Scaling Your Business Through Productized Services with John Warrillow

In this episode of The Widest Net Podcast, Pam’s guest is John Warrillow, a celebrated entrepreneur, bestselling author, and podcast host who has dedicated his career to guiding business owners towards building valuable, sellable companies.

As the mind behind the Value Builder System(™), John has created a powerful sales and marketing software for advisors to support their clients in growing and protecting their businesses. His bestselling books, including Built to Sell and The Automatic Customer, have been recognized by Fortune and Inc. Magazines and translated into multiple languages. John’s firsthand experience in starting and exiting businesses gives him a unique perspective on the challenges and triumphs faced by entrepreneurs.

Go to the Show Notes here



Here’s the transcript:



Welcome to another episode of the Widest Podcast. I’m your host, Pamela Slim, and I am joined today by my guest, John Warrillow. John Warrillow is the founder and CEO of the Value Builder System, a sales and marketing software for business advisors to find, win, and keep their best clients. It combines tools and readymade content for accountants, brokers, consultants and financial advisors who focus on helping others protect, grow and realize the value of their business. John is the author of the best selling book that changed my life, Built to Sell: Creating a Business That Can Thrive Without You, which was recognized by Fortune and Ink Magazines as one of the best business books of 2011.


It was followed by The Automatic Customer Creating a Subscription Business in Any Industry, that was released by Random House in February 2015 and has since been translated into eight languages. In 2021, John released The Art of Selling Your Business, winning strategies and secret hacks for exiting on top. And this completes a trilogy of books, and I appreciate having written a trilogy of books myself, which teaches business owners how to build, accelerate, and harvest the value of their company. As the host of Built to Sell Radio, John has interviewed hundreds of founders about their exit. Forbes ranked John’s podcast as one of the ten best podcasts for business owners.


And before founding the Value Builder System, John started and exited four companies. So welcome to the show, John. This is going to be a mutual admiration society because I’m a huge fan of your books. For those watching this interview, I’m holding up The Widest Net in my hand. So I appreciate all the kind words about my books.


It’s very generous. Well, likewise. So I am excited to dive right into one of the topics in Built to Sell, which is just the core difference of building a company to sell rather than just to scale in the short term. Yeah, I mean, building to sell is really about having options. I call it like the ultimate poker hand.


If you’ve got a company that does not rely on you to do the work, it’s a sellable asset and you can therefore just watch it grow in value. You could choose to sell it, you could bring on a partner, you could bring on an investor. I mean, you’ve got all the cards at the poker table. The reality most businesses are not sellable, however, because most of them are deeply dependent on their entrepreneur, the founder. This is particularly acute in service businesses where there’s a lot of IP involved, intellectual property and they’re providing a service and nothing happens when that entrepreneur doesn’t show up for work that morning, and that’s the definition of an unsellable business.


So we try to read the book and everything that we do really tries to transform unsellable, oftentimes service businesses into sellable companies. You’ve interviewed over 400 entrepreneurs who have sold their company, and you have 70,000 users of ValueBuilder. Why is it so important for professional service providers to consider productizing services, which is one of these core foundations of getting out of delivering day to day? Yeah, because in the absence of a productized service and let me define what I mean by productized service. I mean, it’s a service that looks like a product.


It’s a thing. It’s named. It is a tangible thing that you offer consistently every time versus a service which is, by its nature, customized for each customer. And in the absence of productization, you’re getting your customer to evaluate you as a service provider. Right.


In the absence of a brochure about your product or a system that you follow, they’re left to just try to evaluate you as a service provider. So what do they do? They go onto LinkedIn and they look at all of the places that you’ve worked or the projects you’ve worked on, the recommendations you’ve had. They might talk to previous customers of yours. All this elongates the sales cycle.


It most importantly means that they demand you personally to do the work. Right. If they’re buying you, then guess what? They want you to show up. If you then try to translate their sale and pawn it off onto a second in command or a doer on your team, they’re not going to be happy.


They’re going to be like, no, Pam, I hired you. I evaluated you personally, and I want you to do the work. And so it’s the definition of where we get stuck in our companies and a lot of services business, they’ll get stuck at 100 and 5200, 300, 400,000 revenue, where you’ve got a great lifestyle business. Maybe it’s you and a couple of helpers in your company, but you can never leave. And it feels overwhelming and exhausting at times because you’re just stuck inside your company.


And there is no 401K, there’s no retirement plan. If you don’t show up, nothing happens. And so it can be a very suffocating experience for entrepreneurs to find themselves trapped inside the business that they started. 

It’s like your inside coaching calls that I have with founders, because I have literally heard people say that, like, how could I possibly look at a client and tell them that I am not delivering the service, I am the reason why it is that they’re hiring me? And I’m always saying, no, you’re not.


If you are, there’s a problem there. But really, it is about the way in which they are making very clear the models that they’re using in their business. 

Yeah, and we inadvertently commoditize ourselves too, Pam, I think, because when we say, I’m a copywriter or I’m a facilitator, or I’m a focus group moderator. You all of a sudden have a competitive set, right. Your competition can now say, oh, okay, you’re a focus group moderator.


Well, I can go on Upwork and look at five other focus group moderators, or you’re a copywriter. I can look for how many dollars per word it costs or how many cents per word it costs to hire a copywriter. You essentially commoditize yourself by categorizing yourself as a service provider. Whereas if you say, look, we’ve got the five step system to moderating the world’s ultimate focus group, I’m making this up as we go along. You own that system, right?


You can control what’s in it, what the pricing is, how the money moves. That’s your product, right? Whereas if you just commoditize yourself and say, in a generic sense, I’m a copywriter, a massage therapist, I’m a photographer, you all of a sudden have a competitive set, and I think that’s where we commoditize ourselves. And the other thing about selling a service versus a product is if you think about the last time you bought a service, my guess is that you had experience with service and then paid for it, right? Like, if you got your windows cleaned, the chances are they came, they cleaned your windows, and we’d like to be paid.


Now, they might have left you an invoice and paid 30 days later if you got your tax return done. Right? The accountant collects all the data, they put it all into spreadsheets, and then they spit out your tax return. If you’re happy with it, you sign off on it, and then they send you a bill, right? So they’ve got a negative cash flow cycle.


It’s the worst possible scenario. You’re spending 60, 9120 days waiting between the time the client says, yes, I’d like to hire you before you finally get paid. Whereas if you think about your own behavior when it comes to a product, you walk into Costco and you pick up a bottle of Tide off the shelf, you’re expecting to pay for the product before you use it, right? And the same is true of products, right? I used to run a quantitative market research business, and I made this switch.


We went from project based consulting, doing market research, to a subscription based service. And the subscription based service was a set of reports that we provided large enterprise customers, market research reports, and we charge those customers roughly $40,000 per year for a subscription upfront. So we made the sale, we got the $40,000 in the bank, and then we delivered the service over the next twelve months. That’s because we productized it and we made it look like a thing. And customers and people are used to buying things up front, whereas they are used to paying for services after they are rendered.


So again, whether it’s the cash flow crunch, the business depends on you, I just think selling a service, a generic size service is a recipe for disaster. Whereas I think once we productize, the world really opens up into the kind of world is your oyster. I think you have done a lot of research for companies that have pivoted to productized services. And given what you said, I am curious of both characteristics and maybe behaviors, actions of those that did it successfully took. And then are there pitfalls, for example, getting lots of $40,000 deposits in your bank before you have delivered the work?


For some people, like it can be an issue. So what have you seen both where it works successfully and where it didn’t? Yeah, look, I think there’s a first hidden step to productizing this service. And when I say a hidden step, it’s not immediately obvious to people who are doing it. But I think it’s the prerequisite step that you need to take in order to avoid disaster when you’re productizing a service.


And the step I’m referring to is to hyper niche down. You see, as a service provider, I think we’re all used to bobbing and weaving and consultative selling, right? Client shows up, says, oh, I have this problem. And you’re like, okay, tell me more about that. And you’re probing for all of the problems that they have and implications of the problems.


You’re using spin selling and you’re trying to discover the client’s problem and then you’re providing them with a customized solution to their problem. And every solution is a little bit different because every client is a little bit different. When you are productizing a service, you can’t afford that luxury because guess what? You’re not in the room oftentimes when you’re selling a productized service, much of the selling is done through your website, your brochure, maybe your salespeople when you grow larger. But you don’t have the luxury of the consultative selling technique.


And as a result, you have to find a homogeneous group of customers with a homogeneous need. You have to niche down so tightly that you have a definitive group of customers that are experiencing the same need. So it’s not okay to say my clients are Fortune 500 companies or my clients are B, two B, Fortune 500 companies. You need to get down much, much deeper than that and say my clients are Fortune 500 companies in the northeast, in technology, with a distributed sales force that sell through a Vard channel with a VP marketing. I’m just making this up as we go.


But a very, very finite target market because it’s only there that you get a homogeneous need that you can build out a productized service. For most people trying to make this transition, skip this step, they say, well, I’ve got lots of different clients, I’ve got lots of different things that I offer. And they try to create a service, productize a service that’s too broad. And as a result, it’s just not compelling to anybody. So the first step is this prerequisite or requirement to hyper niche down and pick a very specific niche.


And in practice doing that, what I see is it’s often writing parallel when somebody is making the active transition of productizing services is sometimes delivering the services that have been maybe slightly more customized experiment with marketing messages as you know, since you read the widest net. Thank you. That would be spending specific time in watering holes, for example, that would be made up essentially of people from that more specific audience so that you can actually tell. Thankfully we can meet in person again, but I love to really look at the body language in the room and notice that people are leaning forward and shaking their head if they come up to you after the talk versus sometimes what you think is a great example of a niche and you go there and it does not land. And I always argue better to test it early when you still have the other business rolling rather than go all in on an idea of a tighter niche without really seeing.


What you do need is like financial evidence. People who are creating purchase orders and taking out credit cards in order to pay you for that. Has your research shown anything about that of people who have made big bets like niching without the data or things like that? No, the research I don’t have anything specific. I could just think anecdotally I agree 100% with your point about watering holes and really testing and validating your hypothesis.


The other thing about being in watering holes that really I think is important is you learn the lexicon. Starbucks calls it the tribal language, the way people speak, the dictionary, the vocabulary of your market. You get that and that becomes incredibly valuable as you start to build out your proposition, your product as service. Because again, in the case of a product selling services I think is easy and I don’t mean to be dogmatic or controversial in saying that, I just think it’s easy. I think listening to a client’s problem and having the luxury of coming back to them with a customized solution every time is frankly just easy.


You can dance and make up your way along the way and satiate their specific need with a customized proposal. It’s much harder having done both, I can tell you firsthand, it’s much harder to have the discipline to niche down to figure out what the lexicon is and build a proposition that resonates without you changing it every time. That is incredibly hard and I think it’s the next step. Once you’ve been a service provider for years and you’ve looked in the whites of enough clients’ eyes, you’re in a good spot to say, you know what, this is the specific niche that has this need. I’m uniquely qualified to offer it.


I’m going to go ahead and productize this service. Yeah, I am curious about models knowing you have a journalism background, you’ve written books, you’ve created models. Not everybody I talk to is comfortable knowing how to create it. I’m just curious, does that come naturally to you? Do you tend to think that way as an author that’s consolidating big ideas into bytes?


Or do you rely on other team members or people to help you to create a system that makes sense to people? That is the productized service, you know. In high school, where they would trot out the person who got the highest overall cumulative grade point average in grade twelve and senior year, and he or she would strut across the stage and they would give you the kind of diploma and they would all make a big deal about the smartest person in the room. That was my brother, by the way, which was a hard act to follow. It was my sister.



And that’s why I bring it up. So my sister was the one who got the special award, and everybody fond over her being so brilliant. And I was, relatively speaking, an idiot. And so I think I learned maybe as a kid that I had to kind of dumb it down, simplify it, because I was never going to be her. I was never going to be a smarter sir.


I was never going to do the same degree of homework and the same amount of research. So maybe you try to compare yourself with your siblings and try to position yourself and your family as kind of different and like the Yang and the Yang and the alternative, maybe I learned to simplify things in order to distinguish myself from my sister. Because it’s funny you should say, I never thought about that before, but I do find that I try to take what is complicated and make it simple and digestible if for nothing else, so I can understand it. And sometimes those frameworks help me consume or digest it. So I don’t know the answer to your question.


I do thank you for the compliment, because I do consider that to be something I try to work hard on, which is to take what’s complicated and make it relatively consumable, digestible and simple to understand. So, yeah, thank you for saying that. I don’t have a secret technique, though. I feel like we have a next level of friendship knowing that we have a sibling who was the valedictorian. So, yes, I feel you, who is now a college professor.


But yes, well, it is in watching the work happen. And this is to me where the art comes in about being able to take complex, intersecting ideas, which is everything about how people are running their business and service businesses, no matter what thing that you’re helping what kind of problem you’re helping people to solve, but to get to an essence that is actually relevant and that works in the real world. I appreciate describing that process, as you said, for what it takes to happen, needing to narrow down with a niche, test it. And then where I get on my soapbox is in making sure that your productized service not only becomes easier for you to sell, but it actually successfully, repeatedly does solve the problem. So that people I know it sounds so foundational to be almost insulting, but it is surprising sometimes that there are things that sell that don’t necessarily have a design that leads to the right outcome.


So I just find a lot of people need to take a little bit longer to do that. It often is a collective and collaborative experience of figuring it out and taking the time to test it. But as you said, once you do lock that down and you have something repeatable that you feel good about, it does become so much easier to sell. And if I never have to do a custom proposal again in my life, I am thrilled. Yeah, well, you’re really talking about, I think, delivering on the promise that the productized service offers.


And I think here again, I go back to how do great product marketers think about their product? And I go back to Tide, you pull it off the shelf at Costco and there on the back is a list of ingredients. And I think great productized services list their ingredients, list their methodology, list their approach to delivering. So it’s not just the pretty brand, but it’s also what backs up the brand in terms of a unique process or procedure or methodology that you’re pursuing to get the desired result. It occurs to me, Pam, like we’ve been going on about productized services as though it’s sort of a thing.


I think maybe if you allow me, I’ll sort of define what I mean by productized service and give an example because I feel like I don’t want to lose listeners. I mean, a good example might be, take a contractor for example. Typical contractor, you hire them, they can renovate your backyard, they can put on an addition, they can put on a new kitchen, new bathroom, and every project is different. That’s a service provider happens to be a contractor. And there’s a guy in Dayton, Ohio that took that model and blew it up and said, I want to productize a service. And he built a one day flooring.


And one day flooring is a product. It’s a branded product and it always has the same process. They go into garages and put down a neoprene floor so that you avoid the concrete floor with all the dust gathering, you have a nice neoprene floor. It’s a very simple concept. He’s gone from offering hundreds of different services, kitchens, bathrooms and everything else down to one thing he’s got a process he goes through because what’s everybody’s objection?


Well, how do I get rid of all the stuff in the garage to get the floor in? Who’s going to put it all back? So his first step in his process is we come with a trailer and we mark everything in your garage and we put it in a trailer and then we do the work and then we bring the trailer back and put everything right back where it was when we showed up. It’s one day flooring. And it’s a wonderful example in my mind at least, of going from being a service provider where everything is dependent on you, to having a productized service that you can deliver repeatedly that by the way, doesn’t require this individual any longer to do the work because it’s relatively simple what they’re offering.



So they can get high school students and college students to kind of do some of the work. And it really scaled him up and freed him up. And it’s just an example of going from a service provider into a productized service. So beautiful. And I love that example of taking everything out because it’s often I think I’m a training and development person by background and by trade for the last 30 years.


And so it’s just so beautiful to think of from a performance improvement perspective. If you think about just how somebody would feel 100% good of all the things to get done, they may be sold on that one day flooring like it is just one day and I’m not going to have half of it done for six months and then see a disappearing contractor, which as we know, is a thing. But to think through from the beginning, what needs to happen before is absolutely brilliant. So I love that. And it really does bring together the example of a specific niche in the trade of an area that is feasible.


I’m sure they did an analysis. There’s not plumbing in a garage. There’s a lot of things that are really beneficial to that that would make marketing a lot easier and just the delivery of the service easier. Yeah, I mean, in his case it’s Dayton, Ohio. It’s people with a standalone home, not an apartment with a garage.


And so that’s a finite community. He knows who he’s talking to at that point, right? You can buy lists of those people, you can market to them. He knows who he’s speaking to in that case. That’s right.


And if for listeners that know how much I’m a fan of licensing and certification, that it’s an example that were he to get excited to scale his business, in a way, it could be the model for a basis for a franchise. It could be the basis for licensing certifying people to be using the kinds of tools and frameworks that he has. Which is why it is so essential first to get the successful, defined, tested productized service. That’s really helpful. And as you said, I know a lot of folks in my world tend to be more the data scientist, doctor, consultant, working more like inside businesses.


But it really is the same when you just think of what is the essence of a core problem you could really help somebody solve. So thanks for that example. Well, I’m curious for you. You have done a lot in your career. What is next?


How are you thinking about your own body of work and what you’re excited about working on these days? Yeah, well, you know what? We’ve just started a newsletter, which I’m really excited about. And you think newsletter? What is this, 1984?



It’s true. One of the things that we’re really excited about is Built to Sell News, which is a weekly email that goes sort of. I’m a big fan of the New York Times Deal book, if you’re familiar with that. In fact, it’s daily now email newsletter. But that’s sort of a template that we’re using. But we’re focused on individuals who are building, accelerating, and harvesting the value of their company.



In other words, they’re kind of built to sell people. They’re focused on the sort of ideas and built to sell. And so I’ve personally gotten really excited about this project. I’m not sure why. It’s allowing me to do some more writing and a bunch more research, and I’m just excited about it.


So that’s really we’re into our fourth edition this week and I’m really personally excited about it. So that’s what I’m focused on right now. I get excited about it too. I don’t know if you’re I have to check out that New York Times newsletter you’re talking about. I love morning brew.


I don’t know if you similar. Yeah. And it’s funny, as you said, after so many years, those of us who have been around the internet and Internet marketing for a long time, it feels old school and passe. I don’t experience that as a consumer of information. When it is really well designed, it’s really a delight to do it.


So I can’t wait to subscribe. And for others who may want to connect with you online and also to find out about that new project, where’s the best way for them to find that? Just head over to BuiltToSell. Wonderful. Well, thanks so much, John, for sharing time with us today and your expertise.


For those who are listening, make sure to check out the show notes at Pamela for tips and resources mentioned in today’s show. Thanks to my 31 Marketplace production team, La’Vista Jones, Tanika Lothery, Jose Arboleda, and the award winning narrator for our intro and outro Andia Winslow. Until next time, be sure to subscribe to the show and enjoy building partnerships, organizations and communities that grow our ecosystem.

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