Service Productization: Grow Profits and Rule Your Industry


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For professional services organizations, rising to the top of your industry is not merely about selling more services. 

It’s about efficiency—the efficiency of your delivery methods, your software and even your messaging. How do you convince prospects that your services are better matched to their needs than another agency’s without investing a ton of time? And then how do you deliver in the most cost-effective manner so that you can scale quickly?

The answer is productization.

Productization makes your services more attractive to prospects. It smooths the service journey from sales pitch to final delivery and makes your business more profitable. And it does so in a way that requires minimal effort.

In this article, we’re going to discuss the wide-ranging advantages of productizing your services, no matter who you are and what industry you’re in.

What is a productized service?

If you’ve turned your organization’s services into readymade solutions, you’ve productized them. Like products, these solutions are standardized to meet the needs of a target market. The philosophy behind productization is that the delivery of many services is repeatable—therefore, you can (and should) develop preconfigured methodologies to deliver them instead of starting from square one every time.

Productization takes care of the who, what and how questions of delivering a service:

  • Q: Who is going to work on the project? 
    • A: Because the work has been standardized, it can be routinely done by different people. Including some more junior staff, at a lower cost rate.
  • Q: How long will it take to complete the work? 
    • A: You already know project duration because you’ve done it before.
  • Q: What is involved in executing the project? 
    • A: The methodology you’ve identified for this particular service will be applied each time the service is rendered.
  • Q: How much is it going to cost? 
    • A: You’ve standardized the time and expenses, so your budget is precalculated and accurate. 
  • Q: How much should we sell for? 
    • A: The service comes with a fixed price that you’ve previously determined can balance the costs and garner the right profit margin.

By turning your services into out-of-the-box “products,” prospects shopping for your services immediately know exactly what they’re getting, when and for what price. By the same token, everyone on your team from Sales to Delivery knows what to do when a customer buys these types of services. 

You’ve made the process and the service highly efficient and predictable in terms of execution, outcomes and—of course—the money side of things.

Productized services examples

If you sell services, there’s a good chance that you can productize them.

Marketing & Design Firms

Many marketing and design firms make branding offerings easily obtainable by creating a neat package that encompasses a brand strategy, logo design, brand name, messaging development, website design and possibly a specified number of templates for emails and landing pages. To make it ultra user-friendly, the package could include a master document containing all brand guidelines and aesthetics.

SEO Agencies

An SEO agency might offer a retainer service complete with a content strategy, content and website optimization, so many SEO content pieces per month, weekly keyword research and monthly reporting.

The key is that these businesses know what their target markets are looking for so that they can offer a tidy solution that defines, addresses and solves their customers’ problems. 

Productized services help your business scale

To rule your industry, you need scalable solutions.

Productization allows agencies, consultants and services firms of all kinds to scale rapidly.

The reason?

Instead of reinventing the wheel each time you talk to a new prospect, you’re offering a repeatable, vetted solution that gets quicker and easier to deliver each time. Increasing profitability without increasing output is inevitable.

Ultimately, because productized services evolve from your team’s experience with delivering those services, they help you economize your most valuable resource: your team’s time. You’ve sold enough projects to know how long they’ll take, how much you can get for them, about how much they’re going to cost you and what you need to put into them to make them successful. As a result, you can skip building out the proposal, budget, work breakdown structure and project plan anew and reinvest that time into bringing in new business.

Best of all, you know that your productization strategy will be successful because your team has already made service delivery successful. The proof is in the pudding.

Productizing professional services helps you compete more effectively

As you’re probably well aware, there are contractors out there who can outprice you for similar services. How do you compete without resorting to price battles?

In order to win, you have to change the dynamics. Productization accomplishes this by introducing a new model, one that allows you to compete based on the value of the product —not the price of individual resources. 

Your customers are price-sensitive. But they are also looking for “solution fit,” quality, predictability of outcome and lower risks. You can win any pricing battle if you have the right trade-off between cost, risk and quality. Productizing will get you a long way in establishing a winning balance.

B2B customers want the right solution, not the cheapest one

Plenty of clients are willing to pay top dollar for a service they feel confident will deliver reliable outcomes.

Gartner found that sales representatives who instilled buyer confidence in B2B prospects by helping them make sense of the solution with the right information provided in a simplified way closed deals 80 percent of the time. The lesson to be extracted here is that B2B clients want to know the value of the solution—what they’re getting and how it will solve their problems—up front in an easily digestible way. This is exactly what they get from a productized service shopping experience.

Rising above the competition comes down to packaging your services in a way that demonstrates their intrinsic value to your prospects (and then making sure Service Delivery keeps its promises). A significant portion of prospects would rather buy an agency’s services at a higher price if they know it will be better able to address their needs. 

By productizing services, you shift the focus of the conversation away from price and toward the value your clients are looking for. It’s in this arena that you can win hands down.

Productizing improves your bottom line

For services businesses, there are few avenues to limiting the costs associated with bids to increase business, and thus revenue. Mainly, they can staff projects with inexpensive resources, or they can reduce the amount of time it takes to deliver a service. Problem is; these tactics lower revenue per project. Productization allows for both cost levers to come into play without necessarily lowering revenue per engagement.

Prescribing your teams’ processes makes them faster and better at what they do, reducing the cost of project execution. If you productize, you can also get high-quality results at a lower cost because you’ve laid out the steps for producing excellence no matter who is doing the work. Chances are greater that you don’t have to hire a more expensive specialist—your teams become experts at delivering the service quickly, smoothly and with high-quality results by repetition.

Even more significantly, cost and sales rates are now predictable, raising profit margins. And the dreaded scope creep that can inject unanticipated time and costs into the project? That’s minimized as your team has a tried-and-tested methodology to deliver the results your customers expect. In fact, the quality of your services becomes better and more formularized as you repeat them again and again, which only strengthens your position as a top player in your industry.

In a nutshell, productization makes your business more profitable.

How do you productize services?

  • Determine the methodologies by which you’ll deliver them. What tools are readily available that will get results for the customer? To start productizing services in an efficient and cost-effective manner, you should develop a fixed toolset that everyone already knows how to use. 
  • To ensure every client gets the same level of high-quality service, document all steps involved in delivery for your teams to follow. Important, too, is to define the outcomes for customers. Make sure your documentation is updated as needed—tools like Google Docs and Slides are particularly helpful as they can be edited and shared with all team members in real time.
  • Organize how your teams are going to execute services with templates. Delivery gets quicker and more consistent when projects can be built on templates for items like quotes, statements of work and the work breakdown structure. The goal is to eliminate process ambiguity. 
  • Evaluate the productized services you’re delivering on a constant basis along these axes: budget, margin, timelines and customer satisfaction. Look at what’s working and what isn’t and identify areas you need to improve in. By consistently seeking ways to refine and enhance your process, you maintain (or increase) the quality of your product over time.
  • Also important in maintaining quality is periodically examining your toolset. Consider whether it needs to be updated to stay consistent with evolving customer needs and technologies.

What kind of productized service software can help your teams deliver?

This is an urgent question you should be asking if you plan to productize your services.

Even forward-thinking services firms miss the opportunity to get better at what they do with productized service software. Instead, they subscribe to what we at VOGSY refer to as the “tooling spaghetti” model—a dizzying assortment of software solutions that end up siloing data and departments, wreaking havoc on internal communication, productivity and profitability.

At the heart of productization is simplicity—straightforward solutions to industry-wide problems delivered with the same directness as a prepackaged product. But gaps between software solutions or clunky integrations have the power to interfere with the speed and quality of results.

The more integrated a solution you can run your business on, the more equitably you can deliver high-value services to all of your clients. For PSOs, that’s professional services automation (PSA) software that pulls at least the majority of your business processes as well as all team members together to collaborate in one environment.

If that PSA solution also automates vital aspects of productization, your teams can work even faster, better and smarter. In VOGSY, automated quotes and invoices as well as deliverable templates are built in, expediting services from quote to cash so that you can focus on business-building activities. Tracking of your key success metrics is automated and proactive; at any stage of delivery you will know budget burn, margin vs planned, timeline progression and completion. If something is thrown out of kilter, you will be alerted before real damage is done.

Becoming a leader of your industry is not merely about what you do, but also how you get there. Streamlined software creates streamlined results—and more time to build your empire. Add productization, and you have a powerful strategy to reach the top.

Republished with author's permission from original post.

Mark van Leeuwen
Prior to joining VOGSY as CEO, Mark spent 10 years in a variety of complex projects working for a multinational bank on topics such as marketing, international finance, BPR, customer care and automation, followed by over 15 years leading PSO’s and growing services technology vendors’ market presence internationally.


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