The Power Of Productized Services

0:00Typically, when you think about productized services, you think about going from a service to a product. I think there's a phenomenal opportunity right now to go from a product to a productized service. How much more successful would you be if you had lunch once a week with insanely successful entrepreneurs who shared their biggest secrets on how they think and achieve success? Grab your seat at the table because this is Business Lunch with Roland Frazier and Ryan Dice.

0:30Welcome to another episode of Business Lunch. And today's a snackable episode with Roland where he's going to get into some more tactical strategies that you can start using to live a rich and happy life. If this is the first snackable episode you're hearing, I'd encourage you to go back and listen to some of the other episodes that Roland has put out. And if you want to get notified every time we release a new episode, go to the new businesslunchpodcast.com website and we'll send you detailed notes along with every episode. That's businesslunchpodcast.com, www.businesslunchpodcast.com, and you can sign up for the free email newsletter where you'll be able to get all the highlights and resources from the episodes.

1:05Hey, everybody. Roland Frazier and Ryan Dice here with another episode of Business Lunch. And today, Ryan has all kinds of fun things that we've been talking about talking about. Ryan, what do you want to knock out here first today? Okay. So I'm really excited about this new concept and I want to get your take on it because I can't tell if it's a big deal or if I'm just making too big a deal out of nothing. I'll let you decide. But have you heard this concept called productized services? I have. So when I say productized services, what does that mean to you? So to me, it means that it's very different.

1:42We actually talk about this a lot, so we'll see if it's the same thing. But really, one of the big challenges that service-based businesses have is their ability to scale. And that comes generally as a result of trying to create a bespoke, customized solution for every single client that comes in based on what they need, as opposed to creating a product that is the service. In other words, a standardized set of services with standardized times for completion and standardized costs that meet the majority of the client's needs who come to you. That affords two things. One is it affords the ability to scale because you can educate and have SOP, standard operating procedures, for how any person who comes into the business as an employee can execute the things that the company sells without having to have specialized company knowledge, tribal knowledge, or anything else.

2:42And it also generally makes it more efficient because you're meeting the needs of 80 % of the customers, as opposed to trying to meet the needs of 100%, where 20 % are 80 % of the extra effort. So really, to me, it's a smart way to be able to create a scalable service-based business. And it also creates then upsells that you can or cannot offer depending on the level of capacity that you have available. Because if you basically say, this is our productized service suite of, let's say, digital marketing services, then we do all of these things for you. And you say, but I also want this, or I wish this was that, or, and it works with businesses as well.

3:26Let's say that you're manufacturing, even for services related to goods, you're manufacturing window frames and door frames and you make the seven standard sizes, but you've got customers that come in and say, well, I need a big bay one that's like this and I need one that's this and I have a tiny house and I want that. You can say no to those people because they don't meet the productized services or you can say, we've got capacity right now and therefore we're okay with an upsell. That's kind of my take on it. Yeah. And I think that's a good general breakdown and understanding and mine as well.

4:01Like when I thought about this and have been, this isn't a new concept. And so if you're hearing me talk about this and you're saying like, yeah, I've heard about this before, you're probably right. I think I've got a slightly different tweak on it. And we just, the reason I want to bring this up is because at the Scalable Company, we just had a massive breakthrough on this concept, coming at it from a, approaching it from a slightly different direction. So I think that this is going to apply to you. If you're in a services business right now that can't scale, then this discussion I think is going to apply to you.

4:29If you're an investor, if you do acquisitions, I think it applies to you because there's lots of opportunities to acquire unscalable, inefficient service-based businesses and convert them into a productized service. But I think there's also a phenomenal opportunity here for people who are in the media business, publishing, course sales, coaching, mastermind, like a lot of those folks who've been selling IP. I think there's an opportunity here for you as well. So I'll kind of like just back up the truck a little bit and talk about what we did at Scalable Company. because I think, and I know you know this, but for our listeners, I think it'll be great help.

5:09Let me frame one more thing, just so if you have a company that does not fall into those categories that Ryan just mentioned, really there are tremendous opportunities with any physical products, brick or mortar, wholesaling, manufacturing business to add on things like this. So bear with us and listen, and then we'll try to tie all that back together as to how those things can be beneficial to add on to the products and services that you've already got. Yeah, and to your point, and the point about this being nothing new, to a large extent, any fast food restaurant is, like McDonald's was a productized service of just going to a general restaurant or heck, cooking at home, right?

5:46Or hiring a chef to come and cook for you. And so this idea of let's take something that was a traditional service and productize it, nothing new. There's been companies that have been doing this in the design space forever, like Design Pickle, for example, is one of those companies where there's traditional design shops, but they basically productized it. I'm seeing a lot right now in the video space. Yeah. Like, you know, video editors that previously would have said, we'll edit any video. And now they're basically saying, we'll take your videos and cut them up into shorts. Yeah. Short form kind of things.

6:21So, you know, we're seeing that. There's even this company out of, they're in Santorini, Greece. You should look up. It's called Flying Dress Photo. And it's a photographer. And the, but the only, the only thing they do, like what they advertise on this site is we're going to do this like amazing flying dress photo shoot overlooking like, um, yeah, yeah, exactly. And I think, you know, we had a friend who went and did this recently, a former employee of ours that, uh, went and did this recently. And, and yeah, it's, what are they? They're a photography studio, but they're productizing this one particular service that everybody wanted.

7:03And to your point, if you go the productized service route, you could either say, this is the only thing we're going to do now. Right. We're not going to do any bespoke. We're not going to do any custom. We are only going to do this one thing or this one thing can be kind of a separate brand. That's a lead into your higher ticket, higher end, more bespoke. And I think for for bigger companies, if you've got a department, this works, too, because if you're talking about efficiencies interdepartmentally, than if you've got a media buying component of your business or a content creation or any of the, really the services that are provided, even accounting, you can do the same thing.

7:42You can productize the services, potentially use this as an expense to profit conversion to add additional profit centers. But even if not, simply to get more efficient and say, this is basically what our company needs from this department. And how can we productize those services so that it's available to everyone in the most efficient and effective way. So lots of applications that I don't see a lot of people talking about. So I love it that we're talking about it. Okay, what's the breakthrough? We've got a friend and a client that he's an attorney, a couple of legal partners in a law firm, but their brand is all around crowdfunding.

8:21Yep. And so yes, right now is probably a good moment to pause if you have any type of service offering and say, is there an element we could splinter off and productize? Because not only do you get far greater efficiencies because you can build SOPs around it, you're not doing proposals, there's no customization, people can literally just go and buy it. Conversion rates are typically higher, sales cycles are typically shorter. Like for every reason, you should do this. But here's what we just did, kind of because I've known about this, but I never really thought it applied to a lot of the businesses that we're in because a lot of this, we're not in a lot of services-based businesses that aren't bespoke.

9:00Like we have traditionally avoided those for all the reasons we just talked about. But what we do have are a fair number of publishing companies where we might publish courses or trainings, or we might have a consulting company or a coaching company. And in the past, that's pretty high leverage, right? It already has been productized. And so typically when you think about productized services, you think about going from a service to a product. I think there's a phenomenal opportunity right now to go from a product to a productized service. And I think this is a piece that a lot of folks are missing.

9:37And certainly we were missing it at the Scalable Company. So if you don't know, at the Scalable Company, kind of the main thing that we do is we help business owners install operating systems so their businesses can scale. They can exit the day to day. they can ultimately sell the business if they want to. And there's lots of other components that go into that, you know, with more general coaching and things like that. But it really does center around the, let us help you systemize, operationalize, you know, install this operating system in your business. And we've got books, we've got courses, we've got coaching programs.

10:11And over the years, those have all sold, you know, pretty well to varying degrees. But I wouldn't say it ever just hit it out of the park. And the thing that we asked our people is, what do you really want? What's something that we're not currently offering that you wish we were? And what we heard time and time and time again is, I wish somebody could just build this out for me. And we said, ah, no way. We don't want to be in the services space. We don't want to do bespoke services or anything like that. We just want to, you know, we want to do the high leverage thing. We want to do the one to many.

10:44We want to have the courses and the cohort based programs. And what we realized is we should just maybe give the people what they want. You know, they're asking for who does that crazy idea. Right. Right. And what we further realize, and again, this is probably going to sound painfully obvious to 80, 90 percent of the people listening. And yet, as obvious as it seems, we weren't doing it. And that tells me that plenty of other people aren't doing it either. What we had with our courses, what we had with our books, were not just training materials and programs to teach other people how to do it.

11:17They could just easily be training materials and programs to teach team members how to do it. So what would happen if we just went out there and said, okay, fine, we'll give you what you asked for. And instead of having people go through the trainings, the trainings become trainings for our internal team members. That's what we did. And man, it has crushed it. And we went from, because I think right now it is harder than ever to sell courses. It's harder than ever to sell like cohort-based stuff. It's harder than ever to sell a, let me show you how to do this thing. Everybody right now just wants it done for them.

11:52seemingly more than ever. And so we just decided, okay, let's get into the productized service business. And it has completely changed the game. I mean, sales are up about double just by giving people what we wanted. And the IP was already there. So I just, I wanted to talk about this because I think that there are too many people selling bespoke services that aren't thinking about how can I splinter something off and do a productized services, productized service. Let's do a couple of brainstorms for people. So let's say, because I know that from digital marketer, we have lots of people who are in agency type businesses.

12:34So that means that they may be a digital marketing agency. They may be a consultant that is effectively in the same boat. How do they approach the productization of the service? What's the framework? So if you're a marketing agency, I think you could ask yourself, what I would always start with, what's the thing I'm already doing that I know everybody loves, they get the most value from that, you know, we were getting phenomenal results because if your people are getting great results, then, you know, you got product market fit there. Right. Um, and so that's where I, that's where I would start from.

13:09Um, and then say, oh, sorry, go ahead. I was gonna say, uh, thinking about like, how do we drill down to that? To me, um, I would guess that a combination of a survey of your customers and prospects, asking them to rank the five things that they find most important or most valuable about the services, or maybe you do two questions, one of each of those things, so that you get some data from the people who you're actually trying to appeal to. And then I would probably talk to the people who are doing the work and get them to give you a survey of, or if it's you, you might wanna just take some time and look over your last maybe three months of billings and say, what are the five services that I'm providing or that we are providing to customers more than anything else?

14:00In other words, not only what do they say they want, but what are we actually doing? And then maybe let that help inform how we're gonna start this productization. Does that make sense or you wanna plus that? Yeah, I mean, it's exactly, I think working backwards of what are people asking for, what are people getting results from, and whether that's you just considering what you've already done, and or, and I think it's an and, asking them. You know, even just sending a one sentence survey that is, what are we not currently offering that you wish we were? It's shocking how many times we've asked that question and people ask for things that we are in fact offering.

14:40Um, the other thing you could potentially do is you could aggregate your, if you've got timesheets or something like that, like let's say you had a law firm or, um, or anybody that's doing time-based billing, you could download into a PDF your last 90 days of timesheets and then upload them to chat GBT into the ADA and basically let it tell you, give me a summary of the, of the, of the breakdown of services. as far as you can tell that we're doing. That'd be another good use of getting some specific data and bringing AI into it as well. I think also asking of all the things we do, what's the one that has the clearest result for the client, right?

15:24That you can connect a very clear through line. When they have this, they get this known result. Because so many of the things that we do are kind of around the edges. They're important. And maybe they even need to happen first. Yeah. That's a big mistake that we've made in the past. You know, we've said, ah, before we can get to this thing that the client really wants, we've got to do these other things first to kind of prepare them. And so we sold it as this like one much kind of larger package and bundle, explaining to them on the front end that, oh, you need all this stuff. You don't have to do that.

15:55You can just say, we're going to get you this thing. And then they find out that there's, you know, more stuff on the front end that now that they're on the other side is almost perceived as an extra benefit. Wow, you're going to do all this stuff for me too? Yeah. So you don't have to talk about all the stuff you do. You can just pluck out and talk about the sexy bits that they actually want. I love it. And so I do think that that's where it would start. And I think a lot of people do this and they talk about it. And it might even be a package or it might be a product. I think to really take it to the next level, you create an entire brand around it that is in addition to its own domain name, its own branding, and it can be by your brand.

16:36You know, so, I mean, you could have kind of your parent company and it's this new thing by this. This is what we're looking at doing in digital marketer. So digital marketer, what does everybody want us to do? Wants us to help them build out their funnel, build out their growth engine. Right. And so we're going to look to spin out a productized services brand that's going to be by digital marketer. You know, I mean, that's, I think that's a really, that's kind of the next step to find out, can we market this independently? Can it stand alone and, you know, as an independent service without having to talk about all the other stuff?

17:12like like so that that flying dress photo that is its own website and all it markets is this flying dress thing i'm sure you could hire him to do other photography but there's no mention of it and i think that's really really powerful that's what makes it feel like um i'm actually buying a product i'm buying the service like i would buy a product off of amazon or off of a shopify store nice so separate domain separate trademark uh how do you deal with people because we know shared services models are challenging. If this becomes its own thing, does the entire company pivot? And that's the product that it offers.

17:50And we start with product one and then move forward. Do we continue to do the customized products along the way while we're migrating to this? Do we have a half custom house, half product house? How do you look at those things? When I've seen it done best, it's when there were two different brands and one of them only focused on the productized services and it had dedicated teams and only did that productized service. And then there would be another company kind of behind it that was the parent company and they would do some of the bespoke work if and when it made sense to do that. And I think that is ultimately where you want to be.

18:28So you have the Macintosh team and the Apple II team. Say that again? So you have the Macintosh team and the Apple II team. The Apple II team continues to do what's making money. The Macintosh team works on this new thing. Then we launch, we see how it goes, and maybe everybody becomes the Macintosh team ultimately. Right. We all know. Yeah. And then I think the goal becomes launching multiple productized service brands out of this. And so if I had a marketing agency, as opposed to advertising ourselves as a full service marketing agency, I would want to have a productized service that does the funnel building and design and development.

19:03I might want to have another one that all it does is, you know, get like test and get you your perfect winning ad. Right. And so it's not designed. Here's the key about a productized service in general. There's a clear beginning and an end. And that's important. Right. I mean, you might be thinking like, oh, but I want to be able to serve this client forever. Very often in services, you and it depends on your business model, but oftentimes in services, it's the scope creep where you lose all your margin. Like in the beginning, when it's productized is when you make your margin and over time, you could potentially lose it.

19:38And so the way that we design our productized services is it's designed to do something in 6, 12, or 16 weeks is kind of where we land in terms of productized service sort of in that range. And then afterwards, there could be some kind of ongoing retainer based if you need some additional help and support. but it's not intended to be, we're going to keep doing this thing for you. There's a clear start and a clear end. And I think that's a really important aspect in designing this that we didn't talk about before. What's the clear beginning and when is this thing done? When is the product delivered?

20:16Okay. Let's do a couple other examples. Auto repair shop, brick and mortar business that's providing services. So you're, yeah, so you're an auto repair shop. We do everything, fix all cars, all things, everybody that comes to us, whatever you got, whatever make model, we just fix everything, but we're losing a little bit of money because you know, it's hard to keep track of all those things. How do we deal with that? So you, this has already happened to a certain extent with like the Jiffy loops. So all we do is oil change. Right. And then you have other auto repair shops where they might do a particular service for a particular type of car.

20:52And so we only do work on electric vehicles and we only do this particular thing. There are some of these services where they only do inspections. Right. Okay. Let's say, what else do we want to try? Let's try two more. Restaurant. We serve everything. We're Fridays or Applebee's and you've got eight six eight eight or cheesecake factory we've got 16 000 page menu with everything on the planet on it uh it's hard for everybody to do everything with that but you know different customers want different things what do we do i look at shake shack one of the most successful restauranteurs of all time you know he realized like what if we have a restaurant that we only serve burgers in these configurations and shakes and fries and shakes right i mean so that's kind of the classic classic piece also, right?

21:43Yeah. We got, we got three ways you can get this. That's it. If you don't want it, you're at the wrong place. Yeah. If you don't want it, you're at the wrong place. But again, I'm trying to remember who, but like the people who know, know that this is the person who's also associated with these other fine dining restaurants. And so if, is it Denny Hatch or somebody like that? I think so. Yeah. If, if properly branded a productized service, you can get two wins. You can both elevate, you can both create a new profit center, a new brand, a new business unit, a new sellable asset. While if you were to co-brand that while also leveling up the parent company and giving people who want that bespoke a place to go.

22:25But I think the biggie is don't mix those two teams. Don't ask your people who are doing bespoke stuff to just focus and drill and do productized work. And definitely don't ask your productized people to invite scope creep. You wouldn't ask the burger fryer at McDonald's to, hey, while you're at it, this person wants a filet mignon. Can you knock that out too? Forget about it. Yeah. Yeah. I think knowing your market demographic, psychographic, who do you actually want to serve? This allows you maybe to serve the most profitable section of the market too. So another thing to do, I think would be take a look at what are your most profitable services?

23:02And we did this with a law firm long, long ago when I was practicing law. We were one of the first firms to offer flat fees for the specific sets of complex services that we would do. So we would have we would basically say, here's a class action lawsuit. Here's everything that's going to happen. Here are all the component parts that are most commonly done. that's how we do that. Here is, you know, you can, you see it a lot with like entity formations and things like that, but you might not see it with let's create an offering document and let's create a private placement. Let's create a divestiture.

23:38You know, those are, or an acquisition. Those are all things that can be productized and very profitable. And so we were making, as opposed to the people that were making at the time, four or five, 600 bucks an hour, we were making two, three,$4 ,000 an hour because it's a flat fee associated with a fixed number of services. And that's what you get. And we're actually doing that with AI right now. Even today, we're rolling out our services that is the done for you component of the AI things that we show people how to do. And we're saying, we're going to do a book, but it's not whatever book you want.

24:16It's a nonfiction book. And it's not however many pages you want. It's between this and that. And And it's like that, there's this many edits. There's this many, it's very standardized. So I think it's a great way to go. And then documenting along the way. Do you have any tips for that? Because I know you've kind of done this with SBA. So I'd love for you to share, basically you've got scalable and that's how to do operating systems and all that kind of stuff. Then we've got our done for you service, but then it also created an opportunity for a new profit center where we have people who we license to do this too.

24:55We want to talk about that for a minute before we wrap up? Yeah, absolutely. So I mean, I think going back to the sequence, because you said something important, and it'll come back around to how to do the documentation. Step number one is you've got to define and standardize the scope, right? What is the deliverable? What is the end result? You're speaking to the thing they're getting, it should feel tangible. It should feel like a complete product, right? Just like I pulled something off the shelf, I should have it. There's a beginning, there's an end. It starts, then it's done. And then I have something I didn't have before.