Value Pricing & Business Models for Creative Entrepreneurs

 

Lesson Info

6 Questions to Evaluate Biz Model

Let's examine this guy a little closer, shall we? I'm gonna ask six fundamental questions that we're going to examine throughout the next two days. We're gonna pick them apart, but let's start at the beginning. So the first question, and in this case we're talking about a product or service, is what will this help my customers accomplish? What will this help my customers accomplish? What am I helping my customers to do? What am I helping them change? What frustration am I easing? What am I making more convenient? This, essentially, is your value proposition question. Only I hate the phrase 'value proposition,' because to me it means nothing. (laughs) I'd much rather think about my customers, and what's changing for them. What's different? Speaking of those customers, we need to look at who we're designing this thing for. Who are we designing it for? Who am I designing it for? What are their unique needs? What are their unique desires? Next question: How am I gonna approach my relations...

hip to them? I talked a little bit about relationship yesterday with price, but relationship is a really important part of your business model as well. If you don't stop and consider different ways you can work with different kinds of customers, whether you're making physical products or you're delivering services, you're missing out on opportunities to serve different kinds of customers in different ways. Different kinds of customers with different value sets in different kinds of ways. So thinking critically about what opportunities you have to relate to your customers differently, is a great way to jazz up your business model. Next question is, what does the solution look like? So notice, this is the first question I've actually asked that has anything to do with what the product is going to be. This is the delivering value piece, or it's part of the delivering value piece, right? What does this solution actually look like? When we start with the function first, we can be a lot more creative about how we're actually going to deliver the value. Like, Shauna yesterday was talking about how she's moving from the traditional doula service... Or not moving from, but incorporating also, prenatal coaching. So what she did is she thought about, 'Here's what I want to help my customers accomplish, 'here's how I want them to feel, 'here's how I want things to be different for them. 'What else could that look like? 'Does it always have to look 'like traditional doula services, 'or could it take a different form?' That's what this question is all about. It's about asking you to get creative with the way you're delivering that value. Alright, next question is, how will we let people know about this thing? How will we let people know about this thing? So this is marketing and sales channels. What's the best way to communicate to people about this? What's the best way to get them aware of what we're doing, what we have to offer them, how things could be different for them? Different kinds of products lend themselves to different kinds of conversations, different kinds of conversations lend themselves to different kinds of marketing and sales channels. Marketing and sales channels might be things like Facebook, Twitter, email marketing, face-to-face, cold-calling, referrals. All the different ways that we communicate with customers and make offers to them, that falls in this category. And we want to think about it critically. You don't wanna just take the same strategy with everything that you have. You want to consider what is going to work for these people, with this relationship, with that kind of value. Last question, how much is this thing gonna cost? And not only how much is this thing going to cost to our customers, but how much does this cost to us? Because if it doesn't make sense financially for us, if it doesn't make sense energetically for us, if it doesn't make sense temporally for us, it doesn't make sense to be in our business model. And way too often, we don't stop to ask ourselves the question, 'How much is this costing me as a business owner?' When you've got that product or service that you hate when people buy it, it's because it costs too much to you. It costs too much to you. You may make good money on it, but if the energy you have to put into it isn't worth it, or you just don't wanna, it's not working. And it doesn't belong in your business model. So this is a critical last question. 'Is this gonna be worth it?' How much does it cost to them, how much does it cost to me? All of these questions have to work together. All of these questions have to work together, and all of these questions have to work together layer by layer by layer. What are the different layers? They're all your different products. They're all your different services. They're all your different offers. So I mentioned earlier thinking about your body in terms of all of its different systems: circulatory system, nervous system, digestive system. You can think of your products and services, all your offers, the same way. Each of those layers needs to work together on its own, and each of those layers needs to work together to make the whole business model work. So it has to work both horizontally, and vertically. I gesticulate a lot. (audience laughs) Alright, questions about these six questions? No? Questions from the online world? We've got a lot of comments in, no questions. I think everybody's cool. Fantastic. And making sense. Excellent, alright, okay that was fancy. (audience laughs) Now we're going to evaluate your own model. So what I want you to do is just kind of, just starting off, big picture, let's think about evaluating your own model. And let's think about all the offers that you have right now. So, what I want you to do is take the grid that you have on page 17, and start writing down the products and services that you have to offer right now. What is it that you're currently trying to sell? So you can jot that down in each of that first column. So, do you have an e-book? Do you have an introductory service package? Do you have an e-course? Do you have earrings? So, let me explain this for makers too, before you guys freak out. (laughs) You do not need to list every single style of earring, every single style of necklace. Generally, and this works differently for different kinds of businesses, but generally I would suggest doing earrings, necklaces, or pillows, quilts. You don't have to list style by style. Think more functionally. Why are people buying something? And we'll start from there, and then I'll give you other tips on this as we go. But let's start from there. If you have big, big, big spreads in those things, say like, you have $500 earrings then you also have $50 earrings, you could put high-end earrings, and you could put low-end earrings as well, alright? Later on, we'll start to incorporate things like wholesale and retail and things like that. But for now, focus on the products themselves and fill this out. Any questions from you guys, yes? For the 'Who is it designed for?' Like, if you have a service and you're targeting various demographic groups, in the 'Who it's designed for,' would that be a separate column for that same program? It could be, absolutely, because it's really hard to target more than one demographic with the same offer. So what you might actually see... Um, or more than one ideal customer. So what you might actually see is that as you work through this exercise, a product that you thought was one offer is actually kind of two or three different kinds of offers. And I don't wanna over-complicate things for you, but at the same time I also don't want you to try and paint with too broad a stroke, and lose out completely. So that is a great way to consider that, absolutely. We are going to spend the next two days going in-depth over each of these questions, so don't worry too much about whether you're putting the right answer in every column right now, just try and get some ideas down for each of these things. As you do that, I'm gonna move on. We're gonna come back to this worksheet in just a couple minutes, because I'm going to actually explain to you the parts of my business model in just a little bit. So, one question we wanna ask is, 'Where is your model currently getting blocked?' So we all have an existing business model, even if we haven't sat down and intentionally designed it before. So that means that if you're currently in the micro-business earning plateau, or if you think that you're getting there, you can see it on the horizon, probably your model's getting blocked somewhere. So you might ask yourself... Or, ways that you can figure out how your model is getting blocked, I'm sorry, are that maybe your customers are regularly asking a question that you don't have an answer for. And that answer would be a product or a service. So your customer is asking you, 'How do you?' Or maybe, if you design jewelry, they're saying, 'Well, you know I've got this fancy event. 'You don't have anything fancy, 'can you make me something fancy?' Or maybe you make fancy stuff and you don't have anything casual. 'Can you make me something I can wear every day?' If you don't have an answer to those questions that your customers are regularly asking for, this is some place your business model is currently getting blocked. It's an opportunity that you have to create something new, to deliver value in a new way to your customers. Remember I said that more products don't necessarily equal more sales? Sometimes, you still gotta make something new, right? This is a time where people are regularly asking you a question that you don't have an answer for. 'Are you missing a necessary sales and marketing channel?' So if you're filling out that business model, and you're thinking about the fact that, 'Oh gosh, I forgot I had this service,' or 'I forgot I had this product.' That has happened to me before. And you think 'Oh, well why doesn't that sell? 'Why did I forget about it?' Probably it's because you're missing a necessary sales and marketing channel. You're missing a way to talk about, or to guide your customers to that product or service. And by pulling up your business model and examining it, you can identify those things and you can say, 'Well I can fix that, that's not hard. 'I can send an email, I can mention it on Twitter, 'I can mention it to my client 'who's finishing up their coaching package next week, 'and that would be a great next step for them.' So are you missing any necessary marketing or sales channels? Have you incorrectly positioned an offer that should be selling? This is another one that I hear a lot. 'I made this thing, everybody was asking for it, 'or I thought they were asking for it, 'but nobody bought it.' 'I made this thing, it's awesome, 'nobody's buying it, why?' Well it might be because it's incorrectly positioned. It's not telling the right story. Maybe the price isn't telling the right story, maybe the sales message isn't telling the right story, maybe the marketing's not telling the right story. Maybe you don't have the right story for that product. So if your positioning is off on any one of the things in your business model, you might be incorrectly positioning that offer. And final question, 'Are your customers dropping off after making a purchase?' The goal of almost any business is loyalty, why? Loyalty is cheap. Loyalty is actually fairly easy when it comes to, at least, sales. You deliver once, people get what they want once, who are they gonna come back to when they want something new? You. But if you don't have anything to offer them when they come back, or if what else you have to offer doesn't make sense to the customer that's coming back, they're not gonna buy. So ask yourself if you've got the kind of business where people make a purchase, and they just don't follow up. They just don't come back. Always constantly getting new customers, I want to say that the statistic is, 12 times more expensive. Can you afford 12 times more expensive to get new customers, as opposed to developing products for your existing customers? I really believe that most of our businesses can actually get by on a lot fewer prospects than we already have. How would that feel? What if you could double your revenue right now with the number of prospects you have, right now? What if you didn't need to be constantly blogging, constantly Tweeting, constantly Facebooking? What if your business model worked in such a way that once you got people in, they kept coming back for more? Not because you're under-delivering, but because you actually have what they want. You're anticipating their needs, you're leading them the direction they want to go. That's what your business model is all about. This is one of the most common places I see models getting blocked. Where I see blockages in the body. But let's not talk about that. (audience laughs) It's not that kinda show either. (laughs) Alright, so we all have opportunities in front of us, here's the really good news. Even if your business model is currently getting blocked someplace, there are opportunities you have, right now, that you could be taking advantage of. What opportunities are in front of you? What other needs have you already identified for your existing customers? Almost all of us, I bet, have a laundry list of needs that we know our customers have. I know I do. I could teach this, I could do that, I could explain this thing, I could show them this. So kind of make a mental inventory of that right now. What are the other needs you've already addressed, or already identified, that you could be creating value for? Or, that you could be, you know, kind of looping in to existing offers, maybe? Similarly, what are your existing customers already asking for? I alluded to this in the last slide, on that last point. Let's say you're a life coach, and your life-coaching package is three months long. You work people through a particular issue over those three months, maybe you help them through a career change. And at the end, they've got their new job, they are happy, they are on the way. But a month later, you notice everyone asks the same question. Everyone says, 'Well if only you could help me with working up the ladder, 'or getting more skills, 'or finding ways to network 'and feeling comfortable with myself. 'Networking in my new career.' Well if everyone's asking that question, that's something that your customers are asking you for. Wouldn't it be great if when people finish up their life-coaching package with you, and they've got the results that they really really want, you could anticipate their needs a month later and say 'Hey, I bet you're thinking about this thing. 'I want you to know, 'I've got a course starting up in another week, 'and I'd love to have you onboard. 'Everyone in the course has also just made a career change, 'they're all in the same place as you, 'and they're all asking the same questions you are.' You think that would be an easy sale? Absolutely, that's an easy sale. And you can do it in every single kind of business. Every single kind of business. One of the producers asked me about, 'Okay, how does this work for wedding photography?' You know, that seems like that's a once-and-done kind of thing. Well most of the time, as I understand it, I am not a wedding photographer... Wedding photographers don't just shoot weddings, right? They shoot engagements. They shoot maybe family portraits as well. What comes after marriage? A baby in a baby carriage? (audience laughs) Right? You can anticipate that need. Maybe it's not as clockwork as a career-change person needing networking advice, but maybe you start a year, a year and a half after you wrap somebody's wedding. You shoot their wedding, 18 months later you send them a postcard and you say, 'Do you need a family portrait?' 'Do you need newborn portraits done?' Maybe that's not something you wanna get into in your business, but that's how that can work for you as well. What holes have you identified in the market? So yesterday we talked about markets as conversations, right, and I think this analogy is very helpful with this as well. So if the market is what everyone is talking about in your particular area, what are people not talking about? What are the questions that aren't being asked? What are the connections that aren't being made? Who's not talking to who that could be? Where is the conversation not being served? We've all got that something. In every single industry, you know there's something. There's that nagging little thing. 'Oh nobody wants to talk about this,' or 'Nobody wants to create a solution for this.' Sometimes there's a reason, but a lot of times, that's an opportunity for you to deliver value where there hasn't been value before. It's the opportunity to answer a question that's never been answered before. And what do you think happens for your business when you identify that question, that need that's never been identified before? That's huge, that's huge. So look for that. Last question, and this is a big one for opportunities, how does your unique approach set you apart in the market? What's different about the way you create value? What's different about the way you deliver value? What's different about the way you exchange value? How does your unique approach set your business apart? For me, that's been that I'm not the kind of stiletto, glam business coach that's very common. Love those ladies. I think they're doing phenomenal work. They're serving a market that is vast. That's not me. I like to think of myself as kind of a quirky professor type. (laughs) And so, you know, just even the way I present myself is a unique approach to what I do. It allows me to set myself apart in the market, and if I consider that approach every time I look to answer a question, every time I ask myself, 'Well, what do my customers need to accomplish today,' I can create products that aren't just unique in the value that they offer, but in the way that value's delivered. That makes sales easier, it makes marketing easier, it allows me to give less energy, less of a tap to that business model, to set it in motion. Alright? What about marketing and sales? Marketing and sales is a place where business models get blocked an awful lot. So, where are you expending an awful lot of marketing energy for very little results? Where are you expending a lot of marketing energy for very few results? Think about your, let's just say your social media, because I know that's what everyone does, or the vast majority of people do. Think about your social media time for the last week. What do you feel like you actually got traction on? What conversations did you actually start? Did you actually get any conversions from them? Where are you putting a lot of energy with that, that's getting you very few results? What results are you looking for? Maybe it's email marketing. Maybe you're putting a lot of energy into email marketing and it's not working for you. Maybe you're putting a lot of energy into networking or referrals, and that's not working for you. Why? I don't have an answer for why, but you need to ask yourself. Be critical about it. 'Why? 'Why isn't this working? 'What could be different? 'What is it about the value I'm creating, 'or the customers that I'm serving, 'or the format or price of this thing 'that is making this marketing and sales channel 'so difficult for me to use, 'and what might the other opportunities be?' This one's just easy. Do you have something on your business model, a product or offer that you have for sale, you just haven't really promoted? Why is that? Why is that? It could be that you really shouldn't have created that product or service in the first place. That's okay, let's get it off your business model. Let's not worry about it at all. Let's not ever feel bad that it's not selling. Right, that's really common. I hate when I hear that. 'I feel so bad this thing isn't selling.' Well why isn't it selling? 'Well, because I shouldn't be selling it.' Oh, well, you know. Let's remove the opportunities for feeling bad about yourself from your business model, okay? But maybe you go through your business model and you say 'Oh my gosh, I forgot I had that product, 'or I forgot I had worked up this package. 'I should be promoting that more. 'People should be buying this. 'This is perfect.' So then ask yourself, why aren't you promoting it more? Maybe there needs to be a slight repositioning, maybe you need to try a different channel, maybe you need to try a different sales strategy. Maybe you need to just come up with something that makes you more comfortable, that makes you feel more alive about this product, that makes your customers feel more alive about that product. But if you don't ask this question to start off with, you're not gonna get there. So is there an offer you haven't properly promoted yet? There we go. Is there a clear sales process for each of your offers? In other words, are you actively guiding people toward a buying decision? Later in the day, we're gonna talk about how marketing is not the same thing as sales. So I won't spoil that. (laughs) But we do need to ask ourselves, does each product... Is there a sales process that I work through for each product in my business model? Can I identify step one, step two, and step three? Do I have regular cycles for this product? Is there a time of year when this sells really well, and a conversation that I can have to move this product? So make sure there's a clear sales process for each of your offers. And then finally, how do people find out about each of your offers? What's natural? What's natural? Do people buy something and then just naturally wanna tell all their friends on Facebook about it? Because if so, Facebook might be a great channel for you to use more often about that product. But look at what's natural. How are people naturally talking about this product? How are people naturally referring this service? If you can figure out what's natural, you can use what's natural to your advantage. So how do people find out, most naturally, about each of your offers?


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