Redesigning Product

If things are still slow for you, it’s probably a good time to rethink how you define product.

I spend a lot of time with clients outlining the space between how they define their products and how their customers define their products.  Sometimes this has to do with real or perceived benefits. Sometimes this has to do with where the edges of the product are – the arc of the product experience. Sometimes this has to do with the transaction.

I recently gave away some advice to a potential client that is an excellent case study in this.

This client sells to a particularly downtrodden market (lots of those right now). They have a product offering that is very successful at driving efficiency – real, realizable savings – 150% ROI within the first 18 month. The problem is in initial purchase. There is a significant up-front cost.

No matter how good the ROI is on something right now, it is very difficult to find extra funds, either from funders or from cash flow.  I suggested  to this would-be client, let’s call them StartUpCo,  that, faced with no sales, they try to close some deals with a pseudo-lease deal that spreads out the risk. Real capital items might be able to be financed by a leasing company, the service costs and profits probably have to be financed by StartUpCo.

I’d probably start by trying to partner with a leasing company and setting up a payment schedule that gets your hard costs off your balance sheet within a quarter or two. I’ve done deals like this myself and included a reward for meeting certain performance criteria. If you can structure it as a percentage of realized savings, clients are usually happy to share the wealth.

For StartUpCo, the product was their software, hardware, and integration service. For the customer, the product was the improved work-flow and cost efficiencies. By including financing in the product, they bridge the gap between the two views, aligning value and cost for the customer.

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