How to Create Demand for Your Small Business Services
Written by Mary Duggan, ICIC
Many small businesses thrive by creating products that meet the demand of their customers. For instance, a water supply company delivers bottled water to office locations in order to meet consumer demand for in-office filtered water. But few small businesses move from fulfilling demand to creating demand. Understanding how to do so can mean big rewards for the small business owner, but it requires a better understanding of customers and adaptation of goods and services.
In the most recent CEO Series Webinar, Steve Polo, managing partner at design consultancy firm OPX, shared with audience members how to create real demand for products and services.
What is demand creation? According to Polo, “demand creation” happens when you create a product or service that only you can provide. The example Polo cites is Apple’s iPad. Nobody needed an iPad. Heck, nobody even knew what an iPad was when it was first released. Was it a computer? A laptop? An over-sized cell phone? We weren’t sure, but we all wanted it! In being the first to the market with a product customers didn’t need, but wanted, Apple was able to charge whatever price it wanted for the product (at least, initially).
Polo provides strategies for demand creation:
- Be aware of your competencies. Most people are unaware of what they don’t know, and as a result, they do not recognize their deficits. Others, the “conscious incompetents,” begin to at least realize what they don’t know. After you seek out this information, you move into “conscious competency,” in which you build awareness around a new skill or subject and can expand your services.
- Once you become a conscious competent, begin to think differently about your identity. Maybe insurance agents can do more than sell insurance, maybe lawyers can do more than offer legal services. Identify what skills you have and think about ways that you could use those skills differently to offer customers a different good or service. It matters less of who you are as a good/service provider and more who you can become.
- Don’t just find solutions for your customers’ problems; find your customers problems. Take some time to create a deep understanding of who your customers are and what they value in a service provider. Survey your customers and try to assess what they would like to do that, for one reason or another, they’re struggling to complete. Here, you’re not out to figure out what the customer thinks about your existing product, but rather to identify what’s valuable to the customer that you might then be able to solve. Once you identify the problem, you can provide the services to address the problem—because nobody else is (nobody else knows the problem!).
- Polo cites Snickers for its “Hungry? Why wait?” campaign. Before the ad airs, a person might not even realize they were hungry. But the commercial provokes the viewer and makes him realize that he is indeed hungry, then he grabs a Snickers to satiate this demand.
- Rather than pitching “what you do,” move to “what the customer gets”. Polo’s OPX company used to provide traditional design and architectural services. But after conducting market and customer research combined with a little soul-searching, OPX found that there was a large market demand for providing customers with operational results, instead of just design. Their pitch to companies then became: We’re good problem solvers and designers. Would you like a design? Or would you like to operate better? Customers always chose operating better. OPX then spent time educating its team and changing its identity, in order to become a premier provider of operational results.
- Test what you’re doing to ensure its value. This is a two-part value proposition. First, it has to be valuable for your customer. In OPX’s case, were they actually able to help clients operate better? Yes. The second part of the equation is whether this is a good/service that brings in money for the firm. Again, in OPX’s case, yes. By shifting their approach, it allowed the company to grow in ways they hadn’t been able to before. Their new approach draws four times the margin as their old strategy and products once did.
Polo warns that while demand-creation can open many new doors, it can also be very challenging. Specifically, people associate established firms with an existing identity. These identities are tough to change—both internally among staff members, and externally among consumers. Communicating what you’re doing and then tying it to benefits that accrue to everyone is important.
Second, once you create new demand for a product or service—competitors will take notice! At one point in time, Apple had the only tablet on the market. Now, there are several competitors and Apple has had to innovate and lower its price on the iPad, a market it once dominated (and really, still does through innovation). Be sure to adapt to competition as it arises.
To listen to the entire CEO Series Webinar, click here.