I’ve been wondered why is it that most service providers never really think or talk about what the value of their product service is. Now I mean the value, not the value to them, but the value to us. I also find that most of the time, suppliers rarely talk about what’s known as the total cost of ownership. That’s what the topic of today’s video is going to be.
I bet there have been times in your business life where you’ve been pitched on a product or service and wondered how you’re going to get a return on what you’re spending. Now, I’ve also spent a lot of time questioning this exact same thing. And the truth is, I’ve wondered about it more than once.
I’ve also wondered why is it that most service providers never really think or talk about what the value of their product service is.
Now I mean the value, not the value to them, but the value to us. I also find that most of the time, suppliers rarely talk about what’s known as the total cost of ownership. That’s what the topic of today’s video is going to be.
Hi, I’m Josh Patrick, founder of Sustainable Business, and Cracking the Cash Flow Code. As well as tons of programs to help you create a sustainable business. I’m also the author of Sustainable: A Fable about Creating a Personally and Economically Sustainable Business.
Today we’re going to talk about 6 things that are crucial if you want your customers to start thinking about your service not as a cost, but a profit center for their business. And that’s a really big deal in my opinion.
So, lets start with looking at your offering the customer’s point of view. You know you have to always ask yourself a question.
Why is a customer, or why is your client doing business with you? What is it that they hope to get out of your service that’s going to provide them longterm value?
Now, when you look at your service offering I want you to go past exactly what it is, but what’s total cost of doing business with you, or what’s the total value somebody gets when they do business with you? That’s what your customers are really asking about, that’s what I ask about when I look at a service offering, and I’m going to bet you ask the same question yourself.
Remember, the value is not only what you save, but also what you create. What I mean by create with this is you know, a lot of time we take a service offering and we say this will save you x amount of dollars. Well, that’s nice, but that’s not where real money is made. Is your problem..
Is your product something that’s an innovation product, is it something that’s going to help people create more business for themselves, or is it going to be something that helps them create more profits?
That’s something you really need to be thinking through and you need to be talking about when you’re working with your products.
Now the other thing that you want to think about all the time is what’s the return on the investment for the client? So, if they’re going to spend 25, 30, 40 thousand, or even five thousand dollars with you, are they going to make 10 times the money that you’ve got, that’s a 20 times return on investment. Or, are they just going to get their money back.
Now too often I see people saying, well you know, this is really good if you just get your money back. No, it’s not.
You know, for example, let’s talk about marketing for a minute. If I’m going to spend five thousand dollars on a marketing program, I expect that marketing program to produce at least 50 thousand dollars in revenue for me, because I don’t want my marketing cost to be anymore than 10% of sales.
So, as you’re thinking about your service, what is your cost of your private as a percent of sales, and what is the return on investment they’re going to get?
If their return investment is not at least 4 or 5 times what your cost is, I think you really need to be thinking about an ROI, that return on investment, and what can you do with your product or service to make it worth at least 4 or 5 times what the cost is.
The other thing I think of that really annoys me, especially about service businesses is that most of them don’t have a guarantee. If you can find a way to have a guarantee it makes it easier for someone to say yes to you. That way you’re doing what is called risk reversal which is, you’re taking the risk on, you’re not asking your client or customer to have a leap of faith to do business with you. Now this has nothing to do with someone coming to work with you.
The next thing is really more about when people want to leave. I don’t know about you but there’s too many business providers out there that, when I finally say it’s time for me to leave, they make it really difficult for me. It’s not something I want you to do. If somebody wants to leave your business and wants to stop doing business with you, it’s really important to make it easy for them to leave, because then you’re making it easy for them to come back again.
I can’t tell you how many times I’ve done business with somebody and they’ve left us, and then in a year or two or three years later, they decided, you know, I really life what Patrick was doing and I want to come back to work with him again.
And finally it’s your job to be specific about what your value is. It’s not your customers job to figure it out. When you’re designing your product and your service, be very specific about what the value is you’re providing for customer and how they get value out, and how they’re going to get a return for the money they’re going to be spending with you.
So, that what’s we’ve got today. So, I hope that you’ve been thinking about this in a manner, and I hope you spend some time and write down what is your value proposition? How does your customer get the value proposition? And think about this from your customers point of view.
So, why don’t you leave a comment below about what your thinking about adding value and creating value for your customers and while you’re at it DOWNLOAD our infographic that shows you the success path creating cash in your business. And this is Josh Patrick. Thanks for stopping by, I hope to see you back here really soon.