Why productizing services drives results for all
Fast Company | August 17 2023
After many years of working in professional service, I’ve come to believe that service providers prefer terms like “partner” and “colleague” because they desire a heightened perception from their clients—but often fall short because they don’t do the hard work befitting the title.
For great professional services firms (marketing and ad agencies, in my world) to thrive and the brands they serve to succeed, the key is for both client and agency to work together towards a mutual benefit. Beyond that, the truly great client-agency relationships are synergistic, in which case collaboration and cooperation lead to a combined output that is greater than what the individual parties could have achieved alone.
Advertising is an industry in which client procurement departments over the last 30 years have forced agencies to disclose virtually every detail of the “costs” associated with what we do for the brand. And though it may seem unimaginable to industry outsiders, many agencies are so desperate for work that they are more than willing to open their books, share their staff salaries and hard costs, and let their clients control their business’s profitability.
Of course, this unhealthy arrangement not only misses the point that healthy partnerships should be about shared success, but it also leads to clients commoditizing their agencies and ultimately destroying them. The agencies who share this information in the name of “transparency” are always set up to lose, negotiating against trained procurement professionals whose mission is to pay as little as possible for the services they receive. This leaves agencies with such slim to non-existent margins that their only recourse is to under-serve the account, either by slowing down the pace of work to increase billable hours or saving on reported salaries by swapping in junior people in place of experienced professionals.
Sadly, these machinations are de rigueur for many professional services companies. If we don’t change the conversation from haggling over costs to building synergistic partnerships that provide value, we may not have much of an industry in the next decade that is worth saving.
One of the ways my team and I flipped the script on this race to the bottom was to “productize” what we do. This crystallized the vast array of processes that go into the art of creating, producing, and distributing creative ideas into tangible, explainable, and demonstrable products that deliver proven outcomes. Doing this required real business insight into what our clients needed and how we are uniquely poised to solve them. But at the end of the day, if we want agencies to be truly professional services firms, understanding and identifying the business outcomes we can drive for a brand, organizing them into understandable deliverables, and communicating that value to the client should be a central part of all our jobs.
The benefits of transforming our services into products, besides eliminating haggling over compensation and poisoning what should be collaborative cooperation, will be realized by both sides. The brand can have confidence they are buying a “center of excellence” that will deliver value because the agency has successfully applied it multiple times before. From the agency’s perspective, revenues will grow from selling a product repeatedly, rather than reinventing the wheel for each new assignment. And because of that, unlike under the traditional ad agency model, agencies would not have to hire the heavy staff load required to accommodate executing the work for new project-based assignments. This lets agencies better control their costs and do better work while guaranteeing clients an outcome at a fixed price.
It is a synergistic, simple win-win.
One of the companies I own has partnered with many direct-to-consumer e-commerce brands, all of whom believe they are wildly unique in what they need to grow. But with a gentle hand and a creative eye, we’ve helped them see that all brand growth falls into three phases. The products we built are specifically named to reflect the outcome we will deliver to the brand in each phase. They are Launch, Traction, and Scale. Depending on what stage of life their brands are at, clients choose among:
- Launch, which is tailored to new brands and includes basic services such as brand building, website design/development, and creative production.
- Traction, which includes the necessary elements of the Launch that need to be sustained, but adds a suite of services where we produce, test, and iterate the growth model.
- Scale, which includes elements of Launch and Traction that are essential to marketing and fulfillment, but adds a layer of business strategy, financial planning, and media planning and buying.
The way we did it is just one example of how you can create products out of professional services. Designing each product required discipline, the ability to recognize and articulate the value associated with each product, the analysis of which services require senior people when others could be executed by more junior talent, excellent communications, and the experience to identify the brands that can truly partner with us in this way—and, of course, the courage to walk away from brands that can’t.
Productizing your services puts you in control of your business. It frees you to create and consider new revenue streams and ways to help solve your client’s problems with solutions that are designed with their growth in mind. It removes the ever-onerous procurement process from the decision-making, and most importantly, brings trust back to the client/agency relationship.