What is a product?
Many people think of it as a physical, tangible thing, something we can see, feel, touch or taste. They distinguish ‘products’ from ‘services’, the tangible from the intangible. I take a different view:
PRODUCT = the VALUE that you TRANSFER TO THE CLIENT, and how you PACKAGE and PRICE it.
Welcome to this, the 6th article in my Growth Metrics series, where we’ll explore products and the ecosystems that help grow a business and ensure that you leave nothing on the table.
As shown in my formula above, a ‘product’ can be physical goods, or a service. It doesn’t matter how it’s delivered, ‘product’ is simply another name for how you deliver value to the client.
When a business finds it difficult to articulate that value, we tend to see the traditional ‘services’ approach of billing clients based on hourly rate rather than taking a productised approach.
(Just to be clear, I’m not suggesting here that services businesses don’t need to keep track of time spent on delivery. They certainly do, because tracking is what drives the understanding of margin. Time spent is to a services product what cost of goods is to a physical product. But time tracking is an internal margin measurement tool, not a pricing mechanism).
In today’s business environment, where client value is everything, productisation is essential for a business to stay relevant; even if an offering is non-physical, it still needs to be treated as a value exchange, i.e. a product.
Effective productisation takes a number of steps:
- Articulating the problem the business is there to solve.
- Understanding the client’s experience of the problem, in the client’s own language
- Understanding the ideal outcome that the client is looking for
- Defining the complete solution that will create that client outcome
- Planning the product ecosystem that delivers a complete solution to get to the client from where they are now to their ideal outcome
Reverting back to the house analogy, when you go to build a house, there is a complete ecosystem to support the process. You engage an architect, who helps you select and purchase the land and understand the scope of what is possible based on your criteria, needs and budget. Then there is the engagement of the builder, who manages the whole build project and is responsible for engaging sub-contractors and following the program of works to build the house to the specification. Once the house is signed off and handed over – you’re ready to move in. This is an established industry and process – it wouldn’t work so well if you went to the architect, who drew up plans, only to leave you to go and find the builder. They have solved one problem, the plans, only to leave you with another problem, of who is going to build it. Again, the builder doesn’t tell you that you have to go and pick all your own trades. That wouldn’t work either.
When the ecosystem works well, and the architect, builder and trades engage together, the process works and you get your outcome.
Using my own business as an example, I might say I help people create revenue systems. The problem I am here to solve is that many people struggle to create enough leads, and to have pre-sold, pre-qualified leads hitting their business without personal exertion on a daily basis.
The client’s experience of the problem is that they don’t have enough revenue at the right margin.
The ideal outcome for my clients is a stream of prospects coming to their door, ready to buy and ready to pay good money for the value they can deliver.
However, to get to the complete solution, a revenue system that solves the issue of leads is not enough. If I solve the revenue problem in isolation, the next problem shows up, which is having plenty of leads, but an inability to meet the demand. It is not enough to solve one problem if that simply creates another. To build the complete solution, I have to solve all the problems, generate leads, and build the foundations to handle demand.
So I created a process, or ecosystem, called Growth Metrics, which creates the time and money to invest in the revenue system, which in turn allows businesses to forward plan to handle the resulting demand with ease and without stress. Growth Metrics, along with Business of Brand (BOB) is the complete solution.
It’s no different with physical products – although some businesses who sell physical products don’t realise that their product can be part of an ecosystem.
Lulu Lemon has addressed this with great creativity – their physical clothing and equipment products are part of a bigger ecosystem that includes ‘service’ in the form of an app to track calorie intake and exercise.
Products are one of the six keys to growth in a business – as long as they are truly ‘productised’, and built into an ecosystem that delivers a complete solution. If your product fixes one problem, but creates another that you don’t fix, you’ll simply be leaving money on the table, as well as an unfulfilled customer.
Think about your product ecosystem and whether it meets all your clients’ problems, or are you leaving them with an unfinished house?
Tim Dwyer is a business growth expert, who specialises in helping businesses strategically grow their assets, increase their business value, and improve their capabilities. Tim would welcome the opportunity to share more with you about Growth Metrics for business. You can contact Tim, and read more of his business insights and advice via his profile and learn more about Growth Metrics here.
