Before starting Credo, I always thought businesses understood what an agency is, does, and could be hired to do. But as we’ve gone through the years and we’ve spoken with thousands of companies, I’ve realized that thinking was completely wrong.
After working through a business’s needs and educating on what an agency is best for vs a freelancer or consultant, the point of contact will then have conversations with agencies.
Often, we’ll hear back feedback that goes something like this:
They were all good, but they’re all pitching me custom things and I don’t know how to choose.
While this then opens up other opportunities for us here at Credo, it doesn’t help either side (the buyer or the agency) close the deal unless some other help is given.
So, how does an agency close the gap to the sale and how does the buyer get more of what they need to see up front to help them make the right determination?
The answer could lie in productized services, or an agency productizing services that it offers to leads coming in.
Agency vs Productized Service
There’s a lot of confusion on the internet about what an agency is versus what a productized service is.
I can’t tell you how many outreach emails I’ve received mentioning my “agency”. I don’t own an agency. I never have. I’ve worked at a few, but never owned one.
Credo is not an agency. Our customers are agencies. If anything, Credo is a productized service.
Now that your mind is spinning, let’s explore what differentiates an agency from a productized service and why I think your service business should be a combination.
Difference 1: clients vs customers
When thinking about the differences between an agency and a productized service, the big one is whether they have clients or customers.
In my view, agencies have clients whereas productized services have customers. A business can have both, which is why ultimately I think drawing a line and hard delineation between an agency and a productized service is ultimately futile yet helpful.
Google defines a client as “a person or organization using the services of a lawyer or other professional person or company”.
In my thinking, a client is someone that a service provider is working with consistently and collaboratively. The service provider is teaching them something, get feedback on things, and generally working closely with them. The biggest difference is that the scope of the work can change and custom things done for the client as needed. Pricing also changes and can be done custom of the client needs specific things done.
As compared with a client, Google defines a customer as “a person or organization that buys goods or services from a store or business.”
Notice the difference in language between the two. A client “uses the services of a…professional person or company” whereas a customer “buys goods or services from a store or business.”
“Uses” vs “buys”.
That’s the key difference. While a client is paying you, they’re not really “buying” something from you. They’re giving you money for you to do things. They’re using your services, your time.
A customer buys a thing, a product. When I go to my local grocery store, I am not a “client”. I am a customer buying fruit and veggies and meat and CBD bath soap. I’m not using their services – I am buying their things. That said, if I used their shop-for-you service I may then be a client depending on how they structured their payment!
Use vs buy is a bit of nebulous thing, but it does underscore the next difference between an agency and a productized service – custom vs pre-set packages.
Difference 2: custom vs set packages
The major difference between an agency and a productized service is whether it offers solely custom or pre-set packages.
Pre-set packages are exactly that – something built ahead of time that someone can buy and know exactly what they are getting. A Search Engine Optimization package might look like a two week technical audit, two weeks of research and keyword research, and then four 1,500+ word blog posts and 20 hours of link outreach each month. They do the things, and you pay for that. There’s no consulting (though some hours of consulting can be built into packages) and changing of scope. If a scope change needs to happen, you move to a different tier of service.
Custom packages, or as I call it “work”, are different from the above. In this setup, an agency will conduct a few calls with a potential client (“prospect”) and then put together a custom scope of work and pricing for each client. While this can help an agency deliver better results for clients, these are also harder to close and often end up not going well if the agency is not able to deliver.
The great thing about a productized service or package is that there is a set process for delivering the work, and thus churn should be lower than with custom packages.
Difference 3: pricing and deliverables
Productized services are different from agency work in that they have fixed pricing, fixed scope, and fixed deliverables.
Agencies doing custom work may have a set hourly rate, but how many hours and the various things they do is custom based on each client’s needs.
Why service businesses need both productized and custom packages
Reality is, I think most service businesses should have both productized/pre-packaged offers as well as the ability to offer custom packages.
Why? Well there are quite a few good reasons why you should offer both.
First, it makes sales a lot easier. Prospects are much more likely to buy a specific thing than a custom scope of work.
Second, it reduces sales times for a lot of leads because they do not need a custom pitch and scope of work.
Third, it still leaves the door open for custom work if that is needed. You’re not sunsetting custom packages; you’re simply de-prioritizing them in favor of something that is more scale-able in that it is easier to hire for, easier to deliver, and easier to sell.
In my mind, an agency offers custom services even if they also offer productized services. A productized service only offers pre-set packages and says not to custom work.
How to productize your custom agency packages and services
So, where do you start if you want to start offering productized packages?
First, check out this video from our friend Greg (founder of AltAgency) who is the guy when it comes to productizing a custom services firm:
Greg lays out his strategy in that video to move from 1:1 custom services to productization.
- Identify the services you are most commonly doing for your clients.
- Do these 1:1 done-for-you, but they now have a set price, scope, timeline, etc as a package.
- Move to done-with-you 1:1 where you have resources/tools that the client can use to move faster. You’re guiding them instead of just doing it all for them.
- Now you’re delivering productized services 1:many which allows you to continue to scale.
Does it matter?
Now, after reading all of this you might be asking “Now John, does it really matter what we call ourselves at the end of the day?”
In the past I would’ve said “Not really.”
I said this because I didn’t understand the intricacies of each and that how you label your business affects how you think about it and thus how you think about growing it.
If you do custom work, then you need to talk about how your process sets your clients up for success because they get exactly what they need and not what they don’t.
If you run productized services, you talk about how your process guarantees success for them if they need X, Y, and Z.
And if you do both (as I recommend), then you get the best of both worlds because you can present the packages but if none are the right fit you can always go custom.