As a business owner, it’s your responsibility to uncover your customers’ problems and position your products as the best solutions in your market.
However, this is often much easier said than done. After all, no two customers are the same, right? So, how can a single product or service meet the diverse needs of your entire customer base?
Today, we’re going to discuss a strategy that you might not have considered before, but one that is very easy for any business owner to implement. The best part? This strategy will have a profound impact on your business’s sales and profits:
The multi-tiered product strategy.
If the strategy sounds simple, that’s because it is. The purpose of tiers is to differentiate between the basic and elite versions of the products and services you already sell.
But here is what makes the simple concept of product tiers so transformative for your business: If you integrate these tiers correctly, you’ll be able to offer your current products and services at varying price points, meet more of the needs of your existing customers, and make your entire product line more attractive to future customers.
Common Examples of Product Tiers in Business
Need proof that product tiers work? Look no further than the financial services company, American Express, who were among the first to adopt this strategy.
At the very bottom of their credit card product line was the green card, the most basic version of the product. Two intermediate tiers followed in the gold and platinum cards; and finally, the black card represented the company’s highest tier. The truth is that, while all of these cards met a similar need, customers received slightly different benefits with each one.
Have you flown recently? Most airlines offer product tiers that afford their customers different levels of convenience and luxury. You may have the option to fly economy, business class, or first class—depending on your flying preferences and how much you’re willing to pay for those benefits.
Finally, consider books, video games, and other common types of media. In the case of books, you can often purchase a digital copy, paperback, or hardcover. Video games, on the other hand, often have standard, deluxe, and ultimate editions.
There are countless other examples of how businesses use a multi-tiered product strategy to meet the far-reaching needs of their diverse customer bases.
And guess what? You don’t need to be a massive corporation to implement this concept effectively. Whether you’re a sole proprietor, small business, or large company, you can design your very own product tiers today!
How to Roll Out a Multi-Tiered Product Strategy
Ready to get started? Roll out a multi-tiered product line or amend your current product line with the following steps:
1. Choose Your Number of Tiers
Ideally, you want your product line to feature at least three product tiers and upwards of five tiers—arranged in order of good, better, and best.
This will allow you to not only meet the varying needs of your entire customer base but also stand out from your competitors. With unique products and customized benefits throughout your product line, it will become increasingly harder for customers to compare your products and services to other options on the market.
2. Clearly List the Benefits of Each Tier
Customers are wired to stand out, and naturally, some of them will gravitate toward the higher tiers in your product line and will be willing to pay the premium that comes with those products and services.
However, it’s critical that you make these benefits known to your customers—whether it’s by displaying them on your website or listing them in a brochure or handout. Make it clear to your customers that your highest tiers deliver the most attractive benefits.
3. Assign a Price Point for Each Level
Finally, you will need each level of your product line to have a price relative to the value of the benefits the customer will receive.
Now, it’s true that many of your customers will settle for your lowest product tier. After all, they may have a smaller need for your product or be confined to a tight budget. However, you can structure your prices in a way that makes the customers feel as if they are getting more and more value as they ascend to the higher tiers in your product line!