SPEAKERS

Christian Klepp, Eisha Armstrong

Christian Klepp  00:01

Eisha Armstrong is the executive chairman and co-founder of Vecteris and a business leader with expertise in product innovation as well as product portfolio management. She has extensive experience launching new data and information service businesses, building executive education products, advising C-level executives and overseeing data analysis and qualitative research in a recurring revenue model. She is also the author of the Amazon best-selling books Productize: The Ultimate Guide to turning professional services into scalable products, and Fearless: how to transform a services culture and successfully productize. Tune in to find out more about what this B2B marketer’s mission is. This is a show where we help you to question the conventional, think differently, disrupt your industry and take your marketing to new heights. This is your host, Christian Klepp, and today I’m joined by someone on a mission to provide B to B companies with actionable insights, innovation and growth. Eisha Armstrong, welcome to the show.

Eisha Armstrong  01:03

Thank you, Christian. It’s so great to be here.

Christian Klepp  01:06

I’m really looking forward to this conversation. I mean, we already had a great conversation previously, but, man, this one is really gonna hit the nail on the head, because it’s so relevant to a lot of B2B companies out there, and B2B marketers. So without further ado, let’s just jump right in.

Eisha Armstrong  01:21

Great, great.

Christian Klepp  01:24

So short of staining the obvious, you’re an expert when it comes to productization, and go to market solutions for B to B professional services firms. So for this conversation, let’s focus on a topic that has become part of your professional mission, and that’s how to sell and market productized B to B services. So if memory serves me well, you even wrote a book about it, if I’m not mistaken. So let’s kick off the conversation with this question, why do you think it’s such a complex journey for B to B companies to transition from selling customized services to productized offerings.

Eisha Armstrong  01:46

Oh, good question. Yeah. So they’re really three things going on when you start with a services model, you know where you’re selling time by experts, to selling something that’s more productized, whether it’s more packaged services that are sold based on value, or even a real product, like a data product or a software product or something like that. There are three things going on. So the first one is it’s a business model transformation. So you’re changing the way that you deliver value to your customer base and the way that you make money. And that is hard for any company to do, to transform their business model, even if you’re keeping your services, which a lot of companies do. So they want to introduce more productized services or products alongside their customized services. It’s still a business model transformation.

The second thing is that it’s a digital transformation. So most B to B professional services firms, and they choose to productize, are doing so by tech enabling the delivery of how they create value and deliver value. So maybe they’re creating, you know, software tools that they use internally, or investing in technology to like AI, to standardize the way that they deliver value, or maybe they’re creating a actual tech product, like a, you know, like I said, a software product, or even a data as a service product. And digital transformations are hard again, no matter what type of company you’re talking about.

 And then the third thing that makes it hard is that it’s a cultural transformation. So what we found in our research is that the things that make B to B professional services firms great cultures, like having strong expertise, having a high bar for the quality of deliverables, things like that, can actually torpedo their attempt to productize, because when you’re in a more productized environment, especially a digital productized environment, you have to put your learner’s hat on. You take off your expert hat and put your learner’s hat on. You have to kind of lower the bar for how good things are before you show them to customers to get their feedback, you’re much more focused on collaboration rather than individual heroics. So it’s a cultural transformation, too. And so you put those three things together, a business model transformation, a digital transformation and a cultural transformation. And that is very difficult change for organizations.

Christian Klepp  04:43

Yeah, yeah, no, absolutely, absolutely. Thanks for sharing those with us. Um, I had two follow up questions just based on what you’ve said in the past couple of minutes. How do you… and I’m sure you’ve gotten this more times than you care to count. But how do you deal with pushback from companies that say, Eisha, that’s all great, but we cannot productize, right? Because we have to custom tailor our approach. Because each client is different. They have individual needs, individual different requirements, or at different stages of their business cycle. How do you deal with that?

Eisha Armstrong  05:18

The first thing I do, Christian, is I try to educate them on the fact that productization is actually a spectrum. So most of the organizations that I end up working with are actually still providing services. They’re just trying to standardize and tech enable them a little bit more so that they can achieve some benefits, like being able to scale or being able to not be key-person-dependent on how they deliver those services, so that they can assure quality as they grow and more and more people are delivering those services, and when I talk about productizing services, the way the client experiences, it may still be the same, it may still be through people, but the way that it’s delivered is more codified, more standardized, the professionals delivering it or doing it using the same tools and techniques, and perhaps the pricing has changed, so rather than being time and materials, it’s priced based on value. So there’s more packaging and standardization to the pricing, which then also makes it easier to sell using a professional sales force, and you don’t have to have your professionals be sellers as well. So there are a lot of benefits. So you can achieve just by going kind of down that first step of productization, which is what we call productized services. And then you may decide, oh, we could actually sell some products alongside our services, like a maintenance product, for example. And this is where then maybe you’ve got organizations who think about creating software products, or, like I said, data products, or training products, or things like that, where you no longer have professionals delivering them, but it’s delivered primarily through technology, for example. So I think it’s important first to just educate leaders on what I mean when I talk about productization, and then focus on those benefits of scale and quality assurance and no longer being key person dependent on your highly expert hard to find professionals.

Christian Klepp  07:37

Absolutely, absolutely. That’s a good point. Okay, so that was the first follow up question. So the second follow up question is around the digital transformation aspect. So just from your professional experience and from what you’ve seen, do you feel that there’s an over reliance on technology to get things done? Like, no, no, not at all…?

Eisha Armstrong  07:57

Not at all, not at all. Yeah, and I think that’s probably a misnomer right now, especially there’s so much froth around the potential of generative AI to displace professional services, and a lot of hyperbole about how it might be used based on what I have seen Christian I do believe that generative AI creates a great opportunity for professional services. And I do believe that professional services firms who use generative AI will be more competitive than professional services firms who don’t. Do I think technology is going to completely displace professionals and professional services? No, but I tell all of the leaders that I talk to, if you’re not actively experimenting with how to use generative AI in the delivery of your services, you’re already behind, and here’s why. Because I do work with companies who, for example, have automated using generative AI, 85% of code creation. That’s pretty significant. I work with accounting firms who have automated between 40 to 50% of how they do audits using generative AI, law firms who’ve automated 50 to 75% of how they do discovery using generative AI, marketing agencies who’ve automated 30 to 50% of how they do content creation or design work using generative AI, market research firms who’ve automated 75% of how they do market research using generative AI. These are not made up examples and so, and this is still, I would say, relatively early in the nascency of the technology. So if you’re not already experimenting with it, you’re probably behind it’s okay, go ahead, start experimenting with it. But this idea that tech is is being overused, I think, is absolutely false.

Christian Klepp  09:58

And I’m glad you brought that up. Because that’s a big part about, you know, what the show is about, right? Like it’s dispelling, you know, debunking these myths, dispelling this information, and coming back with factual insights, fact based information that people can have a more informed overview, right? Okay, speaking of which, that’s a great segue to the next question, which is about the seven deadly sins of productization. So talk to us about that and the pitfalls that B2B marketers need to avoid.

Eisha Armstrong  10:29

Yeah. Yeah. Great question. So when we did a research study back in 2000-2001, looking at why is it hard for B to B services firms to productize and what we found is that there are seven common mistakes that organizations make when they try to productize services, and they’re very predictable mistakes, and they range from ignoring the cultural change that has to happen to designing products for problem that doesn’t exist, so designing products that don’t solve the customer’s problem, designing products in a vacuum, like not getting early customer feedback on product design, to letting the fear of cannibalization hinder their sales and marketing efforts. So we catalog these seven mistakes, or deadly sins, as we call them, in our first book called Productize, and then proceeded to detail how to avoid making those mistakes. So for example, the mistake I talked about, where you design a product, but there’s not a customer problem that it solves. That’s actually something that happens a lot with B to B services firms, because perhaps you’ve had a client or two clients who have asked for creation of something that could be turned into a product. And we see a lot of firms then assume that that means that there’s a market for it, and they skip that very vital step that your audience knows it’s incredibly important, which is market research. And they don’t go out and validate and… does this solve a real problem? And we say the best products solve urgent and expensive customer problems, and is the market segment for who has that problem… Is it an attractive market segment for us? So is it one that we can easily reach, or is it one that’s big? Is it one that has a lot of budget and willingness to pay? Is it a market segment that’s growing? Kind of those basic, again, market research questions we were seeing a lot of firms not ask until they’d already developed a product, put it out in the market, and then we’re wondering why it wasn’t selling. So what we try to do is, again, outline those seven deadly sins and then talk about easy ways that companies could try to overcome those mistakes. So for example, again, in the case of designing product that doesn’t solve a problem, how can you quickly do market research without taking months and months and spending hundreds of thousands of dollars doing research? How can you kind of iteratively create products and get customer feedback on them? How can you design products where you don’t cannibalize your existing services revenue, things like that?

Christian Klepp  13:34

Yeah, no, absolutely, absolutely. And you brought something up earlier, which is a great segue into the next question about the importance of market research and developing that right strategy to productize these services. And I think we had a discussion about this in our previous conversation, you know, dealing with clients that say, Eisha, listen, let’s just skip the research part. Okay? Because we we know who our clients are, and we know what their problems are and what they need. Yeah? Your thoughts?

Eisha Armstrong  14:00

Yeah, I do hear that a lot, and I try to gently push back by one talking about how you do lean market research. So again, market research, that doesn’t take a lot of time, doesn’t cost a lot of money, to just validate your hypotheses. And I think that helps, because I think there’s this misunderstanding, especially among visionary leaders, who have a very confident, a lot of confidence, in their product idea, that, like you said, they know the market, they don’t need to do the research. And if you could say, well, can we just take a few weeks and just validate your hypotheses that will help us not only make sure that we’re making investments in the right place, because products require upfront investment to build, and digital products can be quite expensive to build, so let’s derisk your investment by doing a little bit of hypothesis validation and at the. Same time, we can, in our market research process, start to identify beta customers and get feedback on pricing and packaging, and ask the question, you know, would you be willing to be a paid beta customer? And if people start saying yes before you’ve even built the product, then you know, you’re on to something so kind of putting that kind of dual purpose around it, which is, yeah, we’re going to do market research, but we’re also going to start to engage in commercial conversations and see if we can get some early customers, is another way to overcome that objection I don’t need to do market research.

Christian Klepp  15:37

Fantastic, fantastic. So if I’m hearing you correctly, it’s, I always like to call it, like repackaging it a little bit, right? Like trying to highlight the commercial opportunities that this type of research presents, rather than look, this is going to be a massive investment that is going to take six months, and what you get at the end of it is this beautiful, 200 page report. (laugh)

Eisha Armstrong  16:00

What we’d like to deliver at the end is strong recommendations on not only that you’re on the right path with the problem you’re trying to solve, but here are the product features you should build, first, second, third. Here’s the pricing, here’s the packaging, and ideally, here’s a short list of people who’ve said they want to be paid beta customers.

Christian Klepp  16:21

Let’s appreciate that we we have about 30 or 40 minutes, right? But like, walk us through the process of effectively marketing and selling productized B to B solutions. So specifically, what are the key things that B2B marketers need to be doing differently, and what are the key components required for this approach?

Eisha Armstrong  16:39

Yeah. Great question. And I will say I have a book coming out in September about this. So yeah, (laugh) so very top of mind for me. So what we found in our in our work with companies who are productizing, is that it was one thing to build a product that solves an urgent and expensive problem is, you know, got a good product features, and it’s quite another thing to successfully commercialize it, because if you’re traditionally selling services, the go-to-market motions for selling products are very different, because you have to take more of a market mindset. So what we outlined in our new research that, again, is coming out in this book in September, kind of the 5 key areas that need to be addressed for successful commercialization of products. The first one is one I already talked about, and that is, who are you selling to? What is the market segment? Who is the buyer, who is the user, and asking those questions like, Is it an attractive market segment? Is it a growing market segment? Is it one that we can easily reach both to generate leads and to sell to, if not, what type of investment is going to be required? So really defining the who is the market segment is very important, and that’s something that is surprisingly hard for a lot of B to B services firms to do, because a lot of them have kind of made their money by being all things to all people. And that’s hard to do when you create a product. You need to be very clear on who your end buyer is, who your end user is, for the product to be successful. So that’s the first of the five.

The second one is the how are we going to monetize this product? And this is where we get into these questions of pricing and packaging. So how do we package features, unlock different features at different package levels, levels of usage, things like that. What’s the best way to package the product in different ways that map to our different types of buyers? And then, how do we price it? So what is the pricing model? What are the price points? And again, when you’re pricing time and materials, that is much easier than when you’re pricing a product, especially if you’re trying to figure out how to grow the product over time. So that’s the second one is the monetization.

The third one is then marketing. So how are we going to generate leads, especially if our product is designed to reach a new market segment that perhaps we haven’t previously marketed to, or where we have less brand recognition than services. If it’s our existing services customers, that’s a little bit easier. But then we have to figure out, how are we telling a product story versus a services story? So what’s the value proposition? What’s the messaging? And then what are the lead generation tactics? All of that falls into kind of that third category of marketing.

The fourth category is your sales channel. So if you’re, you know, let’s say an accounting firm or a law firm, and you’ve been selling, you know, with your partners, right? You have Doer-sellers partners who sell and do business development, and they also deliver the work. They’re probably. Probably not going to be skilled product sellers. So are you going to set up a new sales channel if you already have a separate sales force that’s separate from delivery, but they’ve been selling services, how are you going to teach them to sell products? So making those decisions around sales channel and how you’re going to maybe shift compensation or skill sets around sales channels, very important.

And then the last one is, how are you going to make sure that the product is renewable? So a lot of the organizations that we’re working with, when they decide to productize, they’re doing so because they want to create more recurring streams of revenue so they create, let’s say, like a subscription software product or subscription data product. And the key to making the economics of a subscription product work is the renewability rate and reducing customer churn, and that requires a whole separate set of capabilities in your organization around customer onboarding, customer success that a lot of firms may not have in place. So those five areas, it’s a lot, I know, but those are all things that we found critical to successful commercialization of products.

Christian Klepp  21:22

Fantastic, fantastic. I’m going to date myself here and say these are the Cliff Notes people, right? Like, do you remember those things from high school?

Eisha Armstrong  21:30

Yes, yes, yes.

Christian Klepp  21:31

Um, so these are the Cliff Notes for how to market and sell B to B productized services. So let me just quickly recap, because I’ve been furiously taking notes as you were talking, right? So the first one is defining your target audience and who you’re selling to. Okay, we don’t want any Swiss Army knives of of this category or that category. Correct.

Eisha Armstrong  21:53

Correct.

Christian Klepp  21:54

How are we gonna monetize? I think was the second one.

Eisha Armstrong  21:58

Correct pricing and packaging.

Christian Klepp  22:00

Pricing and packaging. Then comes the marketing bit. The marketing piece, how are we going to generate leads, right? Is it a product versus services story, then the sales channel and the final one is, how do we ensure that the product is renewable?

Eisha Armstrong  22:16

Yes, exactly. Very, good.

Christian Klepp  22:17

Fantastic, fantastic. On that note, I had a follow up question on your third point marketing, because this is a Marketing Show, and there’s a lot of marketers listening to this saying, okay, that’s fantastic, Eisha, but how do I get senior management or the board to buy into marketing, right? If they’ve, especially if they’ve never done it before, right? And these are maybe 8 times out of 10 people that are like, okay, marketing, is it like social media stuff, or we don’t need that because we already have a website. So, I mean, you know, I’m oversimplifying it here, but how do you deal with the pushback on, like, investing in marketing to get all this off the ground?

Eisha Armstrong  22:57

Yeah, so again, I think it depends, at least for the companies that I’m working with on whether or not they are targeting a new market or the same market. If it is the same market, it is going to be hard to convince them to invest significantly more in marketing assuming they’ve been successful. Now that doesn’t mean that they don’t need product marketing expertise, but if their business case for productizing is just around selling products to existing services customers, then it’s going to be hard to make the business case that they need a lot of additional marketing resources. But I see a lot of companies come to me and they say, Hey, we’ve developed this idea for a software product to sell to a more price sensitive market segment, who perhaps, let’s say you’re a agency, and you’ve done bespoke media planning for large companies, and now you have a tool that you’ve created that can automate some of the media planning, and perhaps you could sell it to smaller companies who can’t afford your bespoke media planning services. Okay, interesting idea, but that’s an entirely new market segment for you, a more price sensitive DIY market segment. So how are you going to generate leads in that market segment? How are you going to build brand awareness and know like and trust in that market segment? Well, you’re going to have to invest in marketing. And so what we do is we try to educate those leaders then on what a good marketing investment would look like. And honestly, we just use benchmarks. We’re like, Okay, this is what a software company spends, on average, on marketing, you know, as a percentage of revenue. So this is what you’re going to need to spend on marketing if you want to sell a software product to an entirely new market segment. And we put that in the business case, and then that’s something that they consider before they make a go, no go decision in developing the product, ideally, but we just try to educate them on the investment that’s going to be required in order for them to be successful.

Christian Klepp  25:14

Yep, sometimes I call it like it’s a steep climb up the mountain, right? It’s, and I suppose it’s to your point, right? You have to understand, or marketers have to understand, what these folks in senior management are looking for, right?

Eisha Armstrong  25:31

Yeah. And honestly, at the end of the day, Christian, it’s pretty simple. They’re looking for sales leads, sure. So we do, you know, a lot of educating on, okay, if you’re going to invest in marketing, how do you measure the return? Well, you measure the return looking at leads, MQLs and SQLs, you know, it’s very simple. This is, this is not something we came up with, it’s something that’s been used by 1000s of companies. And if you can, you can point to lead generation of, you know, qualified leads that eventually turn into real sales opportunities. It’s a lot easier to justify the investment.

Christian Klepp  26:07

Absolutely, absolutely. Okay, Eisha, we get to the point in the conversation where we’re talking about actionable tips, and you’ve given us plenty already, right? But let’s just imagine that there’s somebody listening to this conversation out there that wants to act upon the stuff immediately. So what are like… Maybe 3 to 5 things that you could tell them they can implement immediately based on what you said.

Eisha Armstrong  26:30

Yeah, first one is get very clear if you want to productize why? So is it because you want to reduce key person dependency? Is it because you want to grow at a faster rate than you’re currently growing. Is it because it you know, in 5 to 10 years you want to sell your business, you know you’ll get a higher valuation if you’re more productized. But getting really clear on the why is important, because that will inform the types of productization investments you make and the way that you make that vision come to life. So that’s the first thing. The second thing is that this cannot be an off the side of the desk job. You have to devote dedicated resources to it. And if you’re not willing to do that, you will not be successful, because in a B to B services company, client needs always come first. And so if you don’t have someone who’s dedicated to productization, their time will always be taken up by more urgent client needs. You know, revenue that we can bring in the door this quarter versus revenue that we may not see for a couple years. And then that leads me to my third one, which is that this is a longer investment horizon than you’re probably used to. So if you don’t have the capital to invest in it and not see a return for a couple of years. Don’t go down this path.

Christian Klepp  27:50

Absolutely, there is a little bit, if I’m hearing you correctly, there’s a little bit of risk involved, but it’s also like you have to make that long term investment to see those returns, and they’re not always immediate, right? They takes time.

Eisha Armstrong  28:05

Correct, and there are ways to de risk that investment again, by getting, you know, early clients to co create the product with you, and perhaps, you know, fund part of it, get those early paid beta customers, do a lot of iteration, but you’re not going to see significant returns in year one on your productization efforts.

Christian Klepp  28:29

Okay, a status quo that you passionately disagree with and why? And I’m sure you have plenty, but just pick one.

Eisha Armstrong  28:39

So I’ve been doing a lot of just kind of personal explanation recently around the power of our minds to stretch us beyond our limits. And I think that’s because I’m turning 50 next month, if you can believe it, and I’m wondering kind of what else is possible. So I’ve been doing research around, you know, we just finished watching the Olympics, and kind of how Olympians overcome false beliefs that they may tell themselves, limiting beliefs that they may tell themselves and and I’m really interested in how I apply that in my own kind of, you know, life as it relates to either physical challenges or professional challenges, as well as how I start to impart that on my own children. So I don’t know if that’s so much a status quo, but I think it’s just a an area of interest that we’re probably capable of a lot more than we think we are. And how do we change our mindset to kind of push through those limiting beliefs that we might have… Is something I’m really interested in.

Christian Klepp  29:49

Wow, that was very profound. And if I may say so, you’re a very young 50 year old. (laugh)

Eisha Armstrong  30:00

Yeah, well, I tried to start to put this in practice. So this summer, I did my first technical mountain climbing experience in the Cascades with my brother. And I think this is a key to longevity, and at least feeling younger than perhaps you are is the how can we continue to challenge ourselves and push ourselves beyond what we thought was possible. Someone had told me five years ago, I would have done a technical climb to the top of the mountain. I would have said, No way, but I did it. Yeah, yeah.

Christian Klepp  30:31

Well, good for you. Good for you for doing that and for having the courage to do that, right? I mean, there’s many people out there that would have been like, no thanks. Not for me, and it comes back to what you said about self-limiting beliefs about, you know, feeling like you’re in this. And a lot of people tend to slide back into this. It’s a combination of the comfort zone. It’s the insecurities that you keep telling yourself you can’t do it. And you know, the more you tell yourself that you know, I can’t do it, well, chances are you’re eventually just not going to do it, right? And there are people, and I’m sure you have those in your life, the people that you surround yourself with, that give you that little nudge out the door, to quote the Lord of the Rings, right? Just get out there. Take that risk, you know. And if it didn’t work, at least you tried, right?

Eisha Armstrong  31:18

Yeah, totally.

Christian Klepp  31:20

Absolutely. Okay. Now here comes the bonus question, okay, a place that’s been on your bucket list that you’ve always wanted to visit, and why?

Eisha Armstrong  31:32

Oh, goodness, Ireland. Yeah, so my three out of four grandparents have strong Irish they’ve all passed but strong Irish backgrounds, and I’ve had a lot of friends who’ve gone to Ireland and family and have just said it’s beautiful, and I’ve not been able to visit yet. So that’s a place that’s high on my bucket list. Would love to take my children there and just spend time driving around the country and seeing the scenery and getting to know the people.

Christian Klepp  32:02

Fantastic, fantastic. And then let’s not forget the music. They have beautiful music there.

Eisha Armstrong  32:06

They do, yes, yeah.

Christian Klepp  32:08

It’s a little it’s a little melancholy for some but there is a beauty in it, right? And it’s amazing how some of that has transferred over to the United States. I mean, if you look at like the the Civil War period, there were a lot of like these, these songs and all of that that have Irish influences very strong, right? Like with the violin and so forth, right?

Eisha Armstrong  32:29

That’s right, yeah, absolutely.

Christian Klepp  32:31

Well, Eisha, we could go on and on and on and talk about this, but you know, in the interest of time, I’d like to thank you for coming on the show and for sharing your expertise and experience with the listeners. Please. Quick introduction to yourself and how folks out there can get in touch with you.

Eisha Armstrong  32:45

Yeah. So Eisha Armstrong. Have been on this route of how do you productize services my entire professional career. Launched my own firm in 2018 called Vecteris, which is a great way to get exposed to our research that we’ve done that’s Vecteris.com, and as I’ve mentioned, you mentioned, have written a couple of books about this. Have another one coming out in September on how do you commercialize productized services. And best way to reach me personally is through LinkedIn. Eisha Armstrong and love to connect with people. Just let me know that you heard me on the podcast, and we can connect.

Christian Klepp  33:31

Fantastic, fantastic. And congratulations on the launch of the new book. That must be super exciting.

Eisha Armstrong  33:37

It is. I’m very excited about it and very glad that we’re I’m done with the writing phase.

Christian Klepp  33:44

I bet! And just the whole like editing and proofreading and, oh gosh, I found another mistake, you know, like that kind of,…

Eisha Armstrong  33:50

Yeah, yeah.

Christian Klepp  33:52

Fantastic. Fantastic. Once again. Eisha, thank you so much for coming on the show. Take care, stay safe and talk to you soon.

Eisha Armstrong  33:57

Thank you, Christian. Bye. Bye.

Christian Klepp  33:59

Goodbye for now, welcome.