How to Accelerate your Growth Through Productization
Prior to the Industrial Revolution, items such as shoes and clothing were made to order and tailored to a single person's specific needs. Then, in the 18th century, people began to build machines that could produce goods on a large scale in factories.
On the one hand, personalization and craft represented value propositions, while efficiency and consistency represented values.
Customers and clients nowadays expect much more than just tradition. They want the personal touch of bespoke items as well as the value and convenience of mass manufacturing methods.
As a result, both established and new businesses have created business models that enable productization to deliver a wide range of customization, efficiency, and value in a repeatable manner.
The act of changing something, such as a concept or an internal tool of an organisation, to make it suitable as a commercial product, according to the dictionary definition.
You're probably wondering, "Why would I ever need this?" To answer that, this article will go over each and every function a productized service will serve you, as well as the benefits to your organization as a whole.
A productized service should include the following characteristics
Scalable - Regardless of how many units you sell, the amount of effort and money you put into your business should remain constant. Selling fifty items should take the same amount of time and money as selling ten.
Not Time-Bound -Whether you bill by the hour or by the project, client work takes time and effort on your part. Aside from the occasional customer service request, projects rarely necessitate additional time or effort for each sale.
Mass-Produced - Instead of tailoring projects to each client's specific needs, they will all be identical.
How to Commercialize a Service
Productized services have never been in higher demand. Everyone appears to be attempting to establish one. But what exactly are they, and how can vendors provide them with the least amount of risk?
There will be enough time to go over each of these topics in depth. Before we begin, we must ensure that we have a firm grasp on the fundamentals.
So, let us begin with two crucial definitions:
A product is an object that is sold to customers.
Service - Is a labour performance that is sold to clients.
Businesses have made millions of dollars from the sale of goods and services. They've also made millions by offering services. Each has advantages over the other.
Customers, for example, can generally understand what they're buying and how much it will cost, which makes selling items much easier.
Before making a purchase, vendors who use virtual services typically spend less time and employ less labour.
Isn't it fantastic if we could combine the best features of each and create a combined product with all of those advantages?
Productized services are services that have been converted or customised to look and function similarly to traditional items. The following characteristics define a productized service:
The project scope, including all deliverables and processes, must be precisely defined.
Fixed price - The selling price must be visible and unrelated to the specifics of a particular purchase.
Lack of individualization - The product must be designed to appeal to a diverse range of consumers.
Overhead cost reduction
Productized services eliminate the need for resources devoted to negotiations, scale discussions, and the creation of custom proposals. These time, energy, and material savings are then freed up and can be applied elsewhere in the vendors' businesses.
Some businesses may simply enjoy the cost savings, but others will see significant value in reallocating those resources to improve output quality, take on additional work, purchase advertising, or invest in traditional items.
The resources you could save are significant, especially given that many proposals are never accepted by their recipients.
Productivity also motivates employees to improve. For labour, most service providers charge by the hour. This creates a slew of perverse incentives, with the service provider making less money the more efficient he is.
As a result, it is often not worthwhile for hourly service providers to invest in upgrading their skills or implementing automation. After all, why invest time and money in honing one's skills if it will only result in lower pay?
When working with productized services, efficiency gains are immediately reflected in the company's bottom line. This is due to the fact that the only price clients see throughout their purchasing journey is the final price they will be charged.
Buyers, in other words, are blind to a vendor's actual hourly rate increases. Customers are instead encouraged to focus on the value they receive from the service rather than the number of hours it took to create the deliverables.
The more a vendor's service offerings become productized and uniform, the more the cost of investments in onboarding, process control, automation, training, and research can be spread across clients.
Out-of-pocket costs would have been prohibitively expensive when working on tasks with little overlap, but when projects have comparable needs, they appear to be rather low. Consider a dentist who wants to buy a $10,000 tool for a specific operation.
He wouldn't be able to justify the cost if he only used it for one patient's visit. However, if he performs the treatment several times, the cost will appear to be very low.
It's not just a matter of incentivization; it's also a matter of exposure. Productizing one's service offerings makes it easier to identify inefficiencies.
Data from each project will be easier to combine and analyse across projects as the variety of services provided by a vendor narrows and the activities they perform become more predictable.
Reports will appear as patterns if there are unnecessary risks, waste, or the presence of low-value activities. Because the tasks are consistent across projects, unattractive characteristics can be easily identified and modelled.
Reduced risk for the vendor
Productized service vendors benefit from their predefined nature because it eliminates a variety of issues that could arise in the future.
For example, scope creep will be reduced because each project's definition will have been defined before work begins.
With a little effort, providers of productized services can limit their initial scope of work to the point where customers would not even consider pushing for the inclusion of additional requirements.
Productized consultants have far greater control over the process by which they provide value.
Because each project is built using the same basic template and has the same scope, vendors will learn from experience where to look for the most important warning signs.
The precision of project scope provides experts with greater insight into data than they would have had otherwise.
By providing productized solutions, vendors can reduce their risk of nonpayment. This is advantageous because consumers are less hesitant to pay in advance.
Even if they don't realize it, most service-based businesses are in the loan business.
These employees are paid with their own money and rely on their clients' accounts payable departments to reimburse them. These payments are occasionally delayed.
These payments are not always sent. It's not just a matter of having a set fee schedule that allows vendors to demand payment in advance. It's a shift in consumer mindset.
Many buyers are conditioned to believe that goods and services are always paid for at the time of purchase and that they must wait for payment. Fortunately, productized services frequently resemble products rather than services.
How to Accelerate Growth Through Productization
To accelerate your company's growth, follow these five simple steps:
- Execute rather than Perfect
Accountants often offer "a la carte" services. This is what they do because it is easier to take the easy route and stick to a traditional model.
However, your company will eventually reach its peak. It's what I refer to as an upper threshold issue. Earning more money necessitates the sacrifice of personal time.
It's exhausting and not long-term. You eventually begin to consider your options.
Have you ever considered selling your services? It's simply a method of grouping your services.
Overthinking which services to include could lead to a poor package. Don't be concerned; you can make as many packages as you want.
Begin by offering "good enough" packages to prospective clients. This is the best way to test your offerings.
Your clients will provide you with specific feedback on your packages:
Value: A keen understanding of what your clients value.
Unimportant: Determine which services you thought were important but that your clients do not value.
Overlooked: Your clients request that you include these services in your packages.
2. Positive feedback is priceless.
You should keep your clients in mind no matter how big or small your company is. As you productize your services, keep your clients' needs, wants, and desires in mind.
There is a distinction between the three:
Needs: What tool, procedure, or service does your client require but is unable to express? These are needed to finish the task. Consider the reports, useful work, and information required by your clients.
Wants: Think of wants as something that isn't absolutely necessary, but will make life easier. If you offer bookkeeping services, your clients will almost certainly want tax preparation and QuickBooks training. These services could be included in your packages to solve a specific problem while also appealing to a specific client demographic.
People have desires for things they consider to be luxurious. Perhaps you would want to run a help desk and technical support for your customers. Alternatively, each package could include a predetermined number of client meetings.
Subtraction and addition
Make a strong package by including everything that is required and removing everything that isn't.
First, consider what you believe your clients require, want, and desire. What is the most difficult problem that your clients face the first time they meet with you? That is addressed by your solution.
It includes the activities and insights that are absolutely required to address that issue. When was the last time one of your customers required additional services after their problem was resolved?
Remove: Finally, describe the services you currently provide that you dislike or are not required to provide. Then, remove these items from your company. You will notice that certain operations sap your productivity.
As a result, remove any unnecessary elements from your offers.
3. The target audience
As you pay attention to your clients' needs, wants, and desires, you will become more acquainted with them. Productized services that are well-designed will capture the attention of your ideal client. If this does not occur, consider adjusting your pricing:
4. Refresh your message.
Examine your promotional materials. Is your client attractive? For example, your website is likely to be focused on you and your service. However, it falls short of meeting your client's needs.
As a result, your marketing materials are dull and uninteresting. They appear to be more of a sales pitch than anything else. Productize your services and improve the usability of your website.
Discuss how you solve problems, what people might expect from you, and how to get started.
5. Modify your expectations to meet the needs of the client. The alternative is to solicit feedback from your current customers, especially potential customers.
Make a meeting with them. Take note of how they express themselves. Then inquire as to how you can assist them. Following these meetings, evaluate your productized services and make any necessary changes.
6. Â Determine the Value of Your Productized Services
Never undervalue yourself. When you productize your services, it becomes easier to price for value. Follow these effective pricing strategies:
a) Determine your value: It's pretty tough to price your services. Your charges are affected by your self-esteem. People will reflect your worth, so be aware of this. As a result, before others are willing to pay for what you offer, you must first become acquainted with it.
b) Price for value rather than time. Once they understand the value of your packages, your ideal customers will gladly spend money on them. It is up to you to connect the dots. Educate them on the benefits of each package.
c) Concentrate on benefits rather than features: The problem you address has a greater impact than any actions you take to address it. Accountants, on the whole, are more concerned with what they do than with what they hope to achieve.
Tasks and activities are examples of characteristics. Your clients, on the other hand, invest in your productized service because it solves a problem.
An entrepreneur, for example, who spends countless hours each week looking for misplaced papers hires an organizer.
She hires the organizer to save time searching for important documents, not to have color-coded files, as most organizers do.
d) Increase your perceived value: The most effective way to increase your worth is to gain experience in a specific field. Then, as a consultant, offer advice on that subject. Clients want an expert who has dealt with their issue before and can solve it effectively when they are ready to deal with it.
e) Return Ratio:
Clients should understand that the services they purchase provide additional value above and beyond what they pay for the service.
Is your $12,000 service more likely to enable them to make an extra $50,000 this year? Alternatively, if you can solve a problem for $6000, will they continue to lose $2000 per month as a result of a problem that you can solve for $6000?
To explain how your product or service solves the client's problem, use techniques such as personas, archetypes, and metaphors. How can you best describe your solution to their problem and what you hope to achieve once it is resolved? Highlight those distinctions to set yourself apart from the competition.
f) Increase your profit margin:
Your skills will improve over time. As your level of service improves, you attract more clients. Don't put off raising your product prices any longer. This is the simplest way to increase your earnings. Also, keep in mind that you should continue to remove any unnecessary services from your company.
Test and Implement
Implementation and insight are two simple ideas that can help you succeed. Continue to tweak your packages until they're just right. Read about the development of other accounting firms to learn more about a company's growth. When it comes to new ideas, keep an open mind.
Some Productized Service Examples
To persuade you to productize your service, I have compiled a list of productized services from which you can draw inspiration:
SEO / Marketing
Smash Digital - A Straightforward and Effective Link Building Service
Always Pay Attention - White Hat Link Building That Boosts Your Traffic & Sales
Brand Builders - Designed specifically for your niche and Amazon sites
Rapid Business - Customized coaching, website, and traffic services
Growthgeeks is a platform that allows experts and freelancers to package their services.
Increasing organic social media followers with Social Hackettes
Podcast Engine - Podcast hosting and editing as a service
Cashflow Podcasting is a service that provides podcast editing.
Call for Content - Podcasting marketing authority
Ellect Content - Affiliate, SEO optimised content at $0.07 per word (I paid for it, it's good)
Content Refined - monthly content packages that include content upgrades (I paid for it, and it's good).
Human Proof Designs - monthly content packages for affiliate website owners (I paid for it, and it's good)
CopyHackers is a one-time review of a CRO copywriting website.
Audience Ops - SaaS content marketing that includes marketing funnels and content promotion.
Pickle Graphic Design / UX / CRO - unlimited graphic design by your personal graphic designer
Rocking Book Covers - author book covers
Website Rescues â€“ CRO website redesign
Penji - One flat monthly fee for unlimited graphic design.
Limitless Designs - Hire a dedicated graphic designer for as little as $10 per day.
'Service as a Service' - WP Curve WordPress support [update: not sure if new clients are being accepted after being acquired by Godaddy]
Cloudoptimus - Professional Bloggers' Ultra SecureStupid Fast WordPress Hosting
Work Hero offers monthly web, design, and automation packages.
WP Quickie - a small one-time event WP tasks as a service product
LightSpeedWP - WordPress speed optimization service productized