In this article, we’re going to explore the concept of productising. We’re going to uncover the following:
- The 4 elements every successful product needs.
- Where your product needs to be on the Profit Graph.
- Why your business needs to start with a strong culture and foundation.
Let’s get into it…
First, let’s look at the 4 things you need to create a winning product:
- It needs to solve a problem.
- It needs to be price and packaged as part of an ecosystem. Don’t solve a problem and then create another.
- It needs to be profitable PROFIT = VOLUME X MARGIN.
- It must have a tangible outcome that will be associated with you. Create the anchor so that they remember you. For example, Shirlaws Group helps businesses grow from 6 figures to 7 figures, and from 7 figures to 8 figures. But the growth and extra revenue are not what they’re remembered for.
Instead, Shirlaws sell ‘3 months of extra holiday a year’. The tangible benefit to business growth is the extra time they get to spend on holidays with their kids. That’s the anchor. That’s what Shirlaws is remembered for.
Once you’ve established all 4 elements in your product, you need to analyse the volume and margin it can produce.
The simple equation for Profit is Volume multiplied by Margin, where Margin equals revenue minus cost.
The unicorn of business is a high-volume, high-margin product. Apple is a prime example of a business with high-volume and high-margin. An iPhone costs $50 to produce and distribute, yet millions of people across the world pay up to $1000 to get one in their pocket. Apple also offers products like iTunes that have a ridiculous margin due to the low cost of distribution.
On the opposite end of the spectrum is a low-volume, low-margin product. We call this an ‘ugly’ business model because you’re producing very little and your margin is too small. A business cannot survive if it’s relying on a low-volume, low-margin product. This is not a scalable model, so you need to avoid products that fall into this category.
Most of your products will probably fall into the other two boxes. High-volume, low-margin products are a good way to increase your brand awareness and offer an entry point for prospects to engage with your business.
High-margin, low-volume products are the big ticket products that your best clients will purchase. These are typically the products that make the most money, so this should be the core product that you want prospects to end up purchasing after they’ve purchased your low-cost product.
However, before you start developing products and building a product ecosystem, you need to develop the foundations of your business.
Take a look at the following image:
Your business is much like a building. Everything starts with your culture. If you don’t have a solid culture in place, your business will topple over. Therefore, it’s imperative that you develop a strong culture and set values for your business before you develop any products.
The next level is your foundations. This refers to how your business operates – how do you use your time? How do you use your money? How do you build your capability to grow the business?
All these things make up the foundation of your business and it’s important to get them right. A great product won’t be successful if you’re misusing your time and money, and you don’t develop a strategy for growth, you won’t be able to keep up with demand.
Once your culture and foundations are in place, you can begin to develop your product, brand, sales process, and partnership channels. Above all, it’s your assets that will drive sales and growth. If you learn to leverage your assets, you’ll build a business that can scale.