Hi there, Danilo here.

A founder asked me this week, “How do I know when my service is ‘ready to scale,’ and I can focus on bringing in clients more aggressively?”

The answer boils down to one thing: achieving service-market fit. Many people don’t know what this means. And the few founders who do often believe you either have it or not - when in practice, things aren’t that black-and-white.

Getting your consulting or advisory services right is a process. It unfolds as you learn more about what your clients want and how they use your service. Let's break down what that journey looks like and how you can make sure you're on the right path.

Estimated read time: 6 minutes.

Achieving service-market fit means that your service effectively meets the needs and desires of your target market.

It’s all about the alignment between what your service provides and what your buyers want. They want to accomplish something. Your service helps them do that while generating a profit - and will likely do the same for others in your target market.

This matters because it indicates your service is no longer the main thing holding back growth.

Over time, as you help similar clients solve similar problems, patterns will emerge. You’ll better understand what outcomes your ideal clients are looking for, how they prefer to buy, pay for, and use your services. This learning helps you design more specific and effective services:

• Your initial assessment and problem-solving become more efficient because you know what to ask and what to focus on.
• Your processes to implement solutions become more streamlined as you develop best practices that can be applied to various clients.
• You might also identify opportunities to provide ongoing support for recurring needs, opening more opportunities for deeper client relationships.

But chances are, you don't have that clarity yet. That’s why many consultancies start with a Minimum Viable Service (MVS), which is refined over time through collaboration with clients. As you gather and integrate feedback, your service becomes more attractive and effective.

This process takes time and requires close interaction with each client. While feedback is invaluable, you don’t want to rely on it forever. At some point, your service should be “good enough” to delight new clients without significant changes.

When this happens, the bottleneck that was holding back growth changes. If your service is both profitable and delightful for clients, you probably have other levers that deserve more attention in your business - things such as improving engagement size, bringing in more new clients, developing offerings to solve other complimentary problems they might have.

You’ll often hear that service-market fit is a binary concept: you either have it, or you don’t. This perspective comes from the world of product startups, where feedback is immediate and services can be updated quickly based on user input. In that context, it makes sense to think of service-market fit as a milestone.

But for consultancies, the reality is more nuanced. Service-market fit in consulting is better understood as a spectrum rather than a binary state. Here’s why:

• Trust-based relationships: In consulting, trust takes time to build. Each engagement offers opportunities to refine your service based on real-time feedback.
• Credence goods: Consulting services are “credence goods” - clients can’t fully assess the value until after purchase. Your service-market fit is validated over time, through results, not a single moment.
• Long sales cycles: B2B services often have longer sales cycles. While the client’s decision to hire you is binary, your ability to refine and adapt your service continues throughout the engagement.

In practice, this means service-market fit is something you work toward over time, with early wins, refinements, and eventual breakthroughs. Achieving fit is a gradual process that unfolds over several stages, and there are specific indicators we can use to measure progress in each one of them.

First, you’ll reach what we call early fit. This is when you’ve started delivering your service to a handful of clients, but you’re still figuring out what works best. Your main focus at this stage should be on delight clients. Make sure the service is delivering the outcomes you promised, and gather as much feedback as possible. You’ll likely need to be hands-on with clients, adapting your approach to ensure success. The key is to learn quickly and make improvements that make your service more attractive and effective.

At this first stage, retention and client satisfaction are your key metrics. A repeat purchase rate above 70% or a Net Promoter Score (NPS) over 50 are good signs that your service is resonating. You should also track the number and qualify of client discovery conversations. If clients aren’t willing to pay for your service, that’s a strong indicator that you don’t have fit yet.

As you refine your service and understand what resonates with clients, you’ll move to pitch fit. Here, the focus shifts from solely working on service delivery to also improving how you communicate and sell your service. At this stage, you should be able to consistently pitch your service and land clients with a strong conversion rate. Systematizing your processes becomes important, as you need to ensure that the service can be delivered at scale without burning out or compromising quality. While delivery is still important, your attention will start shifting toward how to replicate results consistently.

As you refine your messaging, track conversion rates: How many leads turn into clients, and what’s your win rate? Pay attention to whether clients are referring others or bringing you into new organizations when they switch jobs. Profitability is another important metric here. Ensure your margins are healthy and that your service is scalable. Typically, aim for gross margins above 50%.

Finally, when everything clicks, you’ll reach service-market fit. This is the sweet spot where clients not only consistently buy your service but also refer others, renew engagements, and even seek out new services from you. You’ve developed a service that delivers repeatable results, and now your focus is on scaling. This is the point where your service is no longer the main bottleneck to growth - clients are coming to you, and you know how to keep them delighted.

Once you’re here, it’s obvious. You’ll have more demand than you can handle, clients will come to you, and referrals will flow naturally. The main indicators of fit at this stage are inbound interest and renewal rates. High client retention, organic demand, and healthy profitability are all signs you’ve nailed it.

Quantifying service-market fit in a consulting context can be tricky, but it’s not impossible. What matters most is comparing yourself against your previous performance over time. Your benchmarks for success should evolve with your business.

Source: Greg Alexander, The Boutique

Productized consulting services are becoming more popular. In the 2023 Consulting Success’ Fees Study, 44% of consultants offered a productized service, up from 30% in 2022.

Source: 2023 Consulting Fees Study​

Where are you on the path to service-market fit?

Is your service offer flexible enough to adapt to different clients, but structured enough to scale?