For those who might not know, NextStage is adapting most of its desktop technologies to web-based tools.
And for those who know me, I don’t make a move without researching it as thoroughly as I can.
NextStage has been a consulting company making some of our desktop technologies available to clients since 2001. Why move from consulting to product based? I’ll share our reasons and then share reasons you may want to consider.
Why We Did It
NextStage’s move from pure consulting to a service/product mix has more to do with web-enablement technologies finally being robust enough for our needs. We’ve always had desktop tools and they were a routine part of our consulting practice. We would go to a client site with our tools on our laptops, run their creative through our tools and give them the resulting reports. Often clients sent us their material for analysis.
The one exception to the above was our web tracking tool that generated reports regarding visitor psychologies. That was web-based and simply required a login.
Now we offer a mix. Customers can purchase access to our online tools. The price point is low enough (we believe, and a whole series of posts could be devoted to determining price points) so that our tools are affordable to a majority of interests. We also offer consulting for those who want our thoughts on the reports the tools generate. Help is available online and it’s always nice to offer consulting for same. Just because someone knows how to use a hammer doesn’t mean they want to build a house.
Lastly, we offer trainings for people who want to become “power” tool users.
We still have our consulting clients and for now, we have the bases covered.
Why You Should Do It – Market Competition
My research about moving from service to product based or vice versa deals a lot with market competition.
Do you have a very exclusive service that none to few can duplicate? If yes, your best bet is to remain a service based business. You’re the only folks who have water in the desert so everybody has to come to you for a drink, for example. Okay, that’s a product example and you get the idea.
Agencies abound because they do not offer exclusivity on a service. Market competition pretty much dictates the price and price variance comes with reputation. Good reputations with long, successful business records get top prices and so on.
Do you have a very rare product that none to few can duplicate? If yes, your best bet is to remain or become a product based business. Again, you’re the only folks in the desert with water.
However and regardless of how rare your product is, the minute the market recognizes you and responds, competitive products will arise. It won’t matter if they’re worse than yours, don’t live up to their claims, don’t do what yours does, … any of that. Just be aware that market competition will arise simply because your success in creating a market for your product will cause others to enter your market. This means your product must remain top of the line, must renew itself, increase capabilities, remain competitively priced, you must demonstrate thought leadership, …
Do you have a very exclusive service that none to few can duplicate and that very exclusive service is productizable into an existing market? Oh, my goodness, go for it. The success this can bring can be embarrassing (but fun).
Avoiding the Sharks
As mentioned above, the moment your product or service begins making recognizable money, competitors will arise and probably with more money to spend on marketing than you could have imagined. Marketing is often the killer because people with great products or services usually don’t know how to market themselves and people with rotten products or services usually make up for it by excelling at schmoozing (read “networking”).
Strategy #1 is to sell out to them because nine times out of ten they will come a’knocking. Remember to get cash up front. Lots of it.
Strategy #2 is to get investors, hire marketers who are better than the competitions’ and hope for the best. Remember, getting investors means giving up part of your company. And usually control of your company, too. This strategy is basically the above strategy except the people you’re selling to want to smile more. Again, remember to get cash up front, and lots of it.
Strategy #3 hearkens back to that reputation and longevity thing mentioned above. There are two moves here; become an ultra-specialized boutique shop (smaller market, higher prices, lots of recognition) or use your reputation, longevity and industry recognition to get the best price possible from options 1 and 2 above.
Strategy #4 is a variant of option 3 above — Make a list of your clients, deepest pockets to shallowest pockets. Ask them to make you an offer you can’t refuse. If your offering is truly unique, truly a game-changer and market differentiator, and you’ve already established yourself and your business, they’ll gladly take your business off your hands and treat you well — they’ll need your smiling face for a while and you’re allowing them to gain market dominance — during the process and long after.
The best strategy is always the one you’re most comfortable with. After that, “Which strategy (product, service or mix) is going to provide you the longest life in the market with the most consistent profitability?” is the question you need to answer.
And avoid the sharks.
Please contact NextStage for information regarding presentations and trainings on this and other topics.
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