Are You Ready to Offer a New Service?
Are You Ready to Offer a New Service?
Businesses often need to grow in order to survive, and web hosting businesses are no exception. One way to grow your business is by adding a new service. This article discusses some points to consider if you are thinking about expanding in this direction.Many web hosts are expanding their businesses with new packages, new services, upgrades to existing services, more capacity, and so on. It seems as if companies post press releases about this kind of growth almost daily. Maybe in this competitive field, you’ve been feeling the pressure. Are you ready to add another service offering?
If you don’t think you are, maybe you need to examine your reasons. (Don’t worry, I’ll talk to those of you who are in just a minute!). You might be holding back out of fear. Are you afraid that you might not be able to manage the new service? Or that what you’d like to add won’t fit in with the rest of your offerings? Maybe you’re so afraid it will fail that you can’t take that first step. Or maybe you believe you don’t have the resources, and as a result you will be stretched too thin and shortchange your customers.
All of those are valid concerns, but you should not let them paralyze you. With so many web hosts chasing customers and coming up with new ways to serve them, the fear of failure can become a self-fulfilling prophecy. This doesn’t mean you should rush right into doing something new, of course! But if you step back and take some time to think about it, you can roll out a new service that will make sense as a part of what you already offer.
Not convinced? One management consultancy insists that businesses need to create a “revenue octopus” for the sake of their own security. Joel G. Block, founder of Growth-Logic, says that “You need around eight different revenue-generation streams.” One successful stream can support a company, but it’s very risky to depend on it.
Ready to start thinking about what else you can do for your customers now? Good. You might not be quite sure where to start. It’s right in front you: start with what you do best.
Are You Ready to Offer a New Service? – How Does it Fit?
You might start by going back to your business plan. If you don’t have one, write one now, as simple or detailed as you want. Make sure it shows you your company as it currently exists. For example, let’s say you host mainly small business websites that use their online presence to drive customers to their stores. You are thinking about giving your customers the option of using a software package that will allow them to make sales over the Internet. How will that change your business plan?
There is a lot to think about here. Does the software package build appropriately on what you already have in place? Do you have the resources to handle an increase in e-commerce being conducted on the sites you host – and how much of an increase? Look not only to your hardware and bandwidth, but your own skills and those of your employees.
Will this addition be cost effective? Does it build on what you already have in place, or are you going to have to acquire a lot more resources (hardware, software, people with particular skill sets) that don’t fit in with the rest of your company? To quote Joel Block again, “If you have to spend an inordinate amount of time getting another part of your business up and running, then you’re using up valuable resources.” You don’t want to start from scratch; you want to make sure those eight revenue streams are related.
If you are the kind of person who needs to see it all in front of you, this might be a good time to sit down with a pen and paper (or a computer and a spreadsheet) and start making some educated guesses as to numbers to crunch. Research other companies that have offerings similar to the new service you want to add. What are their prices? Can you match or beat them?
According to Michael Holigan, owner of a $15 million business that includes a service-based website, it’s very important, when considering a new offering, to “sit down with a piece of paper and figure out your upside and downside. Come up with worst-case and best-case scenarios…you really need to go in understanding the risk factor and how much liability you can afford to take.”
This will help you decide whether a new service offering that you want to add to your business will work, and fit in with what you have. What if you want to come up with a new offering, but you find yourself genuinely stumped? Say you’ve been offering your customers the same thing for so long you don’t know what else makes sense. Keep reading.
To start with, if you’re stumped about what to offer next, you have a problem. It means that you may have lost touch with your customers. If you touch base with your customers regularly, you will know what they need and want – and many of them will be quite up front about any products or services you don’t offer that they would really like. If your customers have told you that they need something new – like the ability to support certain scripts on their websites, perhaps – listen to them. Your bottom line is depending on it.
By the same token, if you’re coming up with this new service yourself, think about how your customers will benefit. If they can’t see what they will get out of the new service – or you can’t show them – it could be a real waste of time and resources. Will the service cost less than what you have in place now? Will it offer your customers better results?
Consider, too, what effect this new service will have on your ability to serve your customers. Will it allow you to host more sites? Host fewer sites, but with more features? Going back to our example of the e-commerce software package, you might find that you cannot host as many accounts because of hardware, bandwidth, and security needs, but with fewer clients, perhaps you can offer your customers more personalized service – and you might be able to charge a little more as a result. You might find that the new offering makes sense as part of an add-on or premium package.
Remember that it comes down to your customers. Is this really what they want? To quote Holigan again, “I think the main thing is to watch your customer base. Can you diversify with your existing customer base?” It’s important to maintain that focus. By keeping an eye on his customer base, Holigan knows that “there are certain things I can do and other things I should never get into.”
Are You Ready to Offer a New Service? – Is the Timing Right?
When it comes to unveiling a new service offering, timing is akin to location in real estate. So ask yourself: why this particular offering, and why this particular time? What is pushing your decision in this direction at this time? Is it really the right time? These may all sound like the same question, but when timing can mean the difference between success and failure, it makes sense to be sure.
Especially if you’re the sole proprietor of your business, you need to think about whether the timing is right for you. You also need to think about what you’ll be getting out of it. How will it improve what you’re doing now? Will you get additional income out of it? Or will you have more free time, or more mobility? Maybe it lets you go into an area that is more interesting to you. Yes, it is important to serve your customers, but you should get some definable personal benefits out of it, too.
There are other ways in which timing is important. For example, you need to make sure you give your customers adequate notice of the new offering. If rolling out the new service is going to affect your current service (and don’t think it won’t), make sure your customers are aware of how they will be affected. Will you be less available for a while as you take care of setting it up? Will your prices increase? Customers deserve to know what’s going on and why; when they do, they are much more likely to understand as you deal with the issues involved in ramping up.
While you’re keeping your customers in the loop about how these changes will affect them, be sure to let them know how excited you are to be offering the new service. In fact, share the news with everyone you know. Your view of the change will influence what your customers think of the change, and how they will respond to it.
Make sure you have a marketing campaign together. While you were number crunching, I hope you made some projections and figured out a way to measure your results. You will need this information to help you determine whether you are on track.
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