The simple answer to the question is value is not created in isolation because customers’ needs are complex and multifaceted.
A single product or service often cannot fully address these needs. The product system’s interconnectedness ensures seamless experiences, efficiency and comprehensive solutions.
The day of thinking about a single products are over. It’s increasingly cheaper to create content or things of value. This is more true with digital assets where the cost to create and distribute are often marginal.
You need a pipeline from start to end to rake in larger returns than one single product.
Customers want flexibility and customization.
A single solution simply cannot accommodate this desire. Everyone has unique requirements where customization should take place.
When people think about flexibility in this context, they believe it to be about adjusting to anyone. To accept anyone. Like a Yamaha factory, pumping out everything from musical instruments to motorcycles.
But that’s incorrect. It’s about continuing the journey with the client, business relationship by solving people’s next problems.
Let’s think about real-world examples.
Would you ever buy from a plumber who can only deal with shower handles but not the inner piping of your home? How about a swimming pool technician who can only maintain water chemistry but not provide more flexibility with equipment installations?
I’d argue you wouldn’t. However, what they offer is still in relation to their core offer. A technician can continue the journey with a customer by solving their next problems rather than a one off solution. People want a partner who can anticipate their changing needs and provide integrated, end-to-end solutions.
There are still cases where simple, well-defined problems that don’t require a suite of integrated offerings. The key is ensuring that even these standalone offerings are designed with an eye towards future flexibility and potential integration.
You may have the solution they seek, but without flexible solutions, you’ll be passed up for another competitive offer.
An ecosystem answers to market expectations
Personalization is no longer a nice-to-have – it’s a new standard in customer experiences. But you can’t personalize if you don’t capture data. So how does data become a meaningful asset to your business? As the title says, through a product ecosystem.
As I have shown before in this diagram, your flagship offering and products for clientele, is manufactured through insights. Each stage informs the next through data. Much like a hierarchy, it’s the foundation that lays the groundwork in what to do next.
Your free presents are acting as data collection agents, telling you what’s hot and not. You can anticipate changes to user behavior sentiments. It tells you how people discover you. And it tells you what resonates to people. Bookmarks, reshares, click-through rates, and comments are more critical than vanity metrics such as likes or follower count.
From work experience, the best option is a diagnostic like tool that feeds into your core offer. It also double as both an email capturing tool while getting to answer the public.
Without these insights, your product ecosystem tends to be more at the mercy of unstable search algorithms far out of your control. But it’s the opposite with data to suit the world’s ever changing expectations.
An ecosystem brings continuous innovation and profits.
Do you know what a local restaurant, a SaaS business, pharmaceuticals, and selling e-commerce stuff have in common? They’re all J-Curve businesses.
The tough love from these businesses come from being volume based games. There’s often minimal loyalty through churn. They require large initial setup in order to become a viable business and more likely require extensive support services.
Here’s a real-word example. Let’s take BMW as an example.
Buying a new model is a bulk purchase. Let’s say it’s about $45,000 dollars. It’s high revenue yet very low margin. No surprise, they aren’t running a charity so they know what they sell should be more than their costs. If BMW wanted to make most of their revenue from these bulk purchases then margins will have to increase by decreasing costs. Perhaps some form of clever innovation. Cheaper materials or different sourcing. But worse case would be to increase the price for customers.
Their real profits come from the ongoing products and services attached to the car. You’ve got finance, insurance, and physical servicing of the cars. Those contain considerable more margin.
It’s the core product (the cars) coupled with the ongoing services through a product ecosystem that makes the brand profitable and what it is today.
What were to happen if BMW didn’t have the core product of car manufacturing? If it only stuck with financing, insurance, etc? Then they will, as if by magic, turn into a J-Curve business. Just like the restaurant model hoping to get more and more customers to stay profitable.
This is to say it’s the product ecosystem that defines the brand and makes the profits. It’s not enough to simply sell one particular product or service.
A little homework for you
Next time you see a successful J-Curve business ask how they got there? When you see business can you also picture their product ecosystem?
Envision their users working with said business and the path they undergo. You’ll be surprised to find just how much value is made through multiple products or services.
Feeling stuck? I made a FREE online tool for you to use to create a product ecosystem. You can use it here.