Smart Business Owners Are Turning Services Into Products (and Maybe You Should Too)
As COVID-19 continues to wreak havoc on the global economy, many companies are pivoting to survive. Designers are making face masks. Distilleries are making hand sanitizer. And manufacturers are making ventilators.
Now, if your business offers a service or a product that you differentiate through a higher level of service, you're probably amongst the worst-hit companies in the current economic disruption.
There’s something important that needs to be said.
Businesses have survived hard times before. And yours can be one of them.
Most consumers are cutting back on services right now to avoid human contact and conserve cash — but we are still buying products that solve a specific problem.
Instead of going down to the pub for a pint, we're spending more on entertainment and exercise. Netflix is an obvious example. However, as we opt to work-out from home, traditional services businesses like personal trainers and yoga instructors are creating online products.
Service Providers Are Pivoting to Provide a Product
Many businesses have reacted to COVID-19 by turning their services into what appears to consumers to be a tangible product:
- Guerilla Tacos is selling "Emergency Taco Kits" with supplies for 40 tacos... and a roll of toilet paper.
- The SnapBar, a photo booth rental business based in Seattle, has launched a "Virtual Photo Booth" for remote teams.
- Encore, a talent booking service for musicians, is offering a "Personalised Music Message", which enables you to commission an artist to create a customized video and "Send love in the time of lockdown".
And you can too.
Here’s what you need to do.
Step #1: Niche Down
The first step is to narrow your focus to a single type of customer.
You might feel this counterintuitive — particularly amid an economic catastrophe. However, the first critical move in turning your service into a product is niching down.
Services can be adapted and customized for a variety of customers. However, products need to fit one type of buyer.
Also, picking a niche helps you design a really great product and efficiently reach potential customers when you are short on resources — financial, marketing, and other.
So. Niche down more than you're comfortable with and then niche down some more. Consider the following:
- Demographics (age, gender, income)
- Firmographics (company size, industry)
- Life stage (just married, retired)
- Company life stage (start-up, mature, etc.)
Step #2: TVR Rank Your Services
Once you've niched down more than feels comfortable, rank your services according to:
- Teachability to employees
- Value to your customers
- Recurring need
Grab a whiteboard or blank sheet of paper and make a list of all the services you can offer to the niche you defined in Step 1. Then score each service on a scale of 1 to 10 on the degree to which you can teach employees to deliver the service, how valuable it is to your niche, and how frequently they will need to buy it.
For instance, an accountancy firm might have bookkeeping, statutory returns, and filings that need doing on a regular basis. These services lend themselves to a productized service — something teachable, valuable, and recurring.
Pick the service that scores the highest, and then move to Step 3.
Step #3: Get Clear about What Problem You Solve
Harvard professor Theodore Levitt was famous for saying, "People don't want to buy a quarter-inch drill. They want a quarter-inch hole."
So, be clear about what problem your product solves for your niche.
For example, the "Emergency Taco Kit" makes cooking at home fun, and easy for quarantined Angelinos. Or Spiffy, the car care specialists, their "Disinfect & Protect" product sanitizes cars for folks who need to keep driving.
Step 4: Brand It
With a service, you're typically hiring a person. With a product, you're selling a thing.
Unlike people, who have names, something like the "Emergency Taco Kit," "Disinfect & Protect," and the "Personalised Music Message" have brands.
My newsletter, Autopilot, is a product. Every week, I pull together the research I do about business exits and selling a business and building a business that runs without you — and then, I package that information into a product that I share with my community.
Step 5: List Your Ingredients
Service businesses customize their deliverables in a unique proposal for every prospect, but product companies list their ingredients.
Pick up any package at a grocery store—whether it's a bottle of soap or a box of cereal—and you'll see an itemized list of what's inside the box, which is why your offering needs to list what customers get when they buy.
Step 6: Pre-empt Objections
When selling a service, you have the opportunity of hearing your prospect's objections first-hand, and you can address them on the spot.
When selling a product, you don't have the benefit of a one-to-one conversation (particularly under current circumstances) to overcome objections. So, consider the potential objections customers might have and pre-empt them.
When selling the "Disinfect & Protect" car cleaning product, Spiffy anticipated the four most common concerns customers raise and pre-empted each in their marketing material.
For example, Spiffy assures prospects that they have:
- A money-back guarantee for people who aren't sure.
- Insurance in case they damage your car.
- Trained technicians who know what they are doing.
- Environmentally friendly cleaning products so they don't damage the environment.
Step #7: Give it a Price Tag
Services are quoted by the hour, day, or project and usually come at the end of a custom proposal. Products publish their price.
Step #8: Create Scarcity
In a services business, you have some sales leverage in that your time is scarce, so customers know they need to act.
With product businesses, on the other hand, you need to give people a reason to act today rather than tomorrow. You need to create a reason for customers to act through things like limited time offers, limited access products, etc.
Also, keep in mind, the most successful services pivots share several traits: utilizing the resources and skills your company already has, creating a product that is in demand, and finding a way to serve populations in need.
Want more insights into building a valuable business? Be sure to subscribe to The Freedom Business, as well as check out these articles from my blog:
- How to switch to a recurring revenue model (and why you need to)
- Six Reasons a Subscription Model Adds Value to Your Business
- Four Subscription Business Models For Your Business
- 5 More Subscription Models for Your Business
- Why there's never been a better time to turn your business into a valuable asset
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