Grow Your Business: New Products and Services
New product and new service development is not reserved for large companies. Small businesses account for a major percentage of product and service innovation. As the business landscape and your local market changes, you'll need to adapt to those changes by developing new products, creating new service offerings to continue to serve the changing needs of your customers.
Refine Current Offerings
Take a moment and think about your business; not just the state of your business today but where you want your company to be in two to three years:
- How has competition in my industry and market changed? What changes are likely to occur in the next few years?
- Have customer buying habits and purchasing trends changed in the last year? How are they likely to change in the future?
- What new products or services threaten to make my business obsolete, or at the very least, to siphon off a portion of my current business?
- Are customers buying products or consuming services through different channels? How does that affect my business?
Then think about simple ways you can change how you currently do business:
- Incremental improvements. Think about small, short-term changes you can make to your current products and services. If customer buying habits have changed, how can you position your products to meet that change?
- Different means of delivery. E-commerce has changed the retail environment dramatically; even if you run a local brick-and-mortar store, you still compete with online retailers. Can you deliver products more conveniently in order to compete with home delivery offered by online retailers? Should you expand store hours to make shopping more convenient? (Online retailers are always open.)
- Different service paradigm. You can still provide the same basic service, but in a dramatically different way. If you provide maintenance and repair services, some of your customers may prefer signing up for a monthly service contract instead of paying for services on an ad hoc basis. Think about ways you can deliver information more conveniently; consider posting product manuals, warranty information, and how-to guides on your website. In short, think about your products and services not simply as "items" but as comprehensive solutions for customer needs. Think about all the ways customers use and consume your products, and adapt to meet those needs.
Develop New Products and Services
Once you've tweaked your current offerings it's time to consider new products and services you can offer. Think about your customers and their needs:
- Start by extending your current offerings. If you sell products, think about complementary items that leverage the products you currently sell. A simple example: if you sell and repair motorcycles, it makes sense to sell helmets, leathers, and other accessories. But motorcycle enthusiasts use other products too: maintenance information, trip guides, cleaning and storage products, outdoor gear, pre-packaged food items for long trips… even financing and insurance. In some cases you may not be able to stock certain products, like insurance, but you can partner with other companies to help your store be a one-stop shop. If you provide services, think about complementary services that leverage current skills or equipment. Providing service for some heating and cooling products can be a natural extension for plumbing contractors, for example.
- But think about the impact on current offerings. Sometimes new products and services can cannibalize sales in other areas. Consider the motorcycle shop example: If you offer comprehensive how-to maintenance guides, the sale of that information may reduce the number of oil changes and basic repairs your service area performs. The key is to consider your customers; you may decide that customers interested in performing some repairs on their own are unlikely to ever use your shop in those instances; selling maintenance guides simply generates additional revenue.
- Add value. It's easy to create new "products" by bundling existing products. Most customers expect to pay less in aggregate for bundled products, though, and your goal should be to increase both sales and profits. Instead of focusing solely on convenience, think about the value a new product or service could provide. For example, many book manufacturers provide a "preflight" service, checking customer files well before the production process begins to ensure there will be no delays due to file preparation issues. Those manufacturers provide a tangible value, since publishers can better control production schedules and avoid costly delays. The manufacturer charges for the service and avoids delays and schedule hiccups as well. Think about ways you can add value to what you currently provide: installation, preventive maintenance, flexible return policies, prior consultation, etc.
- Create entry-level products. If you sell high-end products and services it may be tough for new customers to overcome the price hurdle. Find ways to gently introduce customers to your business. Say you provide heating and cooling services for large buildings and facilities; consider offering system diagnostics, an energy audit, or other services that not only generate revenue but also give you a chance to prove your skills to a new customer. You can do the same where products are concerned, but make sure you don't "cheapen" your brand by offering entry-level products that damage your overall brand perception. (For example, a high-end watch company would never add inexpensive digital watches to their line of products for fear of damaging the brand.)
New product and service development is not as difficult as it may at first seem. Simply listen to your customers. What do they ask for? What do they need? What are their complaints? In many cases your customers will tell you what they want, aside from lower prices, so take the time to listen and act on what you learn. Not only will you grow sales, but you will also build greater customer loyalty.