The Product Ecosystem
Having one product is not enough to make a successful business. After working with plenty of businesses, I’ve learned that a single product rarely makes money. Product ecosystems make money.
Most small businesses make the mistake of having one core product. Often, it’s their most expensive product, and it’s the only one they’re offering to customers. Accountants sell accounting; lawyers sell legal services; plumbers sell plumbing. But this isn’t how great businesses operate. Great businesses have a product ecosystem with four types of product, including a range of free, low-cost and core products that all serve a unique purpose.
1. GIFTS
Gifts are exactly that: a product given totally freely with no strings attached, primarily to capture attention. They are scalable, shareable and affordable for your business to give without too much thought.
Usually they are digital and easy to distribute anywhere in the world at very little cost. Gifts need to be insightful, educational or entertaining, highlighting the problems your business can solve, illuminating your points of value and building an emotional connection. They require no commitment from the person receiving them; a gift ceases to be a gift when expectations are attached or if an exchange is implied.
The ultimate gift-giver is Google, offering searches, maps, email, browsers, storage, videos, research and many other digital products completely free to the world. These products capture attention that Google can then use to commercialize its other offerings.
You don’t need to use Google to give away gifts. You can create reports, podcasts, videos, samples, events, slide-presentations or apps that cost very little to give away once they’re developed. The key is that you ask nothing in return – not even a name or an email address. You just give the gifts away to anyone who wants them and watch how quickly relationships progress.
2. PRODUCT-FOR-PROSPECTS (P4P)
Once you’ve captured a prospect’s attention with a gift, a product-for-prospects will usually be the first purchase a customer makes.
Products-for-prospects build trust, offer quick wins for a fair exchange, typically requiring a small commitment of time, money or data from your prospect. In return, you offer them a valuable first step with your company.
Often a product-for-prospects helps to diagnose a problem that your company can solve or narrow down the decision-making process. A consultant might offer a diagnostic tool or an initial two-hour workshop that hones in on the problems and possible solutions for their client as a product-for-prospects.
Google offers businesses test campaigns to evaluate the impact of various AdWords.
A product-for-prospects should set the scene for a powerful sales conversation. If your sales people are talking to potential clients who have experienced your product-for-prospects, they have someone who’s already moving in the right direction.
Some examples of products-for-prospects include workshops, scorecards, physical books, webinars, strategy-session meetings and e-books.
3. CORE PRODUCT
The core product of a business is its main source of revenue – the product the business is typically known for. BMW’s core product is cars. Google’s is AdWords. Mont Blanc’s is pens (or ‘writing instruments’, as the company says).
The core product focuses on delivering remarkable value to a client and is centered on solving a problem or satisfying a want fully.
Gifts and products-for-prospects tend to offer education or entertainment to whet the appetite, whereas the core product resolves the problem or satisfies the want.
It’s worth having the goal of being the best in the world at delivering your core product.
Unlike the gift and the product-for-prospects, the core product requires a full commitment to delivering a solution to problems that the client is looking to resolve. It is implementation, not ideas; it’s a packaged solution, not a promise of things to come.
4. PRODUCTS FOR CLIENTS (P4C)
Products-for-clients are product extensions, taking customers even further on their journey. A product-for-clients delivers a solution that addresses the customer’s ongoing wants, needs and desires. It is usually a recurring revenue product that provides value over time.
BMW sells its core product, cars, and then offers its products-for-clients which “are finance, insurance and servicing. Apple sells its core product, devices linked to iCloud (iPhones, iPads, iMacs, etc.), then its products-for-clients are things like media, storage, software and music subscriptions that tick over every month.
Creating these products has some rules which I have broken down, you read more here.
Demand and Supply Tension
Here’s the interesting thing: most of the local/small businesses do not have enough Demand and Supply Tension in their business and that is the biggest problem. A lot of them have got a really good core product or service but they don’t have the demand and supply tension.
The purpose of the gifts and the product for prospects is to create the demand and supply tension. If you’ve got 10/20 people a week engaging with your gifts and your product for prospects you’re going to build the demand and supply tension.
It’s going to push the profitability up of your core product or service. I want you to up your game when it comes to gifts and products for prospects because essentially that is the demand side of your business that is the side of your business that drives demand and supply tension.
The Ecosystem
I often see businesses that do not become profitable until they have products in all four categories. Only when it has a product that gains attention, a product that builds trust, a product that creates revenue and a product that is highly profitable will the whole business work.
Between 1998 and 2013, Apple went from near bankruptcy to the most successful company in the world. The success was closely linked to the product ecosystem Steve Jobs innovated that moved people from PC to Mac. He gave away iTunes as a gift to PC users, the iPod became the ideal first Apple purchase (P4P), the core business was computers and devices linked together with iCloud and then the highly profitable content and media sales flowed from there (P4C).
Keep this in mind when developing your business – products and services don’t make money; product and service ecosystems make money. Your business will become highly profitable when you have a strong offering in each of the four categories. read more here.