3 Risks of Expanding Your Services & Offerings
Written by Alex Jimenez
2019 is knocking on the door. We are busy planning for next year, as I am sure many of you are right now. This year has flown by—before we know it, the holidays will have come and gone and we all will be charging into Q2. We hope your organization is able to look back on the past twelve months as a success, and if that is not the case, hopefully you have some tangible and measurable actions at the ready to help transform your results in 2019.
Typically, this is the time of year when organizations evaluate themselves, including their service and product offerings. While we are proponents for consistently evaluating and potentially adding new services or products, this process must be carefully considered and not rushed based on a cash flow challenge. Rash decision making based on subpar performance almost never leads to a desirable result; we can all relate to poor decisions borne of desperation. Hurried service or product rollouts rarely drive more revenue. To the contrary, revenue attrition is often times the inevitable outcome.
So, why does this always happen? Why does organization after organization, year after year, chase the same purple squirrel down the same path with the same results? They did not take the time to ask themselves honest questions. It is always easier to try something new than it is to fix something old.
In other words, treat the root of the problem—not the symptom—or suffer the same results.
If you were to Google ten companies you admire right now and look at their services or offerings, what would you find? Would they look like a Friday’s drink menu? (Alabama Slammer anyone?) As a consumer, does this appeal to you? Is it clear what the organization is good at it compared to their competitors? What is their core offering? While a menu the size of a dictionary might work for a family restaurant whose customers are seated and hungry already, it’s a totally different scenario when your customers are trying to procure a service that may cost them or their business tens of thousands of dollars.
Here’s what your organization risks by offering too much:
- Diluting your organization’s unique value proposition and compromising sales at the same time you are investing capital.
- Opening your organization to more competition. The more you offer, the easier it is for buyers to find competition for comparison.
- Creating a confusing environment for your existing clients and prospective ones. While messaging and a cohesive story can illustrate a valuable relationship among your offerings, the offerings need to intuitively make sense together, or they will not be memorable.
Let me be clear—there is nothing wrong with offering a multitude of services. There is also nothing wrong with rolling out new ones. If the answers to the sample set of questions below are all yes, then you may have a viable product and you should explore the new service offering further:
- Have your customers (either existing or prospective) been asking for the service or product? Have they been banging down your door, email and blowing up your phone? Have they expressed interest in acquiring it from your organization if it was offered? Would they be willing to pay a reduced rate or price for a beta product?
- Can you provide the service or product with your existing resources? What would the impact be to other services or offerings? Are those performing optimally? Would this new offering generate enough revenue or return to justify the deviation of resources?
- Can you provide the service or product uniquely? Would it be new or a unique improvement on what is already available in the marketplace? If not, how would you differentiate this new offering to take market share from your competition? Can you? How long would it take?
If any of the questions above end in a firm “no” or you are unsure, you should be very cautious with how you proceed. While tepid responses to the above may not warrant a complete stop, you will need to regroup with the right stakeholders on your team to assess your strategy.
A little stat I picked up may help set the tone for these conversations. When Proctor & Gamble reduced the different Head and Shoulder products from 20 to 15, their revenue increased 10% across the entire product line.
Sometimes less is more.