How to Find Out How Good Your Products Really Are | Business Town

How to Find Out How Good Your Products Really Are

I find small business owners have great products and services—just ask them! They’ll tell you so!

But I hate to break the news to you—most small business services and products are average at best, except in the minds of their owner-operators.

For small business owners, it’s particularly hard to admit that their products/services may be average, let alone below average. They feel their business, and by extension its offerings, personifies themselves, so it’s very hard for them to honestly evaluate their offerings, let alone take hard action when their product and services are not up to snuff.

Think about it: a big diversified corporation could say, “Our ice cream stands in the Cleveland area are underperforming. Switch the regional director with our best-performing region in Houston, and if it’s still underperforming, liquidate it by the end of the year!”

At the same time, a small business owner with the exact same performance might think, “Our ice cream sales in the Cleveland area are off a little, but we still make some money and we still have some customers who really like us.”

Understand How Your Customers Think about Your Products

So how, as a small business owner, can you start to evaluate your products and services honestly?

You might be surprised. In most of my businesses, it never occurred to me to ask my customers what they thought of my products. Why should I do that? My products were selling, weren’t they? Besides, if they weren’t selling as well as the competition, then it was never because they weren’t as good as the larger publishers; instead, I just knew it was always because of some unfair advantage the big publishers had—bookstores tended to stock more of their books, they had better connections with the media, etc. I always had an excuse!

However, I had an advantage in my one source for getting unbiased information: our independent sales reps. Because these people worked for multiple book publishers, not just me, and because they had been in the business forever, they had a lot of opinions and tended to get more honest feedback from booksellers. Better yet, they tended to give me that feedback even if I didn’t ask for it!

One day, one of them told me, “Bob, booksellers see your books as working because they are priced cheap and have nice covers.” I remarked that I thought they saw us as a specialist expert in high-quality career and business books. “No,” he said. “They see you as a low-priced publisher of trade paperbacks.”

Well, of course I was insulted. But once I got over the initial blow to my ego that the main thing going for my books was their low price, I discovered a huge opportunity! If that was how bookstores perceived my business, then they would buy low-priced books from me on just about any topic!

Soon, instead of just publishing books on jobs and business, we were publishing books on everything under the sun. I even launched a series of books called the Everything series, which grew to more than 200 books on topics ranging from childrearing to word puzzles to weddings.

Truly Understand How You’re Getting and Losing Sales

A really important question to ask yourself is, “How do I win or lose sales?” Or if you don’t have 100 percent of your market, then ask, “Who has the rest and what do they seem to offer to keep it?”

One trap you may fall into in evaluating how you win and lose sales is pricing. You are always going to lose some sales on pricing—if you don’t, your products are way underpriced and not differentiated enough! So don’t get carried away in just looking at or overly focusing on price.

Instead, focus on both the quality of your products and the differentiation from the competition. On quality you want to focus particularly on how well your products serve the needs of your customers and potential customers in your market.

To further get a grasp on what your customers want, you can ask them to fill in a survey—there are plenty of survey tools online. You can offer an incentive to get them to fill in a questionnaire, but I think you are generally better off not even offering them an incentive, but just making it clear that you only have three questions with multiple-choice answers.

Alternatively, you can put together a focus group, which is a discussion group of maybe ten or so people who might be in your target audience. Although it may cost about $5,000 to have a professional firm do this, including finding potential customers, providing a studio room with a two-way mirror, and videotaping, it can be incredibly worthwhile! I have successfully used professional focus groups several times to improve product quality or help launch a new product line.

Use Another Firm as Inspiration

Sometimes you may find one outlier in your industry who, while maybe not the largest competitor, tends to have the best or at least the most distinctive products. When I competed in the book publishing business, the first publisher who came to mind that falls into that category would have been Workman Publishing, founded by the late Peter Workman.

No matter what topic he published a book on, he tended to outsell all competitors, including publishers much larger than his own firm, and outsell them substantially—often by a factor of 5 to 1 or 10 to 1. Sure, his marketing was consistently superlative, but more than that, his products were very much differentiated from other publishers—they tended to be illustrated and better designed inside and out, and unlike other publishers’ offerings, they had a similar family or branded look. They tended to be simply better than the competition, often longer, and always extremely carefully edited and thought out. I know they put much more work into each book than competitors did, and they worked on them for a long period of time, not rushing products to market to fill out or add to their list of new seasonal offerings.

Besides looking at businesses within my industry, I often look at firms in other industries as models to inspire my own. This way, even if you’re the best firm in your industry (which I certainly never was), you can always find some company to inspire you.

Fewer Is Often Better

It’s very hard to create great products and great services and try to run a business and keep producing a full range of offerings. I think one of the keys to having terrific quality products and services is to simply have fewer and put more work into each one.

For example, I tend to prefer restaurants that have fewer, not more, options on their menu. Why? Restaurants that have fewer options on their menu tend to build their food from scratch and tend to give it extra effort to be superlative. Restaurants that have larger menus tend to buy more food that is partially prepared by food services and tend to put more effort into the breadth of their service rather than the quality.

I see the same distinction in other industries. In the auto industry, for example, I note that Honda has tended to have higher sales per vehicle than competitors and appears to give more thought to new releases. I remember when they first came out with a pickup truck in the United States; they were the first to put a fold-up trunk in the base of the pickup bed.

Take a Hard Look at Your Product Mix

As you reevaluate your products and services mix, you can also look at them from the perspective of revenue. Which ones do you really make money on? Which ones just help pay the overhead? Which ones are largely a waste of time? Often, businesses that are underperforming but not necessarily selling an unprofitable product line experience a much stronger boost to their overall profits when they winnow their product mix. Why? Because the company is able to focus on the good product lines and really make them fantastic!

If you have many products and services and you really want to significantly improve your quality, you may be better off totally focusing on improving just one at a time. Or perhaps just focus on the ones that really matter and don’t focus at all on the less important ones. As I’ve explained, I think there is a huge relationship between focus and quality.

I have seen many very talented and ambitious business owners put too much effort into turning out too many products and services as opposed to focusing more on improving their quality.

I also think there are a lot of very talented and ambitious entrepreneurs who spend too much time on improving their sales and marketing effort and not enough time and attention on improving their products and services.

Sometimes part of the issue is the fear of raising prices, or even the fear of not being the low-priced competitor. Too many small businesses underprice their products and services. As long as you see price as one of the major components of your competitive posture, it is going to be a lot more difficult to produce and deliver industry-leading quality products and services.

So, to summarize, I suggest you first find out what your customers really think of your products, how they compare you to your competitors, and what matters to them. Then try to figure out how you can produce some truly great products or services, and don’t be afraid to price them accordingly!

Takeaways You Can Use

  • Check your ego at the door: honest appraisals can open up new opportunities.
  • It’s not enough to know how good your customers think your products are—you have to figure out why they do or don’t buy them.
  • Offering fewer and better products is often a more potent business mix.

About Bob Adams

Bob Adams is a Harvard MBA serial entrepreneur. He has started over a dozen businesses including one that he launched with $1500 and sold for $40 million. He has written 17 books and created 52 online courses for entrepreneurs. Bob also founded BusinessTown, the go-to learning platform for starting and running a business.