The world is embracing the golden age of knowledge. Delivery of information is approaching instantaneous, volume of data is increasing and the computation/conversion of data to human digestible information can be presented in many different ways.
Goods vs Services
During the industrial revolution, sales were based on goods. Now, sales are based on services and information.
The transition from a goods to an information/knowledge based market have several few major differences.
A goods based offering would usually involve a transaction with the delivery of a product. A information/knowledge based offering does not always result in a physical product.
QA processes, reliability, function are all traditional elements used to establish trust in a product. How does this all function in a information/knowledge based world?
With a physical product, the warranty and the length of time a company has been in service are indicators of the commitment of the company to it’s product. Reliability, service, QA are all criteria used to provide consumers an understanding to the level of standard offered by the company. Longevity of the company underwrites the warranty, level of standard and performance/growth of the company. Naturally, poor governance, inadequate disaster recovery, etc could bring a company down faster than you can say trust.
Some criteria are not as important, have a different meaning/context or no longer relevant such as installation, logistics and delivery times.
Where as other criteria are new or have become very important such as availability, response times.
As a result, an information/knowledge based offering will have a heavier dependency on several traditional consumer criteria.
While the list is not comprehensive, Consumers will apply greater weighting on the following requirements when considering a information/knowledge based offering:
- Value of goods
The value of the good/service provided will determine the importance of all requirements. For small ticket items, the criteria isn’t as important as compared to a large, multi-year service offering. Further scrutiny would be made on a high value product.
- Length of engagement
Goods would follow a short engagement life cycle. There is the marketing to entice consumers to the product and once the product is purchased, the engagement ends (unless if it’s a high value good, see below). With information/knowledge based services, there is a longer engagement as the consumer would subscribe to the service for the life of the information or until such time the service is no longer required.
- Consumer Risk appetite
How dependent is the consumer on the good/service? If the consumer requires the service for their business or livelihoods, then further scrutiny would be made on the service.
- Effectiveness of transition
A company that used to be successful selling goods may not successfully transition over to the digital age (Borders, Kodak are two examples). How aware is the organization in it’s direction towards the new age, this is evident in their offerings and differentiators. More on this later.
Given key consumer criteria, it’s time to make the sale.
Selling in the golden age
All good sales people know that when you have competition, you need to differentiate yourself from your competitors. What is your unique selling point?
As mentioned, services and information are no longer physical rendering lots of traditional sales criteria obsolete.
Some differentiators remain the same but in different forms.
As mentioned, a company which has been successful selling goods may not be as successful selling services/information. A company which is aware of this will be required to diversify to capture the market as well as build on the new market to secure and grow.
The New Business Road Test by John W Mullins, assesses a business opportunity and establishes if it is worth pursuing or if an existing opportunity is viable. The book is an excellent book which goes into a lot of detail which unfortunately we won’t be able to cover here. It describes several domains for consideration and one domain noted is found at the Micro level. Two of the five questions to consider are:
- Is there a clear and compelling benefit for the offering?
- Are the benefits from the customer perspective different and superior in some way?
If a service offers no benefit to the consumer or if it is no different to any other service then your opportunity is not going to stand the test of time, the opportunity is over even before it started.
A service must be able to offer clear a benefit to the customer and/or is superior to any other offering from your competitors. The benefits are made up of some of the criteria mentioned previously and the missing link are the differentiators that puts your offering ahead of any competitors.
Moving from a goods based industry have a different set of differentiators to a service/information industry.
Diversification is not without risk. Knowledge of the new market, identification of USPs and opportunities in the new market and so on will lead a solid footing in the new market place.
Just because you might be good at executing with meeting customer demands it doesn’t mean that it will be the same for eternity, look at Borders, Kodak, etc. Their failure to successfully transition lead to their downfall. As consumers no longer want the pain of managing their resources in a time poor society, they turn to offerings which ease their pain, this is where services and convenience comes in.
Ok, even if an organization has transitioned, their competition will seek ways to meet consumer demands and therefore other criteria is required to differentiate themselves as an organization with a superior and competitive offering.
What makes your offering better than the competition, that difference is called a differentiator.
Trust and security as two powerful differentiators.
All your competitors have met the basic consumer requirements, now what…products are no longer physical, there is nothing to physically show that an offering is superior, how does an organization show it is superior?
This is where trust and security comes in.
An organization must now prove that it is even more trustworthy than its competitors.
- How does a customer know that they are getting value for money for a particular service?
- How does a customer know that the organization they are dealing with will be there for the long haul?
- How does a customer know that the organization will be there for their business or livelihoods?
- How does a customer know that the organization’s offerings are future aware?
To answer these questions, consider the following as differentiators:
- Trustworthy, otherwise the deal is not worth the paper it’s written on. Remember, there is no physical element, the deal better be good for the long haul.
- Secure, if your business or livelihood relies on confidentiality, privacy, integrity, you expect that the organization you’re dealing with also does the same. Your customers do not care if your service provider is not up to par, your customer is dealing with you and therefore the buck stops with you.
- Transparent, the last thing you want is an organization beating around the bush or worse still, covering things up.
- Assurance, has the organization been assessed by others to ensure that what they are doing is in line with what other professionals are saying? After all, a second pair of eyes is not a bad thing.
If you are running a service, your competitors are competing on cost and offerings but are they in line with what your customers are asking?