Education is a service business, and I deliver courses worldwide, and I help people worldwide deliver their courses into the USA market. (Yes, with the gift of ADD I get into about seven different business lines.)
A beginner's mistake is to look at what the customer gets and not what problem the customer wants solved. We tend to think "why, I have all this training in website development, so I can create really cool websites. The going rate for websites is about $4000. So I'll go for that, and build really cool websites."
Now in this instance the problem is compounded. Websites generally do nothing more for a business than a telephone book listing once did. Websites now can replace the catalog as well, but not much more. To put thousands of dollars into with is just some pictures does not make much sense, unless it can be proven that the thousands will get you say $100,000 in sales. Well, say it does. Very good, but would a $100 website gotten you the same sales? Website designers talk about everything except how this money spent today will result in this much more money today.
I am picking on the service business of websites since that is one service area where most money is wasted. Say you have $100,000 in student loans from the art academy for a degree in web development. And after graduating you find out economically speaking, complex websites are a net deficit for a company. Now what? Well, as you sell $100 websites that do the job the client needs, you can market yourself as a graduate from the art academy who knows all about websites and knows what he is talking about when he says the client needs no fancy website. Godaddy and google websites just act on the reality that website design is not very important. Don't build websites, start godaddy.com.
Another example. I was listening to a doctor talk about the service he provides, medicine, and the use of maggots. He went on about the problems of dealing with infections in wounds, and all of the kinds of antibiotics and other drugs and all of the problems when those medicines do not work. I was astonished to hear him say "when we find that none of our medicines work, we can always send in the maggots, works beautifully every time."
What? Maggots work beautifully every time? Then why not start with maggots, and no side effects, and no big expense, and works beautifully every time? Well, in this culture we are forced to choose among too few doctors, and they are forced to play the drug game to cover the cost of their student loans.
But why learn all about all of those drugs if maggots will do the trick? Because to sell the very good maggot infection cleaning technique, you better be a doctor. Who is going to trust anyone else to sew up maggots into a leg wound? So yes, you do sell your expertise.
You and I may have a wide range of things to offer a client, A to Z. But the client only wants K. Nothing else. We might say "we'll give you A to Z for $10,000" and they will say no. We say "we'll give you K for $10,000," and they say yes.
And if they can get K in ten minutes, they are even happier to pay the $10,000. Think about going into the dentist with a toothache and you agree to pay the dentist $500 to fix it. You do not want him to clean your teeth, look at alignment and all the other things dentists can do, you want the tooth drilled and drained. If he can solve the problem in 30 seconds you are even happier to pay.
So the trick is to stop thinking about the work we can do and keep focussed on the problem the customer wants solved.
Solve that problem quick, and then our client adjusts to their new business. Company grows. Then they encounter new problems. Then they come back to us, because we solved the last problem in ten minutes...
The trick in the service business is to give them as little as you can to solve the problem, but charge them the same money as if they bought everything you can do.
Feel free to forward this by email to three of your friends.
2 comments:
John, I'm a software developer and mobile/web app developer (not designer). As you know the software industry has a lot of inefficiencies. I feel there is a lot of "noise" in the industry because it's dominated by those that have raised venture funding or big software companies, like Amazon, MSFT, and Google. Big venture capital calls the call the shots on what gets built and often it's clear that the wrong things are being built. Honestly, the money is good but it can get depressing at how wasteful things are. I have a colleague who runs adwords campaigns for companies. When I drilled down, I found that most of those companies are barely breaking even after paying for the ads and the consultant. These consultants often charge $80/hour to break even or do a little better than that on adwords.
As a software developer/consultant, do you have any thoughts about how I can get to "K" instead of "A" through "Z". My goal is to make software/apps that helps make my clients make money and not to lead them down the path of spending money on things that don't actually make them money (even if I advise them not to do so). I think this is "long term greedy" for me as the current internet bubble will burst soon (the damage is being done now according to my very limited understanding of Austrian economics) and those developers/consultants that aren't providing real value will be out of work. I advise my clients not to get patents, put they still spend $20,000 on patents, I advise them not to spend money on adwords but they still waste thousands and thousands on it.
Put another way, I'm a construction manager in Las Vegas in 2006 helping developers build houses to flip. I have customers, but how do we find sustainable customers in such bubbles?
Relying on just a website to build a retail business is not a good idea as John as indicated before. According to the stats, only a very small percentage (something like <5%) of retail sales occur online for small business. John, what are the stats for Amazon?
Check out the previous post:
http://hbhblog.blogspot.com/2011/03/web-based-business-proving-near.html
"as a small business start-up, the point "a business that is only web based is proving near impossible" is as true today as it was in 2001, even more so since we have a decade of experience to back it up."
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