Its Not About the Profit!
| Category: Marketing Strategy | Date: 2003-10-02 |
Delivering Optimum Value In Your Products
I am in the planning stages for a new information product to be sold on the Internet. Part of the process is of course formulating what I will deliver and what the selling cost will be. As I mulled over this whole process, it occurred to me that in the final analysis, it isnt about the profit. Wait a minute, you are saying, if it isnt about the profit, what is it about?
I will concede that if this product were a one shot deal, it might as well be about the profit. But I plan to be around next month and next year and so I have put into my development process a plan that I think will serve me well for a long time. Instead of concentrating on what is the most profitable product cost/content ratio, I instead put into place what I call the DOVE principle - Deliver Optimum Value Endlessly. I am proposing that, for any product, it is possible to provide what, for the customer, is the optimum value.
Although I am a perfectionist, were not talking about perfection here, just a process to get as close to it as practical. Obviously the value of what I am proposing hinges on how I define and determine "optimum value." My definition of optimum value is "the product that best satisfies that customers specific need at what he considers a fair price." Many product offerings I see seem to be following the Ginsu Knives principle - offer what seems to be a good deal, then pile on bonuses until the customer thinks he cant pass it up. This is by all accounts a good selling tactic, but I am proposing that AFTER the sale, the optimum value becomes more important than the selling technique. If the customer finds the basic product to only marginally meet the need he was trying to fill, all the bonuses in the world may not be adequate to sell him the next product you develop. And if you plan on being successful, customer retention must be one of your top goals. I am proposing the DOVE principle as a method of achieving high customer retention rates.
Another sales approach, selling to meet the customers wants rather than his needs, seems to me to fall in the same category - an effective selling technique that doesnt optimize the customer retention rate. After all, once the customer realizes that what he bought was not really what he needed, is he likely to look with favor on the one who convinced him to make the purchase? Is this a path to developing trust between the seller and the customer, or just a path to quick profits?
Why not just over-deliver on all my products, you may ask? Certainly I believe in delivering more than the customer expects, but, taking information sales as an example, piling up e-books, even good ones, may mean the customer gets lost in the mass and ends up having troubles getting at the information that fills his basic, original need. No comment on under-delivering should be necessary!
Putting the DOVE principle into some practical steps:
1. Carefully identify the need you are proposing to fill.
Talk to as many people as you can about this need to properly judge its validity and size. You will undoubtedly find that your original concept of the need will require considerable refinement. Targeting a need far outside the area of your core knowledge and experience may ultimately be successful but will probably be a more time-consuming task and more difficult to properly carry out. The more you understand about the need, the easier it will be to optimize the product to meet it. Failure to execute this step properly will seriously jeopardize your success with the product.
2. Develop and refine the product with that specific need in mind.
Involve others at this step also, since you quickly lose objectivity about your own pet projects.
3. Test the product on your specific target market.
Offer the product free to the type of people you have identified as your target market. Test every part of the customer interface - the sales page, the ordering and delivery process, and most importantly, the product price and content. Dont skimp on this aspect of the process; if you do, you will merely be moving the test onto the general market and lose time and promotional expenses in the process.
4.Optimize the product offering based on the test results.
You will undoubtedly find that some adjustments are required after your test results are in. You may need to add, improve or even delete certain elements of the product, all the while trying to answer the question "What does this customer need?" A second or even a third round of testing should be done, especially if significant changes are made as a result of the tests.
No, a long term market strategy shouldnt be about the profit, but a process that delivers optimum product after optimum product will find a loyal, growing customer base and yes, profits too!
About the Author
Glenn Gordon is the owner of Youre In Business and the website at ur-in-business.com. The site is dedicated to providing training, tips, tools and techniques targeting success online. He also publishes the BusinessBuilder Newsletter which carries the website theme in a bi-weekly format of powerful, relevant articles. Subscription at ur-in-business.com/bbsub.htm
info@ur-in-business.com
http://www.ur-in-business.com
I am in the planning stages for a new information product to be sold on the Internet. Part of the process is of course formulating what I will deliver and what the selling cost will be. As I mulled over this whole process, it occurred to me that in the final analysis, it isnt about the profit. Wait a minute, you are saying, if it isnt about the profit, what is it about?
I will concede that if this product were a one shot deal, it might as well be about the profit. But I plan to be around next month and next year and so I have put into my development process a plan that I think will serve me well for a long time. Instead of concentrating on what is the most profitable product cost/content ratio, I instead put into place what I call the DOVE principle - Deliver Optimum Value Endlessly. I am proposing that, for any product, it is possible to provide what, for the customer, is the optimum value.
Although I am a perfectionist, were not talking about perfection here, just a process to get as close to it as practical. Obviously the value of what I am proposing hinges on how I define and determine "optimum value." My definition of optimum value is "the product that best satisfies that customers specific need at what he considers a fair price." Many product offerings I see seem to be following the Ginsu Knives principle - offer what seems to be a good deal, then pile on bonuses until the customer thinks he cant pass it up. This is by all accounts a good selling tactic, but I am proposing that AFTER the sale, the optimum value becomes more important than the selling technique. If the customer finds the basic product to only marginally meet the need he was trying to fill, all the bonuses in the world may not be adequate to sell him the next product you develop. And if you plan on being successful, customer retention must be one of your top goals. I am proposing the DOVE principle as a method of achieving high customer retention rates.
Another sales approach, selling to meet the customers wants rather than his needs, seems to me to fall in the same category - an effective selling technique that doesnt optimize the customer retention rate. After all, once the customer realizes that what he bought was not really what he needed, is he likely to look with favor on the one who convinced him to make the purchase? Is this a path to developing trust between the seller and the customer, or just a path to quick profits?
Why not just over-deliver on all my products, you may ask? Certainly I believe in delivering more than the customer expects, but, taking information sales as an example, piling up e-books, even good ones, may mean the customer gets lost in the mass and ends up having troubles getting at the information that fills his basic, original need. No comment on under-delivering should be necessary!
Putting the DOVE principle into some practical steps:
1. Carefully identify the need you are proposing to fill.
Talk to as many people as you can about this need to properly judge its validity and size. You will undoubtedly find that your original concept of the need will require considerable refinement. Targeting a need far outside the area of your core knowledge and experience may ultimately be successful but will probably be a more time-consuming task and more difficult to properly carry out. The more you understand about the need, the easier it will be to optimize the product to meet it. Failure to execute this step properly will seriously jeopardize your success with the product.
2. Develop and refine the product with that specific need in mind.
Involve others at this step also, since you quickly lose objectivity about your own pet projects.
3. Test the product on your specific target market.
Offer the product free to the type of people you have identified as your target market. Test every part of the customer interface - the sales page, the ordering and delivery process, and most importantly, the product price and content. Dont skimp on this aspect of the process; if you do, you will merely be moving the test onto the general market and lose time and promotional expenses in the process.
4.Optimize the product offering based on the test results.
You will undoubtedly find that some adjustments are required after your test results are in. You may need to add, improve or even delete certain elements of the product, all the while trying to answer the question "What does this customer need?" A second or even a third round of testing should be done, especially if significant changes are made as a result of the tests.
No, a long term market strategy shouldnt be about the profit, but a process that delivers optimum product after optimum product will find a loyal, growing customer base and yes, profits too!
About the Author
Glenn Gordon is the owner of Youre In Business and the website at ur-in-business.com. The site is dedicated to providing training, tips, tools and techniques targeting success online. He also publishes the BusinessBuilder Newsletter which carries the website theme in a bi-weekly format of powerful, relevant articles. Subscription at ur-in-business.com/bbsub.htm
info@ur-in-business.com
http://www.ur-in-business.com
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