Why Service Businesses Struggle To Sell Information Products
Friday, February 4th, 2022.
Being sent home like naughty children forced plenty of businesses to “go digital”, and a fair few tried their hand at creating digital products – information and tools – based on the service they used to provide.
If you listen to the marketing departments for the course platforms, webinar and meeting software, you’d be forgiven for thinking that millions of businesses made this transition with barely a stumble and are now raking in profits while they sip margheritas on the beach.
Nothing could be further from the truth.
Most businesses came face to face with the reality of selling “do it yourself” products to clients who wanted a “done for you” service.
The bad haircuts were just the tip of the iceberg
Not every business can switch it’s service to a product, but there are ways you can do it with a little marketing savvy, so let’s take a look at how the winners do it…
The evolution of a product business:
Successful product businesses go through a few steps:
Solve a real problem
Prove it can be solved with a product
Find enough people to buy the product to sustain the business
This is, of course simplistic.
Great businesses will sanity check step 3 – making sure there’s a market – before they do anything else.
Service businesses have really just skipped step 2.
A service business will work out how to solve a problem, but keep that skill and the tools to do it for themselves.
They never go through the steps of discovering whether someone else could do the work themselves, and in a lot of cases that makes good sense.
When we buy services, we buy because we don’t want to do then ourselves, or because the return on learning that skill isn’t high enough.
Services appear at the very top and very bottom of the market, and get wiped out in the middle.
I haven’t ironed a short since I started working. It’s just not worth my while.
If I’ve got time or energy to iron a shirt, I may as well spend it building and promoting my products. That’s way higher ROI on that time & energy.
It’s conceivable that someone could invent a machine that would wash and iron my shirts so effortlessly that I’d choose it over the minor inconvenience of being without a few shorts for a. few days while someone else does that.
But until then, I don’t want to do it because the ROI isn’t there.
The only hurdle to buying low ROI services is finding someone to do it.
This is why marketplaces like TaskRabbit, Fiverr, and Upwork exist.
Let’s go to the top of the market.
Last month a jeweller fixed my wife’s engagement ring that had broken a claw. It cost me a surprising amount of money to get it fixed, but as she’s worn it day-in day-out for over 15 years, overall it wasn’t too awful.
Imagine I’d decided to do it myself.
Quite apart from the cost of the tools, it would have taken me weeks, maybe months to learn the skills that the jeweller brought to the table, and it might be another 15 years before I get to use them again.
Once again, the ROI on learning the skill just isn’t there, but this time it’s for the opposite reasons to our shirt ironing example.
Ironing shirts is a regular activity that takes next to no time to learn. But the jeweller is an irregular (maybe once in a lifetime) activity that takes a lot of time & effort to learn.
And yet there are plenty of jewellers.
There are plenty of jewellers because, as a dedicated professional, you can fix people’s rings all day long and charge a lot of money for it.
How to sell high effort, low frequency skills
The people who want training in high value skills that most of us rarely use, are other up-and-coming professionals.
The best example of this is probably surgeons. They’ll spend years learning a skill that (hopefully) most of us will never need. But there are enough people stuffing their faces with donuts to keep the average heart surgeon’s diary full.
This is the next big lesson that anyone selling courses will discover.
If you’re going to sell your skills, you need to be comfortable that your customers will become your competition.
If you’re going to teach your skills as a business, then there’s two thing you really need to be showing your students:
First, the skill itself
Second, the business of selling the skill
This model is pretty well established in a lot of “make money” courses, but you need to teach both sides of the question well for your students to get the success they want – a thriving business.
It presents a second challenge though.
Your new target audience is not your existing customers.
Now it’s likely that you have some junior competition on your email list already, watching what you do to learn for themselves.
You might have turned your back on these people in the past, even tried to block them from your service business’ marketing, but now you have a profitable outlet for them.
Now let’s have a look at the middle of the market.
Things that are somewhat difficult, but which your customers use regularly.
How to turn high frequency services into products.
If you’ve ever heard the words “we’re taking this in-house”, you have a service that can be made into a product.
You’ve just discovered the grey area between people who want a done-for-you service and people who want to do it themselves.
This is an opportunity, not a lost client.
In the middle ground, people will swop between the two.
People who come to learn DIY will realise it’s beyond them, and ask for DFY instead
People who started with DFY will start to think they can do it in house, but need a little bit of training to get there.
The trick is knowing which side they’ll start on and being able to offer what your prospect wants, until you can figure out what they need.
There’s no real point in fighting clients who want to take on the job themselves. It’ll just cause friction and your client won’t know what’s involved until you show them.
At that point you might get them back into the “this is beyond us” group and win them back, appreciating your expertise a little more.
But if your business has become a middleman for mid-low income skills, eventually some of your clients will decide to take it on themselves.
There’s quite a few advantages to helping them with the process rather than just stalling it:
You don’t have a bunch of low-skill employees on your payroll, and your client can take on that cost & risk instead
You can spend your time on the high-level strategic work, instead of just project-managing low-level execution
You still get the training revenue, and you’ll get it each time staff turnover in the client’s business
If your business includes a bunch of software tools, you can probably earn a recurring revenue with little or no overhead by selling them into the client.
Every market gets tougher over time as more competition pours in. There’s every chance that in 2-3 years they’ll need you to help them do more than just stand still with the activity.
Lastly there’s a category of service that can nearly always be sold as a purely digital product.
The “done with you” service.
Selling Done-With-You Services as digital products
Look at some of the most competitive markets for information products:
Starting a business
These all have one thing on common:
Nobody can do it for you.
No one can lift that weight, run that mile, approach that guy or girl at the bar, or get out and invent that product for you.
(Actually the last one is a possibility, but the best at it are already doing it for themselves.)
Once you’ve stepped away from the idea that you’re the only one who can get your client a result, a bunch more business models open up, with greater or lesser demands on your time.
If the flow of information is mostly one-way, you can start to scale the process for a few people at a time.
It’s usually cheaper for one customer, but as you’re taking on a few at a time, you make more overall.
The group will also create a bit of momentum for members helping them move each other along so you don’t have to do all the heavy lifting.
Online Training Courses
If the flow of information is completely one way, the an online course is as scalable as it gets.
This cuts out any need for your involvement with each individual student, but doesn’t have the same dynamics as 1:1 or group coaching, so you may see a bigger drop-off rate and fewer people getting good results.
That’s why we recommend testing the approach of a done-with-you service to start with, either as a group or individuals. That way you can make sure you get some great results to use as testimonials.
Deciding what to sell
So we’ve arrived at one of three paths if you want to turn your service into a scalable digital product:
For high-skill, one-off services: If you have a service that most customers only use once, embrace the idea of your competition becoming your customers. Teach them the business skills as well as the technical skills to get the best results.
For medium-skill, retained services:If you have a service that a customer could do themselves, or hire someone in-house to do, embrace that change and train their staff for a fee, with a retainer to provide the senior-level support & guidance that you give to your own team.
For services where your client already has to do the work: If your service is something that a client has to do themselves anyway, start writing down the process of what you do with each client and developing a group programme or an online course. You already have an excellent business that you can scale by teaching more people at once.
What to do next
If you want to take one of these paths, your firs step is to see whether you can drum up enough interest from your current audience to get started.
Our 5 day email course will get you on the right track to validate your idea before you start spending money on course platforms, microphones, new cameras and a make-overs.