When businesses need to increase profits, where do they usually turn?
Typically, they will ramp up their marketing efforts in order to grow their customer base, or they will employ various strategies to help them convert a higher percentage of their leads into paying customers.
Here’s the problem with both of these approaches. While they can help businesses increase sales, they often do little to nothing to boost their profits.
Because these businesses are already dealing with razor-thin profit margins, they keep working harder and harder—only to end up with very little profit to show for all of that hard work.
A far more effective approach is to create more products for your business.
Today, I want to stress the importance of developing new products and how they can help your business increase its profit margins—not just sales—without causing you to work harder in the process.
How Do New Products Help Increase Profits?
The primary benefit of developing new products is that it allows you to sell to your current customers. Why is that important, exactly?
Your customers—unlike many of your prospects and leads—are people who already know you, like you, and trust you. Rather than constantly working to earn their interest and trust, you can start a conversation because of the relationship that already exists.
Of course, the issue you might encounter with some of your current customers is that they may no longer have a need to buy from you.
This is what makes developing brand new products, services, and solutions so valuable to your business. It allows you to get your foot in the door once again with some of your most trusted customers.
3 Questions You Need to Ask Your Customers
Whenever I instruct business owners to develop new products, it’s usually at this point that they ask the question, “… but what new products should I sell?”
Fortunately, you don’t have to spend hours and hours brainstorming different ideas or racking your brain for the next great product. You have customers, right? So, ask them!
There are three simple yet critical questions you need to ask your current customers before developing or introducing a new product:
1. What problems are you having that people in my industry aren’t helping you solve?
When I ask my business clients this question, the answers I get are typically the same.
I want to pay less in taxes. I need to make more sales. I need to grow and expand my business without running myself into the ground.
These are just some of the most common pain points that customers have within my industry.
Of course, your customers will have entirely different pain points. Knowing exactly what they are will give you a better idea of the types of products and solutions your customers need.
2. If I had a solution for that problem, would you be interested?
While you might assume that there’s only one possible answer to this question (a resounding “yes!”, of course), the truth is that not all pain points are equal.
Some customers’ pain points are mild inconveniences at best. Although they may be a little frustrating to deal with, the customer might not be willing to invest money, time, or energy in new solutions for those problems.
On the other hand, certain pain points are major issues that are holding businesses back. Maybe they’re problems that the customer has been dealing with for years. The more significant the problem, the more likely it is that the customer will be interested.
In any case, asking this question verifies that there is enough interest in a product for it to be worth the time, money, resources, and effort that will be needed for you to develop it.
3. How much would you spend to eliminate that problem?
Whether a pain point is significant or relatively minor, there will always be a specific dollar amount that your customers are willing to pay for the solution.
Of course, identifying this threshold will help you determine whether or not a product is viable at the customer’s desired price point.
What’s more, it will allow you to design the product or service in a way that yields a reasonable profit for your business!