The Big Question
Questions I get from consultants. And my answers.
Got this question from a reader (great question, thanks!):
“Luk, you’ve talked a few times about productized consulting services recently. Could you explain a bit more why and how I should move to such a productized service?”
In my previous newsletter, I explained a few of my clients are generating revenue multiples of 5x or even 10x compared to other consultants doing pretty much the same thing. Those consultants freakishly obsess about these 3 approaches: 1) radical focus, 2) upstream positioning and 3) productized consulting services.
Why tailor-made service offerings are draining for consultants
Offering highly customized services is the biggest draw on your time as a consultant I could think of. It’s really burning out many consultants, and it’s also immensely difficult to reverse such a downward spiral once you’ve started projects.
● Proposal workload: it takes much longer to prepare customized proposals and - see further - as an upstream consultant (see my article) you should get rid of writing proposals as much as possible
● Complex closing: negotiating and closing customized deals often is a complex process with a lot of back and forth, often for minor (or stupid) things but with an enormous time impact
● Scope screep: you will always meet the almighty consulting scope creep. Completing customized (and mostly hourly billed) projects become a nightmare with many clients – they will keep asking for more and more tweaks, updates, and revisions, and consultants are afraid to push back to avoid client conflict
● Unclear expectations: It doesn’t always set clear enough expectations, which means clients are more likely to be disappointed in the end and consultants are left behind frustrated
The benefits of packaging your service offerings
I have a quite extreme vision: as an authority, as a reputed domain expert I would never, ever do fully customized projects. Seriously!
As an expert, you’ve gathered tremendous experiences in your narrow domain leading to an incredible depth and compelling pattern recognition. It’s remarkably uncomplicated to design standardized approaches to solve prototypical pains of your clients. And if you can’t standardize it for 90-100%, you can carry-out a number of well-defined sprints and execute them in a pretty systematic way. It’s more straightforward as most consultants believe.
But never forget: if you aren’t focused on a specific expertise domain and you haven’t established enough visible reputation (or authority) in your market yet, you will always struggle to ‘sell’ standardized approaches. Clients will challenge you and you won’t be able to credibly respond to their objections. You aren’t just deep enough into your stuff yet. Focus, yes, please!
Here’s a short list of advantages of packaging/productizing consulting services.
● It helps you narrow down your focus and really drill into your area of expertise
● By packaging your services, you also clearly and deliberately showcase your area of expertise
● It saves you A LOT of time - avoiding writing pitches and proposals, negotiating terms, etc.
● You are setting yourself and your clients up for success - clear expectations, deliverables, process, timing, etc.
● Pricing your services is much simpler
● Pitching your services becomes more efficient - it’s easier for prospective clients to understand what you do and how you do it and make a decision, especially given it takes 6-8 people to make a B2B purchasing decision, on average (says Gartner)
● It makes it easy for your clients to give you referrals and recommendations - they know exactly what others can expect from you as a consultant
● It makes your marketing more efficient - you know exactly what you sell and to whom, it’s easy to write content and case studies
● It allows you to be more data-driven by analyzing which packages deliver higher ROI
● It’s also easier to grow your business - you know exactly the types of skills you need in potential hires to deliver on client requests
● And many more advantages...
How to switch to a packaged service model
I need to be honest with you. If you have been working in a customized way with certain clients, it won’t be easy to - out of the blue - suggest a new way of (standardized) working. Your existing clients will have difficulties to accept, to understand the change.
But you 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 you can start delivering a more standardized approach:
● Step 1: Narrow down your focus - there’s no way around it. If you’re a generalist (keeping your options open for all kinds of stuff), your packages will not be seen as having any real value, you won’t be credible enough (because you don’t know the prototypical patterns) and you will have difficulties to reply to objections.
● Step 2: Start noticing and writing down patterns in your client work - what types of projects you get the most requests for, what commonalities exist between different projects in terms of the amount of work they require, the tools you use, the turnaround time, the typical pains and gains of the clients, etc.
● Step 3: Start offering packaged services alongside your regular business strategy - gradually introducing your packages to the market - to past, existing (be careful), and potential new clients. See what the feedback is. Test, try, pilot and iterate. That’s what I do with all my clients: testing & validating (gaining time to results, reducing the uncertainty of acceptance).
● Step 4: Start with offering a high-level diagnosis of your client’s current problem situation. That’s the easiest way to start your standardized journey. It can become your Trojan Horse, a low entry-level approach to enter a new client and avoid big (and unpaid) proposal writing time. Tell your client you don’t write big proposals without first diagnosing the problem with your audit tool/approach. And the outcome of such an audit is your proposal for further collaboration, you explain to them the status quo and how they can improve from there. Your suggested roadmap to improvement pictures their ‘Promised Land’ and automatically becomes your new proposal.
● Step 5: Polish up your package’s value proposition based on feedback and make them the central point of your sales and marketing efforts. And keep iterating, improving, iterating, improving. Lean, fast, validated.
In a future newsletter, I will explain the audit approach in more detail, including audit follow-up approaches to integrate into your packages as well as audit case studies you can learn from.
Next Big Q: I received this question from a reader: “I've been asked to provide a rate card but I don't want to charge by the day or hour, rather by project or based on a standard, packaged service. What's your advice on answering the rate card question and calculating how to charge for packaged services?
