Small business strategy questions: What does your business do? And, What does your business sell?

Recently, I posted a list of 100 Small Business Strategy questions that every entrepreneur should ask themselves from time to time. The very first two questions of the list are…

  1. What does your business do?
  2. What does your business sell?

Those questions are related yet different, and you need to answer them at the same time.

Answering the question “What does your business do?” is describing why people buy from you.

Answering the question “What does your business sell?” is describing what they’re actually getting when they hand over your money.

The product or service they get (which answers your second question) should deliver the benefits they expect (which answers your first question).

The key is being able to articulate who you serve and what problems you solve or needs you fulfill and then how you deliver that solution to your customers.

Create a list to answer each of the questions. In general, your answers to the first question should be different than your answers to the second question, and your list of answers to the first question should be longer than your list of answers to the second question.

Not all of your products or services will necessarily achieve all of the things in the list of your first answer, but collectively they will all provide those things.

EXAMPLES OF THE DIFFERENCE BETWEEN THESE TWO QUESTIONS

Here are some examples. I’m going to show you first what the business sells (the answer to the second question) and then I’m going to show you what the business does (the answer to the first question).

A financial advisor sells portfolio management services. But what they do is provide advice, and a filter for crazy investing ideas, and access to the stock market.

A house painting company sells a paint-your-house service. But what they do is provide convenience, professional experience, time-saving and effort-saving value, high quality paint, and fast application to busy homeowners who don’t want to paint their house themselves.

A bookstore sells books. But what they do is provide an escape, a place to curate all the best books that a book-lover should read, advice and suggestions on reading, and a few minutes of peace and quiet in a fast-paced world.

WHAT HAPPENS IF YOU STRUGGLE WITH FINDING AN ANSWER

The answer to the second question is easy. We all know what we sell. The answer to the first question is much harder because we don’t always know what our business does (or how it’s different from what we sell). This is especially true if you sort of “fell” into your business or inherited from someone else or bought a franchise.
So if you are struggling to answer the question “What does my business do?”, try doing the following:

  • Try listing the benefits of your product or service. It doesn’t always give you a complete answer but it’s a good start.
  • Think about when people buy from you. What was the situation that inspired them to come looking for you?
  • Ask the question “Why do people buy from me?” and “What value do I offer?”
  • Ask your previous customers to tell you why they bought from you. Look at testimonials for hints, as well.
  • Examine your most successful marketing campaigns (or, if you’ve just started your business, examine your competitor’s marketing campaigns) to see what kind of language drove people to buy. What was promised?
  • Use a search engine keyword tool to find what your target market is searching for. (People will sometimes search for the name of the product or service they want, but many people will also search for the solution to their problem… and THAT is the answer you’re looking for.

WHAT TO DO WITH THE ANSWERS

Figuring out what your business does is essential to growing your business.

You’ll write a clearer business plan and increase the likelihood of finding investors because your business will be clearly articulated.

You’ll create more effective marketing campaigns because you’ll be focused on the reason your customers are likely to buy from you.

You’ll even discover new ways to make more money. For example, you can look at the answers to your first questions and figure out ways that you can provide the same benefits with new products or services. That’s why financial advisors often also sell other things besides strictly buying and selling investments for their clients – they also sell insurance or mortgage products, too.

Answering the questions “What does your business do?” and “What does your business sell?” are the first and most important questions any business owner should be able to answer.

3 tips every business should know about copywriting

Most online businesses understand the importance of strong copywriting: They know that strong copy grabs the fleeting attention of prospects and then slowly builds credibility and desire and urgency until the prospect desperately wants to hand over their money to the business in exchange for the value promised.

Businesses know that. Unfortunately, we don’t see it in practice as often because there are other important copywriting truths that online business owners don’t realize.

1. THE MESSAGE IS ONLY PART OF THE EQUATION

Good copy is vital but good copy directed toward the wrong audience won’t convert prospects into frothing-at-the-wallet buyers. It’s just wasted money. Businesses that want to grow successfully by using copy need to first target their marketing messages to the right audience. (Check out these 55 questions to help you determine your target market). Once the right audience is identified and thoroughly scrutinized, only then can the most effective copy be written that will actually work to generate more prospect-to-customer conversions and, of course, more sales.

2. GOOD COPY IS NOT A CURE FOR POOR VALUE

Imagine that you find a great product that promises to do everything you need it to do. You spend your hard-earned money to own it. You put it to use. But if falls far short and doesn’t solve the problem you originally bought it for. All the good promises in the world won’t correct your disappointment at being “duped”. If your business is struggling to provide good value in the product or service you sell, getting a good copywriting is only a short-term fix. The good copywriter might be able to make your products or services look good… but if your business doesn’t back up that “talk” with the promised value then the long-term outlook isn’t good. You could end up losing money on returned merchandise and even negative word-of-mouth. Here’s a blog post about how to improve value so you can sell more.

3. COPY IS NOT THE SILVER BULLET YOU’RE HOPING IT TO BE

All too often, entrepreneurs who want to grow will look around at their struggling business and decide that better sales copy will solve their struggles. So they commission a high-priced copywriter to write their sales copy for them and then they sit back and wait for the money to roll in. They wait and wait and wait. What they’ve failed to realize is that good sales copy is only part of the equation. (Find out the better way to construct an offer). Businesses need to still drive prospects to their sales copy and they need to constantly test to make sure that the copy they’re using is the most effective copy.

Copywriting is an effective (even essential!) tool in the growth of a business. But hiring a copywriting to write a sales letter is only part of the formula for running a business. Next time you need expert copywriting, keep these tips in mind and ensure that you know your market, you provide good value, and your copy will be integrated into a larger sales funnel.

A primer on value: How to sell more by understanding these two types of value

Businesses talk about value a lot. But what does it mean and how can you use it to sell your products and services more successfully?

VALUE: MORE THAN JUST DOLLARS

When I say “value”, the first thing that might spring to mind is dollars and sense – such as how much money a prospect is willing to spend or how much money do they save by buying from you instead of from someone else.
But value is much more than that. Here’s what value really is:

People have problems and needs… Lots of problems and needs. These range from the simple and obvious ones like hunger and thirst, going all the way through to need for social acceptance and love. (Maslow’s Hierarchy of Need is instructive here).

People want these problems solved and needs fulfilled and they are willing to exchange some of their own “assets” to solve these problems and fulfill these needs.

The assets they’re willing to exchange can be broadly defined as time, money, and effort. (There might be others but let’s stick with these 3 basic ones for now).

People are willing to give some combination of these three things to solve their problems or fulfill their needs.

There are different factors that determine how much time, how much money, and how much effort they are willing to spend to solve their problems and fulfill their needs. Some of the factors include:

  • Availability or perceived importance of each asset (some people might have more time, others might have more money; some might value their money over their time)
  • Social pressure (peers might pressure someone to spend more money on something)
  • Choice of solution (some problems don’t have a lot of solutions)

(These are just a few; there are other factors as well).

Each of those assets (time, money, and effort) has its own varying amount of importance in the prospect’s mind, and so does the problem or need. Prospects are willing to give some combination of these things if they feel that the problem can be solved to a greater degree than the cost of giving up their assets.

My definition of value is: The importance of the time/money/effort assets compared to the perceived return on investment for the solution to the problem or the fulfillment of the need.

3 EXAMPLES OF VALUE AS PART OF THE BUYING DECISION

Let’s consider three examples:

Example #1: Bob and Jim are both hungry and since it’s lunch time, they are going to solve their problem with some food.

  • Bob is a busy dude with a lot of money. Since he has money but doesn’t have a lot of time and doesn’t feel like putting in the effort, Bob goes to a nearby restaurant and buys his lunch. He exchanges money plus a little bit of time (and zero effort) to get his lunch at a restaurant. His problem of hunger is solved with a combination of money and a bit of time.
  • Jim is pretty busy, too, but doesn’t have a lot of money. Since money is scarce, he has to spend a combination of time and effort to go home and make lunch. It’s cheaper but his problem is solved by a combination of time and effort.

Example #2: After lunch, both Bob and Jim realize that they have transportation needs. They need to get somewhere and it’s time to solve those transportation needs.

  • Bob has money so he goes and buys a new car. It takes some money but very little effort or time. Since Bob has a lot of money, he might also ascribe some level of importance to the social status that his car might provide him. But he also considers the future effort of having a black car (which might show the dirt more clearly and need constant washing) versus a red car (which his wife loves and might want to drive all the time) versus a white car (which his neighbor owns and will think he’s copying him) versus some other color of car.
  • Jim considers his options: He could walk everywhere. It’s cheap but it takes a lot of time and effort. He could take the bus. He could ride a bike. It’s cheap but it takes slightly less time and effort (except when going up hills). He could take the bus. It costs a bit of money and takes even less time and effort than a walking or riding. He could buy a used car. It costs money (although it’s cheaper than buying a new car) and it will be faster (although it could take some effort if the car ever breaks down).

Example #3: That afternoon, Bob and Jim both experience nasty pain in one of their molars.

  • Bob has the money for the dentist, and he also has the time to take the afternoon off and go there… but he hates dentists and the effort of putting up with the pain is too much. It’s not worth the money and the time. So he puts up with the pain, buying increasingly large doses of pain killers to help him cope.
  • Jim doesn’t have a lot of money for the dentist and he doesn’t have a lot of time. He doesn’t like the dentist but he knows that the pain will last for days and could distract him from his work. The effort of putting up with the pain is more than the money and time and effort needed to go to the dentist. So goes to get his tooth pulled.

So in these three examples – of their hunger, their transportation needs, and their dental pain – we see how Bob and Jim consider the value of their solutions as being related to time, money, and effort.

HOW PEOPLE USE VALUE TO MAKE DECISIONS

Prospects don’t consciously weigh value in the way I’ve described above – it’s all unconscious and behind the scenes. Ultimately, every time a prospect realizes they have a problem or need and encounters a potential solution or fulfillment, the prospect unconsciously asks themselves three questions:

  1. Will this solution satisfy my problem/need?
  2. If so, what combination of my own assets can I use to gain access to that solution?
  3. Will the solution be better than the sacrifice of my time/money/effort assets?

Okay, we’ve seen how each assets time, money, and effort is ascribed its own degree of importance in the prospect’s mind, and they ascribe a degree of importance to the problem. When the cost of the assets are outweighed by the benefit of solving the problem or fulfilling the need, the prospect becomes a customer.

Think of this as two types of value: The Perceived Value (which is the benefit of solving their problem or fulfilling their need) and the Market Value (which is the amount of their time, money, and effort that they will have to give up).

THE VALUE GAUGE

The Value Gauge is a way for you to understand how perceived value and market value work together.

Perceived Value (PV, pictured as the orange box) is the value that a prospect and/or customer ascribes to your product or service. It’s the benefit they expect to get from your product or service to solve their problem or fulfill their need. It could be derived from a combination of marketing and sales presentations, social proof and word of mouth, and the prospect’s feeling of urgency about their problem or need.

Market Value (MV, pictured as the blue box) is the value that the prospect is willing to spend for your product or service. It’s the cost they will have to pay to get the solution. Remember: It’s a combination of time, money, and value. Market Value is derived from some of the following things: The price tag, the expectation that the customer will assemble the product themselves, the time required to implement the solution, etc.

Perceived Value is what your business gives and what your customers get. Market Value is what your customers give and your business gets.

There are really only 3 possible variations of the Value Gauge.

Some businesses charge a lot (Market Value) but provide very little benefit (Perceived Value). It’s important to note that the Perceived Value may only be lacking if the business isn’t doing a good enough job marketing and selling the product. Perhaps they are not highlighting the benefits of the product enough. But sometimes, businesses simply overcharge for what they promise. So sometimes this problem is solved by improving marketing and sometimes this problem is solved by lowering the price.

Some businesses charge very little but they provide a lot of benefit. This might seem like a smart customer acquisition strategy but it can be dangerous: If the price is too low, businesses run the risk of not honoring their financial commitments to vendors and employees. And, businesses set a dangerous precedent if customers love the ratio of Perceived Value to Market Value and then later resent the adjustment that the business needs to make to the price. (This is exactly what happened when Netflix tried to raise its price last year). Even if your Market Value is profitable and your Perceived Value is extremely high, you could create a “too good to be true” syndrome among your prospects.

Some businesses strike a balance between the benefit and the cost of the solution. This is the best option. They provide sufficient benefit for the amount of time/money/effort that the customer has to “pay”.

Within this optimal range, there is some flexibility – within a specific “sweet spot”. You can move your price higher or lower, as long as it is within this sweet spot. You find out what this sweet spot is by testing your price point and testing your marketing.

  • Both Perceived Value and Market Value are made up of a combination of time, money and effort.
  • The relationship between Perceived Value and Market Value is a kind of “tug of war” or zero-sum game one side always gives while the other side always takes.
  • Every prospect and customer will create their own Value Gauge for the product or service. (Some customers, for example, might perceive more value than another). Businesses who want to use the Value Gauge to help them will need to make some assumptions based on their average target market.
  • Perceived Value (PV) can be anticipated Perceived Value by those who have not yet bought the product or service, and it can be experienced Perceived Value by those who have bought the product or service.
  • Increasing your Perceived Value may increase your expenses if you add additional features to your product or service.
  • Improving your marketing will also increase your Perceived Value. Just remember that your Market Value needs to be in that sweet spot. If your Perceived Value is too great and your Market Value isn’t at an appropriate ratio, you could create skepticism in your prospects who consider your product or service too good to be true.
  • Your Market Value is best determined by testing different price points but that’s not the only way to adjust Market Value: Time and effort are also “assets” that your customer has to “spend” to get your product or service.
  • Ultimately, this is a tug of war with profit as the deciding factor. At the extremes, profitability drops.

Here’s a great example to understand how Perceived Value and Market Value work together:

When I was remodeling my kitchen, I explored a number of different options. My wife and I went to kitchen centers that specialize in custom-built kitchen cabinetry and we went to Ikea for a DIY option… and to some of the offerings in between (like those big box home reno stores). We looked at the Perceived Value and Market Value of each offering (although obviously we didn’t use that terminology!) and we decided that an off-the-shelf kitchen with a few customized pieces was the way to go. With the kitchen cabinetry stores, their Market Value was too high for our Perceived Value of what we were wanting in our kitchen. And the same with Ikea’s build-it-yourself models: The Market Value was too high (not in terms of money but in terms of time and effort) compared to the Perceived Value of what were getting.

So, how do you figure out the Perceived Value and the Market Value of your product or service?

DETERMINING VALUE

Start by listing the benefits of your product or service. List as many as you can. Don’t jump over some as being too obvious or because they’re a standard that everyone in your industry must adhere to. List everything. (Need help? Check out my blog post 9 easy steps to discover all of the benefits of your product or service).

Compare what others in your industry are pricing their products or services at and what benefits they offer to boost their offering’s Perceived Value. Add more to your Market Value if you have more benefits; discount your Market Value if you have fewer benefits.

Choose three Market Values and test them. Identify your sweet spot – the upper and lower points at which you remain profitable and can still offer a good balance between Perceived Value and Market Value. Remember that your Market Value is more than just price; it’s also influenced by the time and effort that your customer has to put into the purchase.

Value is such a HUGE topic! There is so much more to talk about. I’ll build on these concepts in future blog posts.

9 steps to identify the benefits of your product or service

Every marketing and sales expert everywhere advises that you use benefits to sell your product or service. After all, people buy stuff because it benefits them so businesses should outline what those benefits are.

But throughout my work as a writer, copywriter, marketer, sales person, and entrepreneur, there have been many times when I’ve wanted to list the benefits of a product or service but have been left with far fewer than I would like.

Here’s an easy step-by-step way to find all the benefits of the product or service you’re selling. So get a blank piece of paper and get ready to fill it up with more benefits than you know what to do with!

STEP 1. LIST THE OBVIOUS BENEFITS

You can probably list a few benefits already. These are the ones that spring to mind for you. I call these the “pet benefits” because they’re the ones that are at the top of your mind.

STEP 2. TURN FEATURES INTO BENEFITS

Turning features into benefits is a classic sales technique. Here’s how to do it: List all of the features of your product or service and then complete the sentence “that’s great because:”

So the feature “long lasting” you might write: “that’s great because my customer doesn’t have to replace it ever year”; or if the feature is “inexpensive” you might write: “that’s great because my customer can save their money to spend on something else”.

STEP 3. THINK ABOUT YOUR TOP CUSTOMERS

Your top customers – the ones who come back again and again, and who tell their friends and family about you – they buy for a reason. What is that reason? What conditions exist in their business or their life that compels them to return again? (Note: The answer to this question isn’t a benefit. You’ll have to translate it into one or more benefits).

STEP 4. THINK ABOUT BRAND NEW CUSTOMERS

The very first time someone clicks to your website or walks into your store, they are tentative and curious and have questions. What questions are they asking? Their questions are a hint at the type of benefits they’re looking for. Use your secret decoder ring to reinterpret their questions and your answers into benefits.

STEP 5. CATEGORIZE YOUR CUSTOMERS

Customers can be categorized into groups. Demographics is one of the easiest and most obvious ways to categorize customers but there are other ways as well: Why do some customers buy at certain time? Why do some customer group specific products and services together? Why do some customers come back again and again while others only buy once? Why do some customers spend more in one sale while others spread out the same number of purchases over a longer period of time? There are many ways to categorize your customers. Each category of customer buys for different reasons. What is it about your product or service that appeals to each category of customer?

STEP 6. THINK ABOUT THE PICKAXE FACTOR

If your product or service wasn’t available and your customer had to fend for themselves, what would they have to do? What makeshift alternate solution would they use? How much time, money, and effort would be required? I call this “the pickaxe factor” because your product saves them from the hard work of doing it themselves.

STEP 7. LOOK AT YOUR COMPETITORS

Although every business’ products and services are slightly different and offer their own unique benefits, there will be some common points between your offerings and your competitor’s offerings. So look at your competitor’s products and services to figure out why people buy. It’s sometimes easier to look at your competitors than your own business anyway, since you’re so close to your own business. (By the way, here are some other ways you can use competitive analysis to grow your business).

STEP 8. EXPAND YOUR LIST

Now that you have a list of benefits, it’s time to expand the list. For every benefit, rewrite it in two or three different ways. Rewording benefits in different ways is a great exercise because it helps you look at the benefit from different angles. A classic example is the benefit of “saving time”. I used to write that down as a benefit to the products or services I sold. But saving time is only one way to express the benefit and it’s not really the best way to express the benefit. Rather, “having time to spend on other activities” is a better way to express the “saving time” benefit. Once you’ve reworded your benefits, you don’t have to get rid of the original benefit; it’s good to have both.

STEP 9. QUANTIFY YOUR LIST

This could be the most difficult step. Where possible, quantify your list of benefits. If one of the benefits is “save time” then figure out how much time they save. If one of the benefits is “save money” then figure out how much money they save.

BONUS STEP

If you’re really anxious to make these benefits work for you, check out my blog post How to construct persuasive sales benefits to turn this list of benefits into a list of magical, eyeball-gripping, wallet-producing benefits.

As you go through these steps, build up a big list of benefits and save that list somewhere as a source document for all of the marketing and sales efforts in your sales funnel. You’ll end up pulling these benefits into your marketing copy and sales presentations. Schedule ten minutes a month to revisit the list and see if you can come up with any more benefits.

How to construct persuasive sales benefits

Whether selling through written word or speaking, people respond better to your sales presentation when you sell them on the benefits of your product or service.

There are lots of ways to communicate a benefit but the most persuasive sales benefit I’ve ever seen looked like this (and I’ve written it for a real estate investor but it applies to anyone)…

“Discover the 3 steps you need to take within 45 minutes of investing in a property to increase its value by 25% immediately”

Let’s deconstruct this benefit to see all of the parts:

  • Strong, compelling action verb: Discover…
  • Easy-to-implement action: …the 3 steps you need to take…
  • Timeframe to perform the above action: …within 45 minutes of investing in a property…
  • Measurable benefit: …to increase its value by 25%…
  • Timeframe to realize the benefit: …immediately.

(For more reading on the topic, check out: 37 ways to improve your sales skills).