Every successful business stays relevant by regularly reassessing its offerings through the lens of its customers. Improving the customer experience means providing an array of high quality products and services that meets evolving needs.
Any company that limits itself to a strict idea of its products and services is passing up opportunities to strengthen its core business. A costly casualty of stagnation is having the competition lure away otherwise loyal customers. Remember, customers will stay loyal only as long as you continue to provide them with more value than your competitors do.
For companies wanting to increase revenue or market share, product line expansion and diversification can be part of a solid growth strategy. Whether it’s new versions of or upgrades to current products or a totally new product introduction, thinking beyond the status quo is what keeps companies vibrant.
Case in point: A top chocolate brand shifted from thinking of itself as only competing in the confectionery space to vying with snack brands for “share of stomach”. The result was a successful new line of European-style spreads that can be enjoyed at any time of the day.
But while enhancing or adding products and services can bolster value and customer loyalty, an investment in expansion or diversification should not be made on a whim. Even after a company does all of the market research, making the decision to expand or diversify can be like betting on the unknown: Is it the right bet? Could the money be used better elsewhere?
Before launching such a plan, businesses should consider the following:
- Understand the end-user: Clearly define the target market and how the expansion will benefit your target audience through customer feedback and, if necessary, formal market research
- Be true to your brand’s DNA: Identify the long-term goal, strategy or theme and determine if the expansion makes sense for the core business
- Rally the troops: Confirm that the business has the expertise, political will and financial support to execute the expansion properly
- Consider hidden costs: Adding more options can make product quality suffer, while expanding services can spread your staff and resources too thin
- Master economics 101: Without the proper analysis, supply can outweigh the demand and your brand might lose its appeal
- Crunch the numbers: Analyze the cost of diversification against the potential return to ensure the ROI and manage expectations on how long it will take to realize it. It's important to know when to give it time and when to cut bait
- Map and track the ROI: Define what success looks like, i.e. solving a customer or business problem, growing market share, enhancing other business lines, reducing costs and, most often overlooked, providing a path to future
When executed poorly, adding products and services can yield an unmanageable portfolio that dilutes the brand and confuses the customer. Companies fail when they either a) try to over-simplify their product lines and become too generic or b) try to meet every customer’s needs and end up with a patchwork of products that make no sense for the brand. Such failures invariably occur when businesses lose sight of their target audience and the playing field.
Here’s an example of a misguided brand stretch: A highly successful butane lighter company with worldwide brand recognition created a line of women’s fragrances. Although the target audience loved the lighters, the branded perfume made no sense and the product flamed out.
At WillScot, we are sharpening our execution in an area in which we already play: providing the customer with high-quality but streamlined products and services. For us, success is a mixture of financial profitability, internal adoption, market share and cost reduction.
No matter what your industry, staying relevant in the marketplace means never standing still. The key is balance. When done well, expanding or diversifying the range of products and services can boost your company’s bottom line and set you on a course for continued success.