Expanding the line of products or services your business provides can help you remain competitive with — or even get ahead of — others in your industry. But it’s not a decision to be made lightly. If you don’t have the right resources in place or your team isn’t on board, an expansion may bring more frustration than additional revenue.
It’s essential to carefully and thoroughly review not only marketplace demand but also your company’s structure and capabilities before proceeding. To ensure you and your team are fully prepared when it’s time to add to your product or service line, read the following advice shared by members of Business Journals Leadership Trust.
1. Sustainability
At Sunflower Bank, we are committed to “sustainable growth.” This means we keep a close eye on our markets and customers to help guide where we invest in future expansion. This simply means allocating our resource investments based on customer needs. We look for opportunities to provide solutions or make connections that help our customers. – Mollie Carter, Sunflower Bank, N.A.
2. Customer satisfaction
Understanding your target customer and how the new product or service can enhance customer satisfaction is key. Any business should consider these two factors when deciding whether to introduce a new product or service line. – Sudhakar Puvvada, INDIGO MILL DESIGNS, Inc
3. Potential effects on your current product or service line
It’s important to consider how an expansion may negatively affect current products or services. Expansion that causes a deterioration in the quality of current products or services would be ill-advised. – Marc Vincent, Redstone Advisors Inc
4. Licensing
One factor that accounting firms must consider when determining where to expand their service lines is licensing. Reciprocity is virtually nonexistent where public audit and attestation services are considered. Once you’ve obtained the state license to practice, you are instantly granted access to another market of potential clients. – Anthony Otaigbe, The Otaigbe Group
5. The problem you’ll be solving
Be sure you are solving a problem. If you notice emerging trends in customer conversations, come up with solutions and engage customers to gather feedback. You don’t need full buy-in, but if the solution clearly solves the problem, pursue it. When launching a new service, act as if it were a startup and push hard to get it going, but be sure not to ignore your primary business line. – Lauren Asghari, Alderson Loop
6. Serving existing customers first
When rolling out a new product or service offering, consider making the new offering available to existing customers first. There are two reasons for this. First, an existing customer is far likelier to give you grace and forgive the inevitable bumps of a new offering. Second, the existing customer might not be too happy if they aren’t given the first crack at the new product or service. – Jim Cunningham, CunninghamLegal
7. Your current capabilities
When looking to expand a product or service line, ensure you have the capabilities to do so with your current team, as well as the necessary manufacturing capabilities. Avoid putting too much strain on your staff while focusing on this new service line, and be wary of not giving enough attention to, or abandoning, the core mission of the business. – Jessica Hawthorne-Castro, Hawthorne Advertising
8. The target market
The factor to consider is this: Is the expansion’s target market existing markets, adjacent markets or new markets? The cost of taking a product or service line to market can increase dramatically when moving from existing markets to adjacent and new markets — the risk and the probability of failure are increased as well. These considerations should be balanced with the market potential for this expansion line so you make the right decisions. – Pradeep Anand, Seeta Resources
9. The competitive landscape
Understand clearly the competitive landscape in terms of existing products or services that could pose a competitive threat. Once that’s clear, lay out each competitor’s strengths and weaknesses and evaluate them against the unmet need — that’s your value proposition. Once you have your VP, test, test and test among a subset of potential customers and tweak before launch. Then, make the launch a splash! – Rodger Roeser, The Eisen Agency
10. Cash flow
Passion is an important factor, but the reigning lens for determining expansion is the impact on cash flow. That’s the reality check for any decisions we make about changes or expansions. Always consider investment — both monetary and your team’s time — as well as potential risks and rewards. Being pragmatic and thoughtful helps ensure you don’t negatively impact cash flow while continuing to generate projects. – Samantha Haney, Waypoint Ventures LLC
11. Your brand positioning
Ask yourself, “Is the extension meaningful to our brand, or not?” Sometimes brand extensions can hurt your brand positioning and value by expanding into territory that is wasteful. Poll your customers, do surveys and host focus groups — whatever you need to do to prove that this is something that your audience wants. Sometimes a strong gut feeling is just indigestion. – Christopher Tompkins, The Go! Agency
12. Your market share
When you have reached a steady state and you’re looking to unlock the next phase of your growth, it’s time to consider adding a new product or service to enhance your brand and benefit your target clients. Or, if you are at a competitive disadvantage and are beginning to lose market share, you may need to expand your offerings to be at parity with competitors. – Shikha Jain, Simon-Kucher & Partners
13. The impact on customers
At Truliant, we make sure new services match our mission to improve our members’ lives. When there is a product or service we do not have that would allow us to better serve our members, we owe it to them to investigate it. If we can do it well, save our customers money or offer a better experience, then we would consider adding it. – Todd Hall, Truliant Federal Credit Union
14. Current market conditions and demand
The biggest indicator that it’s time for expansion is demand. For instance, before Covid, we limited our services to the local market. As a result of Covid, our services have consistently been requested nationally — so we decided to expand and now have a new service line! – Kimberly Lucas, Goldstone Partners
15. The fit with your value stack
It’s critical to consider expansion into new products and services in order to grow. However, most companies focus too much on revenue potential and not enough on how well the new offer fits within their value stack. Remember, products are tools to help customers get jobs done. Make sure any new tool you bring to market is consistent with your primary promise of impact or you risk brand erosion. – Thomas Miller, Human
16. What your clients are telling you
One definition for marketing is to find a need and meet it. When creating a new product or service, the secret to success is your relationships with your clients. Through frequent meetings and conversations, inevitably a client will express needs, and you can jointly develop a solution. Typically, the same challenges are experienced by other organizations. As you share the solution, a new product is born. – Tony Rossell, Marketing General Incorporated
