how much they’ll pay for it. As you begin productizing, you may get fewer initial inquiries but a higher percentage of clients who are serious about purchasing what you offer. That just means you’re sifting out those who aren’t really serious, and only spending your valuable time on those who are.

As you work to productize, Service Provider PRO can help. We’re equipped to handle productized services from sales and invoicing all the way to order delivery. Sign up for a free trial now to see how we can change the way you do business.

In the next post in this series, we’ll get you on the road to launching productization!

Posted by Ray