The professor’s illustration during a graduate school class at the University of Kansas was powerful.
As students walked into the room for class that evening, two piles of pink powder were on a sheet of paper at the front. Each had a price written in front of it, one substantially higher than the other. And both had a description of what was in the powder.
The question was then posed, “What is different and why does one have such a higher price point than the other?”
The visually identical piles of pink powder were sugar-free Kool-Aid and sugar-free Crystal Light. They both had the same flavor and nearly identical ingredients.
The professor was offering a clever and extremely powerful illustration of how one of the world’s leading brands created a new revenue stream from an existing product. Adults wouldn’t drink Kool-Aid. But they’d chug down Crystal Light by the gallon. WHY?
Because the manufacturer identified a new addressable market, modified the value proposition, and tweaked the marketing message to capture the attention of the adult market.
Do you have a new revenue story waiting to be unlocked?
Most companies intuitively know they have a “Crystal Light” story within their products and services with new revenue opportunities from existing capabilities just waiting to be unlocked. But finding, vetting, testing and developing those is difficult when day-to-day focus is on meeting sales goals from proven revenue streams.
As a result, concepts are discussed during annual planning, agreement reached that further exploration is needed and, more often than not, worthy ideas get shelved for review on another day that never comes. New revenue opportunities go down the drain.
Keep Your Team Focused on Current Revenue Streams While Exploring the “What Ifs?”
Staying focused on proven revenue sources is rarely a mistake. Concurrently, pursuing new revenues without thorough, methodical review, is almost always a mistake. So how does a company find the right balance? How does one hedge the risk of too narrow of focus?
A strong approach to adopt a systematic review process with multiple evaluate to continue points:
- Define the boundaries of the exploration
- Most companies should start with new revenue mining ONLY from existing product or service.
- Many companies will want to focus on opportunities with current customers.
- Creating “boundary definitions” will avoid new revenue mining that is not viable even if lucrative.
- Understand your product or service generically
- To be successful with current revenue generation, you’ve likely focused capabilities on specific market needs / use cases. Now you need to unbundle that view to examine other potential.
- Customer use cases can be profoundly informative. Your customers may have been more creative in mining for value from your solution than you were.
- Look for Buyer Personas or Distribution Channels you are familiar with.
- A new revenue stream should extend a competency, not require development of one.
- However, it cannot cannibalize current revenue or customer attention.
- Further, it shouldn’t be a portfolio expansion … that’s a different objective.
- Build in Multiple "Go/No-Go" points for the review
- Make sure to structure review so that multiple litmus tests occur.
- Make sure to talk to customers / prospects early.
- Use a negative push through approach … make prospects tell you the idea is good even as you tell them you think it’s a bad concept.
- Use a proven methodology
- Follow a Sirius Decision, Pragmatic Marketing Framework or PMPathlights process model.
- Be thorough or don’t mine. The risks are too high to make decisions on surface level analysis.
- Consider outsourcing. Not only does this keep you team focused, it brings a fresh external perspective to the new revenue mining review.
Move the Needle on “Woulda, Coulda, Shoulda".
Don't let a busy schedule, daily interruptions, and current revenue focus keep you from unlocking your "Crystal Light" opportunities. This year, forego the typical "tasks for a later date" approach and proactively plan your new revenue mining.