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You’ve
left the corporate world and started off on
your own, largely because you saw big opportunities
to do something better within your last employer’s
organization. You came up with the perfect
technology to do that task that seemed impossible,
and now you are out on your own, consulting
for companies who have the same structure
and needs as your former employer. You’ve
made quite a consulting business out of creating
a similar kind of solution for large corporations,
and now you are investigating how to turn
your service-based business into a product-based
business, where you sell large volumes of
your product without having to be personally
involved in each transaction. Well good on
ya!
This transition
period will force you to make many changes
in the way you do business, and it will force
to you ask important questions about what
you are doing and where you want to go. A
product based company is very different than
a service based company, mainly because you
need to be able to make money not by selling
more of your own time, but by selling more
volume. This means you need to create a product
distribution strategy that can scale. You
will be making money in smaller increments
with more customers, rather than large chunks
with a few clients each year. This means you
have a new goal – find many customers.
It is
important to realize that by switching to
the volume model, you may need to change the
target market you are most used to, and most
comfortable with. For example, if you have
built your consulting business around helping
enterprise clients build solutions for very
complex situations, your opportunity to ‘dive
deep’ into the problem as a consultant
will change drastically when you are working
with a product/volume model. Your product,
unlike your consulting practice, will need
to be much more broadly attractive to a larger
group of customers who can implement it with
minimal help from your organization. The customer’s
expectation with a product is it will produce
some results quickly and early on, which is
very different to the assess, define and produce
model of consulting.
To assess
your readiness to move to a product-based
model, consider the following 7 key steps:
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1.
Clearly define your product.
In product distribution, especially in
the case where you are offering implementation
services, you need to define as clearly
as possible what the product specs are
early on. ‘Bugs’ in your client’s
eyes can quickly start to feel like extra
features to you. You want to be able to
refer to a mutually agreed upon document
before you get into a sticky mess of constant
revisions, and a drain on your engineering
time.
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2.
Prepare to make a long-term investment
in service & support.
Service and support seems like a no-brainer,
since you have come from a business model
where your money is made solving problems,
often on an hourly basis. Product-based
business models are just the opposite.
Any time spent fixing or re-deploying
the product you have already sold is a
drain on your profits. It is essential
to set up a service and support plan that
covers your resource costs and clearly
defines where your company’s support
starts and ends. Not carefully planning
out this step has caused many a product
organization to dive deep into the red
in programming time and fees.
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3.
Define your audience.
Now that you are supplying a more ubiquitous
solution for a larger audience, you need
to clearly define who that audience is
and what their particular needs are. The
fastest way to seed a market is to supply
a tangible solution that solves a problem
that is often encountered in that particular
environment. Your product is probably
an iteration of the solutions you most
frequently provided to your consulting
clients. But remember that you no longer
have the luxury of a long contract to
‘sell’ your audience. In order
for a product-driven company to work,
you need to get the attention of a larger
number of people more quickly.
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4.
Know your competition before starting
You may be entering into an already crowded
space. This is not necessarily a deal
killer, but tweaks to your offering to
highlight what your product can uniquely
provide will help differentiate you from
the rest of the competition. What’s
important is to find out what these adjustments
might be before you launch. Subsequent
versions are obviously going to come,
but you want to get as much momentum as
possible in your first effort to build
trust within your market.
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5.
Hire a good marketing talent.
Engineers are not marketers, and vice
versa. Instead of trying to master the
craft of marketing, invest in talent that
is knowledgeable about your audience first
and your industry second. Find someone
who has had experience in a similar product
space, so that you can leverage their
experience and expertise. Keep in mind
that it may not be necessary to invest
in an internal marketing officer right
off the bat. Hiring a marketing consultant
may be a more economical and targeted
way to get a lot done early.
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6.
Clearly articulate what customer needs
your product addresses.
Any good marketer will first ask you what
your product does well and for whom does
it solve problems. This requires you to
step out of your own shoes, and consider
the frustrations and desires of your key
market. (As your product organization
grows, you can tackle additional markets,
more on that in #7). Think back about
your consulting clients and what they
complained about most in their daily work.
It may not be the most exciting piece
of what you provide, but it could be just
that thing they have been looking for
to make their job easier. Issues that
bother people on a daily or weekly basis
are the ones people are looking to solve
most quickly, because it directly translates
into more time either to get other tasks
done, or, often to relieve a constant
schedule of working longer hours.
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7.
Focus first on the low-hanging fruit.
You may have big plans to take over the
known universe in the future, and you
may feel that your product is a must for
everyone. But it’s important to
stay focused on the quickest return early
on in your product launch. By laser-targeting
the group who is most likely going to
buy your product, you will be able to
minimize your marketing spend, refine
your key messages to that audience, and
hopefully seed a ‘cash cow’
that will fund future releases and future
growth of your business.
Perhaps
the most important in all of this is to focus
on the reality of where your technology fits
in the marketplace. Set up your business to
answer the question: who is your most profitable
target market? If you are true to the audience
that is getting the most out of your offering,
your business will have a very good chance
of succeeding.
Shelli Strand
is founder and primary consultant for Strand
& Associates, a consulting firm specializing
in marketing and lead generation. www.strandm.com
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