We’re in the homestretch of the HostGator Home Business Guide. Previously we covered the basics of developing a minimum viable product (MVP) to test your business idea and get feedback from customers. Now, we look at what to do after you have at least one viable product or service for sale. It’s time to refine it and maybe expand your offerings so you can make more sales to your current customers and reach new customers, too.
Start (always) by listening to your customers
How do you know what to offer next? Listen and your customers will tell you. If they don’t have any requests for you, you can ask–then use your active listening skills to hear their answers clearly. Start conversations with your customers about their needs when you see them face to face in your shop or at your event booth. Use your website, email list, and social media accounts to ask for direct feedback, host polls, and take surveys. Just remember to ask lots of questions and take your time developing the ideas you get from these talks.
Present your existing products and services in new ways
While you’re listening to your customers, you can also work on new ways to offer your existing product or service to appeal to a broader range of customers. In fact, your current and would-be customers may suggest some of these options to you.
Use tiered pricing to appeal to customers at different price points
This is a tried-and-true tactic for businesses of all sizes, because it changes your customer’s decision from a single binary choice (do they want your product at the one price listed, yes or no?) to a mini-buffet of options they can choose from.
Snappy hears what these would-be customers have to say and decides to offer three tiers of pricing for his bounce house rentals:
- an all-day rate for $250
- the current $50 per hour rate
- a nonprofit rate of 50% off in exchange for listing Snappy’s as a sponsor and giving out promotional material at the event
Snappy’s not offering anything new (yet) but he is giving customers some options when it comes to meeting their bounce house rental needs. This gives him the ability to bring in new customers—nonprofits on small budgets and homeowners who host all-day events.
Package deals are another way to win customers. You bundle your next MVP with your current products and services, or you can partner with another business to package your offerings together.
For example, Snappy might hear from his customers that planning a kids’ party takes a huge amount of time. So he might offer a package that includes a 20-minute performance by a magician and delivery of a birthday cake, plates, and napkins to the event site. Grateful parents may respond better to that package (and pay more for it) than a basic rental.
You can create landing pages for your tiered pricing choices and your packages on your web site. Then promote these pages through your social media and email channels so your customers know they have new options.
Cross-selling and upselling
If you have new MVPs to offer, you can sell them as standalone products, but you may sell more if you have a plan to cross-sell or upsell them to your current customers.
Cross-selling: offer something new
Let’s say Snappy has heard from some customers that they would also like something their party guests can enjoy in the pool. He does some research, buys several big rainbow unicorn pool floats, and offers them as a separate rental option for his customers. The unicorn armada is a success, but his higher net worth customers say they’re still looking for more “wow” factor for their backyard pool parties.
Upselling: offer something better
Snappy wants to cater to these high net worth customers. Because it’s a great time to be alive, he finds an option online he thinks they’ll like: a rainbow unicorn pool float encrusted with thousands of crystals (yes, this is a real thing). He also pays a set designer to make coordinating sparkly decorations for the outside of his bounce houses to offer a “glam” option at a higher rental rate. Snappy’s dolled-up bounce houses and crystal unicorn pool-float party rentals become must-haves among his moneyed clients.
When you add cross-sells and upsells, be sure to feature them prominently on your website, especially if they make compelling images.
Refine and revisit your MVP and USP to deliver better products
It’s important to note that Snappy didn’t just plunk down $6K for a sparkly pool toy without doing his market research and his math. He knew before he made the purchase that there were enough parents (and other adults) in his customer base with the means and the willingness to make it a profitable decision. And he ran a minimum viable product test with some un-sparkly unicorn pool floats to test the pool-toy rental idea first.
It’s also crucial to remember that Snappy’s new packages and offerings help refine his unique selling position (USP). He’s moving from being a run-of-the-mill bounce house provider for children’s backyard parties to being a fuller-service party entertainment and rental company for house parties and community events – but he’s still firmly focused on his core business of party rentals and services. Well done, Snappy.
Next time, in the final post of our HostGator Home Business Guide, we’ll talk about how to review your business from top to bottom to make sure you’re getting the most from your hard work and to find ways to keep growing and improving.