Offer Prevention - Own the Cure
The art of bundling services - general and expert - to drive up the value of your business
To grow a valuable business – and one you can eventually sell – you need to set up your company so that it is no longer fully reliant on you. If you can also get recurring revenue streams you increase the value dramatically.
This can be easier said than done, especially when, like a Dentist or Plumber, what you are selling is your expertise. This cannot be easily scaled if the expertise is for a complex product or service, – as is the case in many knowledge-based businesses.
To scale any business, you would ideally start by trying to figure out how to impart your knowledge to your employees, so that they can deliver the solutions to your clients without your direct participation.
The main challenge here is that it can be difficult to condense years of school and on-the-job learning into a few weeks of employee training. The more specialized your knowledge, the harder it is to hand off work to juniors.
(After all, it takes years for a dentist to acquire the education and experience to successfully complete a root canal, but it’s relatively easier and quicker to train a hygienist to perform a regularly scheduled cleaning).
What makes it even more challenging is that your highly skilled expertise can sometimes be viewed as a commodity in the market. In fact, if you were in a city and did a Google Search on local Dentists and Plumbers, it would produce dozen of results.
In that situation if someone’s pipes burst, how can you be the first of many they would call?
Well you have to be top of mind for when they do call. How do you do that? You can flood the market and spend a lot of money advertising, or you can bundle prevention and cure activities to build a relationship with that customer long before the pipe bursts, so when it does, you are the ONLY one he thinks of calling.
How do you assemble the right bundle of products and services to create and build a relationship.
You start by identifying and scaling the activities and services that clients value, but which are teachable and recurring. For knowledge specific businesses, this will mean a focus on the complementary products and services that can be scaled.
Often these complementary services can be branded as “preventable” protection against a major expensive disaster or issue. With Plumbers it can mean a package of 2-3 inspections per year of the plumbing in your house to spot and prevent any small issue that could become major and burst the pipe. For dentists, it could be offering regular scheduled 3-month cleanings from a hygienist to avoid gum damage and root canal work down the line.
In both cases, the “preventable” are sold as part of a set schedule of packages. To make these effective, you would want to train and share as much knowledge as possible around these products and services, as well as document and create standard operating procedures for flawless delivery.
These will not only provide a steady diet of recurring revenues, but you will build and strengthen the relationship for when the big items occur. At that time you can then come in with your specialized expertise with premium value for both you and your customer.
The key to making this work is a longer view perspective on building profitability by growing your customers’ average and lifetime values. This requires patience and excellent customer relationships. It also requires your ability to flawlessly execute on your offers so customers are excited to deal with you.
You can see that if you provide a product or service with real tangible value to customers they will not only buy more from you but tell everyone they know to buy more from you. They also tend to be more interested in other products and services you offer. Plus as they become familiar with you it costs you less to service their business as they know how you operate.
However, too often, this is ignored and profitability is solely based on each transaction being as profitable as possible solely for the owner (which is often at the expense of damaging or destroying any long term customer relationship potential).
Instead base your profitability on the whole cycle of acquiring a customer and then leveraging the relationship to make their average and lifetime value higher. With this perspective you can be creative in mixing and matching your products and services to stand out and build value for your customers.
This often means having the willingness to “take a loss” on the customer acquisition via a special, but delivering an exceptional experience to gain their loyalty and then upselling the core and ancillary services to make the relationship profitable.
It goes without saying that the initial offer that brings in a customer must be executed at such a high quality that the customer is excited by the value it created and becomes a loyal and more profitable customer.
The Dentist, for example, can offer for a limited time a 90 minute 12 point dental exam with hygiene cleaning for an introductory AED 200 special price, than deliver excellent service, and so sign up the new customer for a 12 month “Dental Maintenance plan” and/or full service if the exam shows major work needed.
It’s not easy, but when you execute on this strategy of offering prevention to later own the cure you have effectively created a more valuable business; one with both regular recuring revenues and an attractive scalable foundation.