Your Next Big Thing Shouldn't Be Your Next Big Thing
Tuesday, August 20, 2019
So, What's Next?
People are always asking themselves, "What's next?"
- They graduate from high school and ask, "What's next?"
- They read a chapter in a novel and ask, "What's next?"
- They follow a step in a recipe and ask, "What's next?"
Business owners are no different. They want to know how their offerings can be improved and are constantly at the ready to build the next big thing. As a contrarian, I have to wonder: if everyone has been trained from birth to seek out whatever comes next, should you really be following suit?
Maybe it's time to stop looking for the next big thing, and leave that to your competitors. Maybe it's time to start looking for the previous big thing. In this article, I'm going to tell you how and why you should do just that.
The market for your ideal customers is probably competitive - a red ocean full of companies that are chasing the very same folks that you are trying so desperately hard to attract. Instead of taking part in the red queen's arms race and competing for the pool of existing customers, why not just create some new customers instead?
It may seem heretical and violate conventional business advice, but adapting your sales funnel to attract people who aren't your ideal buyers might just give you a powerful leg up on the competition.
Most car dealerships compete for the same basic audience: people who drive vehicles. Sure, dealerships segment further based upon additional criteria. Ultimately, however, very few dealerships focus upon anyone outside of that group. And why should they? Who would buy a car except someone who drives?
The fact that every dealership is focused upon attracting the same pool of potential buyers represents a significant problem. It increases the difficulty and expense of acquiring buyers for each market participant and pushes each to be on the constant lookout for the next big thing to earn the attention of drivers. What if there were a better way? What if a dealership focused upon the previous big thing - the thing that converts non-ideal buyers into the ideal buyers that every firm is so desperate to obtain? What if a dealership offered driving lessons to people who didn't yet know how to drive? Driving lessons would provide an opportunity to build relationships with people who are likely to become buyers in the future. All things being equal, if a student took driving classes for a few weeks and had a positive experience, wouldn't he be more likely to buy a vehicle from the dealership that taught him to operate a car than from a random one?
Similar outcomes are possible by firms in almost any industry. Consider technology recruiting. This particular field is cutthroat, with very little differentiation between vendors. Each vies for the same pool of individuals: educated and experienced technology professionals who are looking to be hired. In such markets it can be difficult for one firm to stand out from the rest. But what if a recruiting firm offered a monthly lecture series about managing one's technical career? Many of those in attendance might not be looking for a job right now, but at some point in the future, they would. Where do you think these individuals would start their job searches? Would they seek out the sponsoring firm's representatives who they see each month and who have provided intellectually stimulating events, or would they take a chance on a firm with which they've had no contact?
What about a rock climbing gym? Many enthusiasts enjoy the process of scaling walls that are dozens of feet high, but a good number of people would find such an activity intimidating. What if the owners of a climbing gym also offered bouldering, an activity that builds many skills useful to rock climbers, but involves minimal heights and demands less training? The availability of bouldering could serve as a method for creating new rock climbing customers, practically out of thin air.
Benefits to You
The benefits to pursuing the previous big thing should be clear:
- You're creating a pipeline of future customers for your business
- You're able to stand out in an environment with little competition from current competitors
- If treated as a marketing expense, you're able to undercut those who offer the previous big thing as a business in its own right
- Depending upon implementation, you may generate a profit
- You're able to train potential customers to consider their future buying decisions in a way that is most advantageous to your firm
Effects upon Pricing Power
Of course, this being a blog focused upon pricing strategy, one might wonder how a firm's pricing power would be affected by this type of scheme. Is the only result of pursuing the previous big thing an increase in a company's pool of customers?
To answer this question, let's take a look at the effects upon the components of the DUMB pricing power framework:
- Discoverability - Potential customers will become acquainted with you and your offerings earlier in the buying process, leading to higher degrees of discoverability
- Urgency - Potential customers will be exposed to, and affected by, your messaging allowing you to create a strong sense of urgency
- Mesmerization - Potential customers will be trained to value the benefits your firm provides and overlook areas in which your firm is lacking, leading to higher degrees of mesmerization
- Barriers to Purchase - Potential customers will already be exposed to you, have an opportunity to build trust with you, and become comfortable dealing with you, leading to lower barriers to purchase
A strong focus on providing the previous big thing won't provide you with limitless pricing power, but it will certainly offer you the opportunity to increase it.
Identifying the Differentiator Between Ideal Buyers and Those Who May Become Them
Of course, it's one thing to be told to create the previous big thing. It's quite another to figure out what the previous big thing is. What if you don't run a car dealership, a technology recruiting firm, or a rock climbing gym? How can you possibly figure out what to create to convert non-ideal buyers into ideal ones?
Any attempts to develop a previous big thing should start with a strong focus upon the primary differentiator that separates your ideal customers from those who aren't even in the market. What is it that is fundamentally different about your ideal customers and everybody else?
Many readers will likely misunderstand this guidance. It is not a question of coming up with the differentiator between your ideal customers who buy from you and your ideal customers who make their purchases elsewhere. It is a question of identity - not of action.
In most cases, the differentiator will belong to one of the following categories:
- Experience, knowledge, and certification
- Fear, uncertainty, and doubt
- Budget, finances, and ability to pay
- Urgency, need, and desire
Once you understand the nature of the differentiator, you'll have what you need to start developing your very own previous big thing.
Although this method can be quite powerful, its use is not without risk.
If implemented improperly, the previous big thing may result in significant cannibalization or even outright destruction of your existing product lines.
- Car dealers might discover that they make terrible driving instructors and scare students away
- Technology recruiters might create an environment in which attendees bypass their offerings and provide jobs directly to each other
- Rock climbing gyms might create a bouldering experience that is so compelling that it causes existing rock climbers to lose interest in scaling walls
In some cases, a previous big thing can decimate a firm's reputation among its existing client base. If Ferrari were to release a low-cost car as a previous big thing, existing buyers would be aghast. High-end buyers don't, as a rule, want to be associated with the unwashed masses.
That is not to say that every attempt will be met with failure, but each venture should be well-thought-out and introduced with exceptional care. The introduction of previous big things may require shifts in thinking or new staff to be hired prior to design and implementation. As an example, a brilliant physics professor might make a terrible impression upon a high school class, not because he isn't knowledgeable about physics, but because different audiences often reward vastly different characteristics.
Finally, those who attempt to utilize the previous big thing strategy should remember that Rome wasn't built in a day. It is almost certain that a degree of lag will exist between the time at which a previous big thing is introduced and existing product lines experience any benefits as a result. Firms with short time horizons, poor cash flow, or misaligned incentives may not be able to take advantage of previous big things that require months or even years to pay off.
Business owners need to train themselves to stop asking, "What's next?" They can leave such mundane navel gazing to their legions of analysts, industry pundits, and customers. Everyone is always ready to offer an opinion on what a firm's next big thing should be.
It's far more rare to find people willing to ask themselves the far more important question: "What's previous?"
Oh, by the Way...
I'm developing a few previous products of my own. In a world where companies like Uber, Tesla, WeWork, Netflix and countless other media darlings captivate investors while losing billions of dollars in the process, and banks are literally paying customers to borrow money from them, it's clear that much of my advice in the field of pricing strategy may be too advanced for their needs.
Fortunately, I have other offerings available including my free course Business Economics for Non-Economists and my books like Premium: The Missing Framework.
Will these efforts pay off? I don't know; I never try to predict what will happen next.