Agencies need to sell products, not services
It’s time to reset our terms and restore the lost emphasis on output.
Lynk
As markets tumble and profit margins shrink, clients are tightening budgets and asking more of partners that are already stretched. Many agencies’ instinct will be to cut prices, either by lowering rates or acquiescing to more output for the price. That will devalue creativity and dissolve trust at a critical time for our business.
Instead, we need to stop trading for dollars on the hour altogether. With the current standard, we sentence ourselves to a more-for-less spiral. We shove extra features into services and compete on how “flexible” we are.
Then clients throw in extra demands—always urgent—during delivery. For example, the media finally gets approved, but it requires new cuts on videos in a tight timeframe. And then comes the dreaded, “but what about …” that was probably missed in haste just to lock in a project or client. Or PR demands a release before the website is approved, so a splash page has to go up pronto to signal all the newness. We’ve all experienced myriad scenarios—hardly strategic, highly reactive and riddled with drama.
Those kinds of sudden, extra requests take people away from other clients, increase their stress and reinforce the expectation you’ll always “do whatever it takes” to satisfy clients. Typically, the extra effort does nothing to improve results; it only pacifies a client’s anxiety. Meanwhile, it fatigues and burns out agency teams, which can be catastrophic.
The underlying problem is that agency services are loosely defined, so clients’ assumptions define the process. All the rails are more like chalk lines that dissipate over time. If we try to charge reactively for extra attention, time or effort, we fear (realistically) that clients will begin to question our value, scope and pricing completely or just walk away. Service-based scopes are assumption bombs set to explode.
The solution is to replace services with products.
People treat products differently. When we enter a store (physical or virtual), we pick products with fixed prices and pay at checkout. We don’t load up the cart, leave and say we’ll pay for everything in three months if we decide we like it. A product has a brand we buy into, features we like, a clear picture of value, and a sharp answer to a specific need whether that’s vanity or utility.
Agencies can productize services by breaking down the components of value and what it costs to produce them, then charging for each component. Instead of, say, strategy as one giant line item with a bunch of “stuff” crammed into it—which can invite a tug-of-war over pricing—identify the output and price for each component of your strategy delivery. So, market assessments, brand platforms, audience segmentation and many more elements can become individual products, each with their own process, value, timeline, output and price.
The work to do the work is invaluable. It shouldn’t come free.
This changes the conversation to specifically what clients will get, how and when and how much they’re paying for it. It sets the basis for upfront payment. And it sets a foundation for amending the deal by adding products as client needs expand. Whereas our current standard of services invites confusion and drama, defined products will establish deeper trust.
Products will provide predictability
Products will instill checks and balances to our historically uncheckable business. When you break your services down into products, you learn to allocate resources and budget more efficiently.
Products will identify unseen value
Digging into delivery component by component will reveal overlooked benefits and efficiencies. For example, audience segmentation is the linchpin of strategy, so there’s everything to gain from making it a product unto itself.
Products will reduce client churn
Identifying services as products will build more trusting client relationships. Hours and assumptions surrounding service create confusion and drama, whereas defined products set the stage for a long-lasting partnership.
Products will streamline new business
Scoping will get simpler when you can match products to client failure points. Response will speed up because you’re not constructing from scratch and diverting resources to the latest pitch.
Products will preserve talent
When agencies can plan and schedule to create results without the chaos of over-scope demands, we can solve the burnout that triggers many talent defections. The Great Resignation has taught us this much.
Products will redefine acceptable loss
When we set terms to keep our agencies healthy, some clients will say no. That’s fine. When you know what you can afford to do, relationships that are out of balance become clear.
It’s up to agencies to reset our terms and restore the lost emphasis on output. That will not come from complaining or bargaining over the inputs. It will come from doing the hard work to establish clear outputs with a defined path and the ultimate statement of value: a fixed price tag with good business guardrails.
