Situation: To date, a company has performed a single set of services focused on collection and delivery of a stream of raw data to its clients. The CEO wants to add a consulting service based on the expertise that the company has developed over the years. The CEO seeks input on both how to position this new service, and how to organize it, either within or separately from the current business. How do you expand your business model?
Advice from the CEOs:
Consulting services can be offered at a premium to current services because the company will be offering analysis and recommendations for a solution, instead of just raw data. Intelligence is more valuable than raw data.
Offer the consulting service on a project rather than an hourly basis. For example, price a project at $10k for the consulting package instead of $200/hour for data collection and reporting.
To add weight to the consulting offering, provide final reports and recommendations as a professional, written document supplemented by a presentation.
Test the concept and early options for the consulting service with existing clients.
Create a new division for the consulting service so the customer sees it as an additional option and value that the company provides. This will change both the branding and image of the business.
To increase the opportunity for success, develop a full business plan for the consulting model.
Focus on the new consulting business with the same discipline as the current data business.
Situation: A company has a long relationship with its initial client, which provides the company with key intellectual property. This client handles all marketing, sales and distribution for the company’s principal products, but only accesses 20% of the market. The client is concerned about having its image associated with expansion into markets that the company wishes to pursue. How do you structure a deal that enables you to access the broader market without offending the client?
Advice from the CEOs:
The issues for the client are public relations and liability. They don’t want to be associated with certain segments of the larger market as it may compromise customer perceptions of their core business. Further, they want to be indemnified should they face damages from your forays into the larger market. It is important that you address their concerns.
Sit down with the key client. Pose a problem that will generate the solution that you seek and let them solve it on their own. Then seek an agreement with the client on carve-outs within the larger target market with which they are agreeable.
Build an external company with different branding to approach the larger market, without jeopardizing the relationship with the key client. If ownership and management of the two entities are the same be aware that this is a thin veil.
You may increase opportunity for success if you build your own successor product – one tailored for the larger market – while your key client is paying you for current business. Once the product is built, ask the client whether they want to be involved and if so, on what terms. This enhances your bargaining position and reduces your downside risk.
Expand your offering, where current products are part of a larger offering. You have two alternatives: go there anyway, or go there with the client. If the client decides that they don’t like what’s happening and opens the market this could be ideal for you.
Situation: IBM and others established the value of preaching FUD (Fear, Uncertainty and Doubt) within their marketing campaigns – “choose IBM, the brand that you can depend on, because who knows what others will actually deliver.” Is it still worthwhile to use FUD, or are we better off emphasizing the positive benefits of our services and keeping our image positive?
Advice from the CEOs:
When considering whether it is better to sell the time that your system or product is “up” or the time that it is “not down,” you need to understand your customer’s perspective.
If they are cautious and skeptical, then FUD may work. If they are positive and upbeat, then they will more likely respond to a positive, upbeat message.
Match your marketing message to the attitude of the key decision makers within your customer companies. Learn their hot buttons during ambassadorial visits.
Companies sometimes use FUD when they sell “the future.”
Being “in”: if you haven’t got our product/service you won’t be with it!
Insurance companies sell protection from the unknown.
Mix the message. Sell the positives, with an appreciation of the cost of the negatives to reinforce the positives.
Be the “Mr. Goodwrench” of your marketplace. Educate and reinforce.
Consider positive health care analogies in your marketing:
Rapid Response – mimic messages from urgent care.
The value of maintenance programs – mimic messages from wellness programs.
Develop metrics to substantiate what your customers are hearing from your message.