From Complexity to Clarity: Function Growth's Productization Success and Advice for Others

Agencies play a critical role in helping brands build relationships with customers. But what happens when an agency's service offerings become too complex, making it difficult to attract and serve their own clients effectively? This was the challenge faced by Function Growth, a direct-to-consumer e-commerce agency that helps brands maximize acquisition and revenue growth through behavioral science and AI-enabled services.

I interviewed Brian Russell, Managing Director of Function Growth, about why he turned to productization to overcome his firm's challenges, the impact on his team and clients, and his advice for other firms considering productizing their value. 

Success leads to complexity, costs, and change

Function Growth has been an agency to watch. Over the past few years, they've received significant industry recognition, such as AdAge's 2023 Newcomer Agency of the Year and Inc. 5000's Fastest 2022/2023 Growing Companies. More recently, their client, Wellow, one of Function Growth's owned and operated brands, was named Fast Company's 2024 Most Innovative Company. However, success and growth often introduce new complexity for ascending firms. Function Growth was no exception to this occurrence.

"We had experienced success delivering significant value to our existing partners; however, our services and options had become overwhelming and confusing to prospects," Russell explains. "It became challenging to 'close' meaningful new business. Our old model also lacked repeatability, with every engagement feeling 100% new and unique."

The need for change became clear for Function Growth through numerous client conversations. "They were impressed with our work," Russell said. "But our offering seemed too complex and expensive for what they needed."

Their offerings had evolved and were no longer aligned with their target market. Russell and his team saw the need to refocus their firm, reestablish a market fit, and simplify their costs and ways of delivering value to clients.

Turning to productization

Function Growth needed to reexamine its services and identify where true value existed for its clients. That's when they hired Lodestar. When we first met, Russell and his team were already familiar with the benefits of productization and had a clear vision of success, which was to:

1. Position themselves higher on their client's value chain for stronger relationships and pricing leverage.

2. Simplify their offerings and reduce costs to improve speed and profitability.

3. Redesign their services to become easily “additive” to any prospect's e-commerce strategy, making it easier to spark new client relationships and short their sales cycles.

4. Systematize and scale how they deliver value, focusing on high-value/high-margin offerings and reducing investment in low-value and commoditized services.

5. Surface and monetize existing IP to diversify their revenue streams and differentiate their firm.

The Function Growth team saw productization as the best way to achieve these goals.

The "before"

Russell and his team were not strangers to productization. They had already taken a step in this direction when we began working together. The firm had built products to help clients solve specific problems at different stages of growth. Their products were named accordingly: Launch, Traction, and Scale.

Function Growth's clients could choose which they wanted based on their brand's stage of life:

• LAUNCH: Launch was tailored to new brands needing basic services such as brand building, website design/development, and creative production.

• TRACTION: Traction included elements of Launch that needed to be sustained but added a suite of services to produce, test, and iterate the growth model.

• SCALE: Scale included elements of Launch and Traction that were essential to marketing and fulfillment but added a layer of business strategy, financial planning, media planning and buying.

Russell's team knew their firm's strengths but needed clarity on how to sell them. He explained, "We have expertise in areas that are highly-valuable to our target market, but we needed to reestablish our product/market fit. We needed to figure out how to package, price, and deliver them with a higher profit margin."

Achieving clarity; seeing where true value lives 

When I asked Russell how Lodestar’s work contributed to his team's thinking, he explained, "Lodestar’s approach forced us to examine the laundry list of services we were offering and where our true value existed for clients. The experience also revealed where we performed extremely high-cost work that added little or no value to our clients."

"Even though we had agreed 'productization' was the right direction for us to take, Lodestar required us to go through a specific thought process that provided clarity on the direction we needed to go," Russell added. 

He continued. "Lodestar's tools and work sessions were crucial for us, with a simple question-and-answer framework that led to the clarity we needed. The work is substantial, but you have to clear away the distractions to see where the real value lies."

The "after"

While Function Growth is not substantially changing what they do, the team will change how they do it, package and price it, and deliver it. 

They shifted their solution strategy from focusing on three stages of client growth to narrowing in on four specific problems and solutions--DRIVE, CONVERT, BOOST, and MAXIMIZE:

1. DRIVE to drive qualified traffic from across their client's customer interaction points.

2. CONVERT to convert traffic with the highest possible order value.

3. BOOST to increase the average order value of first-time purchases.

4. MAXIMIZE to increase repeat sales, profit, LTV, and upsells and cross-sells. 

They will also offer a bonus BUILD solution for clients who need help establishing a foundational direct-to-consumer framework to build their brand and sell their products to new customers. 

Early results

Russell said, "We are mostly done revising our sales and marketing materials. We've already run some pitches using the new products. The initial responses have been favorable. We’re dialing in some final touches, but it’s clear that this is a dramatic improvement over how we were previously offering our value.”

"The next step is getting traction, moving these products into the wild, marketing them, and selling a large amount," Russell shared. "With these products, we think we'll be able to change the game for many DTC e-commerce companies."

Restructuring teams

Function Growth is also restructuring its teams to organize its talent more efficiently around its new products. Russell explained, "We’ll organize our teams into core project teams focusing on delivering each product. The teams have worked together for years, so even when products are stacked, we expect a very collaborative approach."

Advice for agencies

Reflecting on the experience, Russell offered valuable advice for other agencies considering productization. He shared, "You may think you know yourselves and your business going into the process, but plan to be surprised! You are giving away a lot of value. At least we were. You will have an “ah ha” moment when you are working through the process where you’ll say, 'Why weren’t we always doing it this way?'”

He added, "Your agency's value is in its expertise and knowing how to help clients avoid mistakes. It's not about hours or service menus. Productizing is about packaging your value into a clear offer you can deliver consistently and profitably. If that sounds like something you want, I recommend productization, and I strongly recommend you work with Lodestar to do it as efficiently and effectively as possible."

What does all this mean?

Function Growth went from complexity to clarity through productization. By identifying their core value, packaging their expertise into repeatable offerings, and restructuring their teams for efficiency and effectiveness, they are positioning themselves for scalable growth and sustainable success. 

Given the state of our industry—the commoditization of agencies, the limited revenue and profitability potential in a labor-based revenue model, and AI rendering the billable hour obsolete—productization is becoming an important strategy to remain competitive and of high value to clients.

I hope that Function Growth's story helps educate and inspire other agencies to consider productizing their value to overcome the many common challenges they’re experiencing today.