Small businesses account for a major percentage of product and service innovation. In fact, as local, regional and national markets evolve, one thing is inevitable. To keep pace, your company will need to expand its own offerings, even if your firm is relatively new.
Refine Current Offerings
Take a moment and think about your business – where you are today and where you want to be in two or three years. Ask yourself these questions:
- 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. Consider 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 bricks-and-mortar store, you still compete with online retailers. Can you deliver products more conveniently in order to compete with home delivery online retailers offer? Online retailers are always open. Should you expand your store hours to make shopping more convenient?
- Different service paradigm. You still can provide the same basic service, but in a dramatically different way. For instance, if you provide maintenance and repair services, some customers may prefer signing up for a monthly service contract instead of paying for services on an as needed 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, regard your products and services not simply as "items" but as comprehensive solutions for customer needs. Then, adapt to meet those needs.
Develop New Products and Services
Once you've tweaked your current offerings, it's time to consider adding new products and services.
Start by extending your current offerings. If you sell products, think about complementary items that leverage the items you currently sell. A simple example: if you own a motorcycle shop, it makes sense to sell helmets, leathers and other accessories.
But other products make sense, too, including repair manuals, travel 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, but you can partner with other companies to help make your establishment a one-stop shop.
If you provide services, think about complementary services that leverage current skills or equipment. Providing repairs or maintenance for some heating and cooling products can be a natural extension for plumbing contractors, for example. Here are additional guidelines:
- Add value. It's easy to create new "products" by bundling existing stock. Most customers expect to pay less for these deals, though, and your goal should be to increase both sales and profits. As an alternative, focus on enhanced service as an added value.
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 delivery schedules and avoid costly delays. The manufacturer charges for the service and avoids delays and schedule hiccups as well.
Apply this thought process to your own situation. Consider how you can add value – half-price carpet installation for two rooms or more, preventive maintenance on electrical appliances, 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 generate revenue and 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.
- Think about the impact on current offerings. A word of caution: Sometimes new products and services can cannibalize sales in other areas. Consider the motorcycle shop: 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 those 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.
New product and service development is not as difficult as it may seem at first. In many cases your customers will tell you what they want, 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.