$3M CEO Shares How To Win With Productized Services

Summary

Sam, founder of testimonial video service Testimonial Hero, joins to discuss productized services. They cover defining productized services based on business goals rather than a rigid definition, the importance of focusing such services on quality and innovation to access premium markets, and key metrics like gross margin for scalability and profitability. Sam explains how he brought on a GM to run operations so he can guide strategy, take risks, and innovate. He also shares tips on social proof's increasing significance, using buyer personas and their questions/doubts to shape authentic peer stories that drive sales.

Takeaways

• 😊 Productized services allow you to more easily sell, market, and deliver a service by putting defined processes behind it
• 💡 The level of productization depends on your business goals; it can change over time
• 📈 Higher gross margins (>50%) allow room for investing back into scaling the business
• 👥 Bringing on a GM frees up founders to work on innovation and new initiatives
• 🤝 Most buyers now self-serve & research before ever talking to sales, so social proof is crucial
• 🔎 Understanding your ideal buyer persona and their questions/doubts is key to effective social proof
• 🎥 Customer testimonials should focus on the transformation and outcome achieved
• 🚀 There is a big opportunity in productizing services & taking them upmarket with innovation
• 💰 Pricing should support having sales calls instead of hoping no calls are needed
• 🧑‍💼 Founders often underestimate their ability to scale rather than just start businesses

Q & A

What are some key benefits of productizing a service according to Sam?

Some key benefits Sam mentions are: it's easier to deliver consistently, easier to sell and market, easier to price, and you can build processes to deliver efficiently. This allows more scalability than a pure custom service.

Why does Sam recommend planning for sales calls when pricing a productized service?

He recommends pricing it so you can afford a sales call. Many founders price too low hoping to not need calls, but end up having to do them anyway without proper economics to support it. Sales calls allow selling bigger deals and learning about customers.

What does Sam see as an appropriate lifetime value to customer acquisition cost ratio?

Sam aims for at least a 3:1 ratio. So if it costs $10,000 to acquire a customer that will generate $60,000 lifetime revenue, that leaves enough margin to profitably acquire customers.

Why does Sam emphasize the importance of gross margin?

If gross margin is over 50%, there is room to reinvest in growth while staying profitable. Below 50%, you have less flexibility and have to choose between growth or profitability.

How can having a GM in place benefit a founder?

It allows the founder to take a higher level view, launch new initiatives, and parachute into the existing business where they can add value. But the GM likely won't drive aggressive, exponential growth like a founder.

What shift does Sam see in the B2B buyer journey regarding sales interactions?

Buyers now do 80% of research before ever talking to sales. So social proof needs to be available earlier to influence prospects before that first call.

What makes an impactful customer testimonial video according to Sam?

The customer should be the hero of the story, with the focus on the transformation the business helped them achieve. It's not always about touting direct financial gains.

What does Sam recommend when determining pricing for a productized service?

He recommends pricing based on being able to afford a sales call. Many founders price too low hoping to avoid calls, but have to do them anyway without proper economics.

What % gross margin does Sam target for a healthy productized service?

Sam targets over 50% gross margin. That leaves enough room to reinvest in growth while maintaining profitability.

What kinds of founders does Sam like to coach one-on-one?

He enjoys coaching ambitious founders doing over $500k revenue looking to get to 7 figures, where he's been before. People motivated to put in the work to grow.