Does your company offer a service? If so, your business is likely to be affected by the economic disruption caused by the Coronavirus. Consumers are reducing use of many services right now to avoid human contact and save money, yet we are still buying products that solve a specific problem.
Businesses are buying products like Zoom and Slack for teleconferencing, and consumers are abandoning services in favor of products. Italy was the first Western democracy to experience the limitations placed on everyday activities in an effort to curb the Coronavirus pandemic, and it changed everything about everyday life, even what people bought on Amazon.
For example, in the week after the Italian government quarantined most of its citizens, there was a 236% increase in Italians buying sports equipment, presumably to establish a home exercise routine to replace services like personal training.
Instead of going out to enjoy the service in a great restaurant, you are buying more alcohol. According to a recent Nielsen survey, total sales of spirits such as tequila and vodka were up 75% over the same period last year. Service providers are turning (pivoting) to provide a product.
Many companies have reacted by turning their services into what consumers see as a tangible product:
- Guerrilla Tacos in Los Angeles typically offers a lively dining experience and has recently focused on offering a product called the “Emergency Taco Kit,” a take-away taco kit for taco lovers
- Spiffy, a mobile car wash service based in the United States, has reinvented itself and is offering a new product that they have called: COVID-19, to disinfect and protect cars UK-based
- Encore has grown from an artist booking service to offering its 'personalized music message' product, which allows the customer to request an artist to create a personalized video greeting for a loved one
To take advantage of our gravitation toward purchasing "products," service providers can take the following eight steps:
Step 1: Define a Niche
The first step is to narrow your focus to just one type of customer. Many people are uncomfortable with this stage, particularly at times like these, when you need more clients, not fewer. It's counterintuitive, but the critical first step in turning your service into a product is to focus on a niche. Services can be tailored and personalized for a variety of clients; in contrast, products must be tailored to one type of buyer.
Choosing a niche also helps you design a great product and efficiently reach potential customers through things like Facebook groups set up to serve a specific target group. Focus on a niche that you are comfortable in and then carve out a niche within that niche. Consider the following:
- Demographic data (age, gender, income)
- Company size, industry
- Life stage (newlyweds, retired, etc)
- Life stage of the company (entrepreneurship, mature company, etc.)
- Psychographic data
Step 2: TVR - Rank Your Services
The next step in turning your service into a product is to identify the services you offer that can be taught to employees and that are valuable to your customers, who have a recurring need for that service. In our Value Builder (Value Builder System), we call this finding your TVR (Teachable, Valuable, Repeatable).
Take a white board or paper and make a list of all the services you can offer to the niche you selected in Step 1. Then rate each service on a scale of 1 to 10 to the degree to which you can teach employees to offer the service, how valuable it is to your niche, and how often your customers will need to buy it.
Choose the service that gets the highest score, and then proceed to Step 3. (You can always return to this step if you want to consider multiple products.)
Step 3: Be Clear About What Problem Your Product Solves
Harvard professor Theodore Levitt was famous for saying, “People don't want to buy a quarter-inch drill. They want a quarter-inch hole. " Be clear about what problem your product solves for your niche. For example, the “Taco Kit” makes cooking at home fun for the family, while the “Sanitize and Protect” product sanitizes cars for those essential service providers who need to keep driving.
Step 4: Brand
With a service, you generally hire one person. With a product, you are selling one thing. Unlike the people who have names, something like “Cue Kit”, “Sanitize and Protect” and “Personalized Musical Message” have brands.
Step 5: List Your Ingredients Service
Companies customize their deliveries into a unique proposition for each potential customer, but product companies list their ingredients. Pick any package in a grocery store, be it a bottle of dishwasher detergent or a cereal box, and you'll see a detailed list of what's inside the box, so your offering should list what customers get when they buy.
Step 6: Anticipate Objections
When selling a service, you can afford to hear your prospect's objections first-hand, and you can dynamically address them. When selling a product, you don't have the benefit of one person handling customer objections on the spot, so consider and anticipate potential customer objections and avoid them. By selling the “Sanitize & Protect” auto cleaning product, Spiffy anticipated the four most common concerns customers raise and anticipated each in his marketing collateral. For example, Spiffy assures its prospects of the following:
- A money back guarantee for people who are not satisfied
- Insurance in case of damage to your car
- Trained technicians who know what they are doing
- Ecological cleaning products so that they do not harm the environment
Step 7: Price it
Services are priced by the hour, day, or project and are generally presented at the end of a custom proposal. Products publish their price.
Step 8: Manufacturing Shortage
One of the benefits of a service business is that the customer who really needs you will look for you, because if he does not, he knows that someone else will and may be left without the service.
With product businesses, on the other hand, you must give people a reason to act today rather than tomorrow. This means that you must give your customer a reason to act and buy from you through things like limited-time offers, limited-access products, and more.
Many of the service providers have been adversely affected by this crisis, but if you make your service "look and feel more like a product," you can take advantage of our society's trend toward buying tangible products in times of stress and uncertainty.
Source: Value Builder System