Why A Boutique Consultancy Should Productize Its Expertise

Written by Luk Smeyers | 22 September 2023

I’ve interacted with hundreds of consultancies over the years – dozens of them were my clients; with others, I had in-depth conversations to understand better their pain points, goals, business models, value propositions, and mindsets.

This has allowed me to take a step back and look at the macro image – the paths different consultancies take and the decisions that significantly improve their chances of success in growing their boutique consultancy.

In the past few years, I have written extensively about what my highly successful clients have started doing. In this article, I’d like to elaborate on standardising and productising consulting services.

Why tailor-made service offerings can be draining for a boutique consultancy

Consultancy firms and their founders/owners are highly client-oriented. And that makes sense, of course. That's pretty much a given in the service business.

However, many consultancies take this to mean that to secure and retain a client, they always have to offer highly customised services that, like window insulating foam, fill in every nook and cranny of a business process.

And that's why they say yes to most client requests and get drawn into doing work they've never done before, a draining and unsustainable approach in the long run.

Here's why.

Closing the deal also becomes a complex process with much back and forth. The more detailed and customised the proposal, the longer it takes for prospects to approve it. Decision-makers usually pull in more and more stakeholders, resulting in an endless cycle of emails, calls, and follow-ups.

It takes much longer to get started. The higher the level of customisation, the more time is needed to study the client’s business pain points and to prepare a proposal that matches 100% of their expectations (which will never be the case; welcome to scope creep and change requests!). Leave full customisation for the big consulting firms.

Completing projects becomes a nightmare for some clients. If a consultancy sells itself short, is unreasonably accommodating, and goes not just the extra mile but runs an entire marathon for a client, the consultancy's owners shouldn't be surprised when many of the clients take it for granted and exhaust the consultancy with an endless number of tweaks, revisions, and update requests.
Consultancies often fail to set clear expectations and boundaries, with the risk of leaving clients disappointed in the end. When there is no clear communication of the scope of the project and the level of accommodation from the very start, consultancies increase the chances of clients being disappointed at the end. There is a mismatch between their expectations and the delivery capacities.

Growing fully customised consulting projects means hiring a lot. And hiring. And hiring, yes. And because we are living in the era of labour and expert shortages, hiring to grow is what I would always try to avoid as a boutique consultancy owner.

The benefits of packaging consulting service offerings

Before I dive into the benefits of packaging consulting services, I'd like to clarify what I mean by packaging services or productisation in consulting.

There are many definitions, but most focus on the productisation of online services, and that’s a different space than consulting work. So here's how I define a packaged or productised consulting service.

"A productized service in consulting refers to a standardized offering where specific solutions are packaged and priced in a predefined manner. While tailored to address common challenges within a specific expertise domain, it streamlines the consulting process by setting clear parameters, deliverables, and pricing. This approach combines the consistency of a product with the expertise of consulting, ensuring both efficiency and value delivery."

My vision is rather extreme: I would never do fully customised projects as a small or medium-sized boutique consultancy. Seriously! The consultancy can maybe do additional customisation on top of a standardised approach, but that's about it.

Here’s why. As experts, consultancies have gathered tremendous experiences in their narrow expertise domain all those years, leading to incredible depth, compelling pattern recognition, and proprietary data and benchmarks.

Designing standardised approaches to solve the prototypical pains of ideal clients is remarkably uncomplicated. And if a consultancy can’t standardise it for 80-90%, they can carry out several well-defined sprints and execute them systematically. It’s more straightforward than most consulting leaders and owners believe.

Most consulting leaders I meet seem allergic to standardisation; they consider it as 'not doing real consulting'. Which is nonsense, of course. Maybe even quite naive. Sorry to say.

However, consultancies will most likely struggle to' sell' standardised approaches without focusing on a specific expertise domain and without a visible reputation (or authority) in the market. And that's why they don't get started—the vicious loop to gross margin hell.

Clients will challenge the consultancy, and it won’t be difficult to respond to their objections credibly. Focus, yes, please! As I explained in one of my articles, put all the eggs in one basket!

12 advantages of productising consulting services

It helps narrow down the focus and drill into the domain expertise. In the search for patterns, consultancies should be forced to dig deeper into their field. Clients’ problems aren’t unique. However, they lie on different levels, and to understand the underlying issues and notice patterns, the consultancy will need to dive deeply into a very narrow subject.
Consultancies are setting themselves and their clients up for success. When a consultancy offers its services via a set of straightforward packages, it sets clear expectations, deliverables, and budgets up-front. Its clients know exactly what the consulting firm can deliver, and when its consultants deliver on these expectations, everyone walks away happy.
Pricing consulting services is much simpler. When consultancies break down their products into a defined set of activities, it’s much simpler to calculate the amount of time and other resources needed to complete each activity. Consulting leaders don’t need to worry about unexpected costs due to miscommunication or their client’s expectation of a high degree of personalisation of services.
Pitching consulting services becomes more efficient. Not only do consultancies need to make minor tweaks to their proposals for prospective clients, but it is easier for these prospects to understand what the consulting services entail and how consultancies deliver them. Client questions or objections? It's easy to answer because the firm has already done it 17 times.
It makes it easy for clients to give consultancy referrals and recommendations. When a small- or medium-sized consultancy establishes the parameters of work from the start and sets the right expectations, its clients feel happy with its work once the consultants deliver on those expectations and feel way more confident recommending the consultancy to their network. They know exactly what this firm does, how it does it, and what others can expect from this consultancy. Word of mouth only works when people trust the system and can explain the service and its outcomes to others.
Thought leadership development. Standardising consulting services paves the way for a wealth of knowledge and experience derived from repeated observation. This accumulated expertise becomes a cornerstone for educating clients. As is often emphasised, the essence of business development in consulting lies in educating the target audience."
It saves consulting firms A LOT of time. It’s not only about being more efficient with preparing pitches and proposals. Every aspect of running a consulting business and operations becomes more efficient – negotiating terms, identifying the right tools or staff members for each project, managing schedules and pipelines, training new consultants, reporting, etc.
It makes marketing at consultancies more efficient. Packaging consulting services forces consultancies to do two things: (1) drill down into their expertise and (2) narrow down their audience. Marketing only delivers strong results when highly targeted/segmented to a specific audience. By packaging consulting services, firms can focus on a limited number of 'products' that they pitch to a very narrow audience, maximising the ROI of their efforts. Marketing in consulting is all about building trust and visibility at scale. Productisation is the engine for marketing ROI.
It allows consultancies to be more data-driven. Creating exclusive, proprietary data sets is essential, strengthening the consultancy's credibility and encouraging clients to check out the expertise. By productising services, collecting data is uniformly streamlined across all clients. This consistent data collection offers unique insights that enhance advisory strategies and foster thought leadership development (see #6), drawing from the distinct perspectives the data provides. Moreover, this data can evolve into a unique proprietary asset or intellectual property, adding significant monetary value to the firm and opening the door for premium pricing.
Outcomes, outcomes, outcomes. Standardising consulting services is a strategic move towards achieving more predictable outcomes. By implementing a consistent approach and methodology, consultancies can significantly reduce the variability in results, ensuring that clients receive solutions that align closely with their expectations. In a landscape where clients prioritise tangible outcomes, the predictability offered by standardised services becomes invaluable. After all, in the world of consulting, predictability is akin to gold, assuring clients of the reliability and effectiveness of the solutions provided.
Scaling a consulting business becomes exponentially more efficient. The productivity boost from standardisation allows consultancies to achieve non-linear growth, uncoupling revenue growth from headcount expansion. In today's era of labour shortages, this represents one of the most significant advantages of service standardisation in consulting. On top of that, standardisation brings uniformity to the resources they deploy and the skill sets they seek. This clarity in requirements simplifies the hiring process, ensuring that consulting leaders and owners can pinpoint the exact competencies needed for potential recruits to meet client demands. It also sharpens the focus of their Learning & Development initiatives.
Resource planning improvements. By standardizing services, consultancies can significantly enhance their resource planning, ensuring that the right skills and tools are always aligned with the project processes. Moreover, with a standardized approach, revenue forecasting becomes less of an art and more of a precise science, reducing uncertainties and improving financial stability. In essence, the more a consultancy leans into standardization, the more streamlined, predictable, and efficient its operations become.

Packaging consulting services doesn’t mean eliminating customisation

"Luk, the idea of standardising our services seems impractical. Every client we serve is unique, and they seek us out for a tailored approach that caters to their distinct requirements."

This sentiment resonates with many. "Won't a standardised service deter clients who are wary of generic solutions?"

Let me clarify a misconception: expertise in a narrow specialisation domain often reveals that while clients' contexts and business scenarios vary, their core issues are strikingly similar. These issues invariably trace back to a handful of fundamental pain points. If these pain points remain elusive to a consultancy, it's an indication that there's more depth to be explored in its domain.

"We must reimagine and redraft our offerings as solution sets; constellations of benefits designed to solve real-world business and marketing problems for our clients". (Tim Williams, professional services pricing expert)

Packaging consulting services aren't about delivering a carbon-copy solution to every client. Instead, it's about defining the scope of a consultancy's expertise – outlining what it's capable of, how its consultants approach a problem, and most crucially, which challenges the firm is adept at overcoming for its clients.

While the framework remains consistent, the application is always tailored. Consultancies are not just addressing a generic problem but diving deep into their client's unique business landscape. However, they do so with crystal-clear boundaries: defining the methodologies employed, the data benchmarks, the tools leveraged, the expected timelines, and drawing parallels with outcomes from analogous projects.

This approach ensures clarity, transparency, and a promise of delivering value – all while retaining the essence of contextual customisation.

I've written an article on Vertical Service Integration with two case studies of boutique consultancies (pitching and winning against the big firms all the time) who have packaged their expertise to the highest possible degree but are working with clients in totally different contexts. Why were they able to systematically productise (standardise)? Because (that's what they keep repeating to me) the core issues they face are strikingly similar in all their client organisations.

Here's what I always answered clients when I got challenged on customisation versus standardisation: 'We are using our proven methodology and we tailor this to your specific context'. I never got in trouble, I hardly ever got difficult reactions or questions.

It's building trust at a double level:

Clients get a proven methodology (that's what they are looking for)
They feel understood because 'tailoring it to their context'

How to switch to a packaged service model

I need to be honest with consultancies here. Out of the blue, it won’t be easy to suggest a new way of (standardised) working for consultancies that have been working in a customised manner with their clients. Their existing clients will have difficulties understanding and accepting the change.

But consulting firms don’t have to jump off a cliff – there’s a way to do it gradually. And for new clients, there’s no problem, of course.

Here are a few suggestions on how consultancies can start delivering a more standardised approach:

Step 1: Narrowing down the focus - there’s no way around it. Generalist consultancies (those that keep their options open for all kinds of stuff) will struggle to have their packages seen as having any real value, they won’t be credible enough (because they don’t know the prototypical patterns), and they will have difficulties to respond to objections effectively.
Step 2: Getting in the habit of noticing and writing down patterns in client work. I recommend that consultancies start to actively pay attention to what types of projects they get the most requests for, what commonalities exist between different projects in terms of the amount of work they require, the tools the consultancy uses, the turnaround time, the typical pains and gains of the clients, etc.
Step 3: Introducing packaged services alongside a regular business strategy. Consultancies can start by gradually introducing their packages to the market – to past, existing (be careful), and potential new clients. They should monitor the feedback, test, try, pilot, and iterate. I do that with all my clients: test and validate (gain time for results, reduce the uncertainty of acceptance).
Step 4: Introducing a high-level diagnosis of clients' current problem situation. That’s the easiest way to start the standardised journey. It can become a consulting firm's Trojan Horse, a low entry-level approach to entering a new client and avoiding significant (and unpaid) proposal writing time. Consultancies can tell their clients they don’t write important proposals without first diagnosing the problem with their audit tool/approach. And the outcome of such an audit is their proposal for further collaboration. Consultancies explain the status quo to clients and how they can improve. The consultancy's suggested roadmap to improvement pictures their ‘Promised Land’ and automatically becomes its new proposal. I've written a long article about this tactic of offering a discovery service.
Step 5: Polishing up packages' value proposition. Based on feedback, consultancies should finalise their package's value proposition and make it the central point of their sales and marketing efforts. And keep iterating, improving, gathering data, comparing, iterating again, improving, and gathering more data. Lean, fast, validated, data-driven.

And what about building & selling software?

Never sell self-developed software tools as a consultancy.

I know, another black-and-white point of view. Why? Because most of the initiatives I've witnessed in the past decade have failed (I'd say 95%). Both in big consulting firms and boutique consultancies.

Here's a live example...

A while ago, a consultancy owner explained at a conference that they were selling their clients licenses of the tool they had developed. They developed the software tool in the past years to improve a specific consulting service's quality, speed, value, and pricing.

It was their way to productise their expertise. Well done! I love that.

But about a year ago, they started selling user licenses for this tool to their existing clients. I consider this a big (and naive) mistake.

Why?

As I've seen many times, they quickly lost 2 important clients who used the consultancy's (productized) service in the past. They are now using the tool and told the consultancy they will do most of the work - previously done by the consultancy - themselves.

The price of the license, that's what I was afraid of, was way too low to compensate for the client's loss.

The consultancy owner asked for my advice. My answer is relatively straightforward: there are only 2 approaches that can lead to success:

Approach 1: Productized Consulting

The consultancy uses the self-developed tool as its productized consulting approach and, with the help of the tool, delivers higher quality consulting faster, better, and at a fixed (high-end) price.

It's a perfect way to scale a consultancy's expertise and revenue. On top of that, it's helping the consultancy grow non-linearly, uncoupling revenue growth from linear headcount increase.

Approach 2: Selling a Product

The consultancy builds a product 'the startup way', and they stop consulting with it.

Suppose a consultancy believes it can make money by scaling such a product. In that case, it will need to hire developers, build a tech stack, hire a product development expert, build a sales team, maybe even get investment money (or a bank loan), etc., to scale the product and sell a few 1000s rapidly.

As my good friend and consulting marketing expert Florian Heinrichs would say, by doing so, the consultancy is leaving 'the consulting category'.

Building, validating, selling, and scaling a product 'the startup way' is a totally different space for any consultancy, with different expertise, capabilities, and business models.

Here's my 'building software' advice

Never get into selling a few licenses to please or impress a few existing clients to use your clever software. If a consultancy decides to do so, it gives away years of expertise without the proper return. Even if you sell 100 licenses, they will most likely never compensate for the long-term consulting revenue.

You either do productised consulting with it (better, bigger, faster, more value, better data/benchmarks, more expensive), or you scale it the startup way (selling 1000s of licenses in the next 10 years to come).

It's either/or.

Don’t do something in between because it will cannibalise the consultancy's premium value consulting work and erode its reputation as experts in the market.

There's one more thing: project management

Halfway doesn't cut It. The Achilles' heel? Project management. Without uniformity here, we're just kidding ourselves.

Here’s the hard truth: project management is often a wild card. Each project manager has his/her playbook, leading to wildly varying deliveries. It’s like being promised a smooth flight only to find every pilot navigating their own route. The result? A service that's about as 'productized' from A to Z as a jigsaw puzzle with missing pieces.

Clients sign up expecting a seamless, proven methodology. If there's inconsistency in the final delivery due to non-standardized project management, it's the wrench in our productization gears.

If we're serious about true productization, the focus should be crystal clear: uniform project management is non-negotiable. It's an integral part of a productization and standardization approach.

Only then can we deliver the proven methodology we promise. Anything less, and we're just paying lip service to the concept of productization.

In conclusion

Being a consultancy leader can be an exciting and rewarding profession. I know it was and still is for me.

Unfortunately, I encounter too many consultancy founders, partners and leaders who feel overwhelmed, overburdened, and overworked. They struggle with a work-life balance, fear missing out on opportunities, and don’t see consistent business growth.

It’s time to re-evaluate the consultancy's approach to working with clients when that happens. Working in this chaotic, unpredictable, overburdening manner should scare consulting leaders more than the prospect of changing their business model toward more productisation or standardisation.

Consulting owners need to start doing less. It will force them to prioritise what they do and how they do it, to choose quality over quantity, and to strive to maximise the value their firms deliver for each client instead of maximising the number of clients.

Standardising consulting services is an essential element of the consulting business approach that I advocate. Still, it will only work if a boutique consultancy starts to understand and accept that full customisation of their consultancy projects is a road to trouble and profit erosion.

Unless a boutique consultancy can charge 2x or 3x more for it (which is exceptional), full customisation of every consultancy project is not what I would recommend (yes, that's me).

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