Ditching Hourly

Hello and welcome to Ditching Hourly. I'm Jonathan Stark. Today I'm going to talk about the concepts of high-touch, low-touch, and leverage when considering your product mix or your product ladder as I've described in previous episodes. This is a little tricky to do without a visual so I'm going to describe a four-quadrant graph or double-axis graph sort of split into four sections. If you go to the show notes, if you're signed up for the mailing list you'll receive this in the show notes and you can find it on the website as well. But I'll do my best to describe it to paint a picture in your mind, if you will. Okay, so imagine a double-axis graph. So in the going bottom to top we're going to have delivery. So this is the high-touch, low-touch level of difficulty to deliver a product or service. So at the bottom it's very easy to deliver the product or service which I'll just refer to as an offering from now on. And at the very top it is difficult or costly for you to deliver the offering. And then horizontally across the bottom you can imagine a sales line that represents high-touch, low-touch sales. So at the left-hand side the sales process is very easy. So it's really easy to sell. You don't have to interact very much with the buyer before they choose to buy. And on the right-hand side, the far right-hand side, you have a very high-touch sales process where it's a major decision for the buyer. There'll be one or more sales meetings perhaps that then lead into a custom proposal. So there's a lot of work that the seller has to do to sort of prepare the buyer for the buying decision and to create the offer. And it's just a lot of work before any money changes hands. Okay, so if you split this, if you imagine splitting this into four quadrants. So you've got a vertical line in the middle and a horizontal line in the middle also. So you get this sort of T-shape X. In each quadrant, products fall into different quadrants or offerings fall into different quadrants. Most software developers operate at the top right-hand maximum high-touch sales and high-touch delivery quadrant where they have a relatively difficult sales process where they actually have to talk to people on the phone. They have to convince people or perhaps compete with other providers that are being considered. And then they have to go through the process of writing up a quote and then following up on the quote. All of these things that you have to do to sell a custom project. That's what most software developers, that's the only area they operate in. And it's high-touch on both axes which makes it really difficult actually. So very high-touch delivery, very high-touch sales process. If that is where you operate exclusively, the easiest place to move is down the sales scale. So if you go to the left, I shouldn't have said down. If you actually move to the left quadrant, you still have a high-touch delivery but you make your sales process much easier. That's probably the best, easiest transition to make. So you continue to offer custom projects. But then you offer a productized service like a roadmap. And the nice thing about a roadmap is that it's presented as a, or a similar productized service. It's presented as a product. So the sales cycle is very easy compared to a custom product because you don't have to do a quote. You can just describe what is included in the project. It would be a relatively fixed scope regardless of who buys it. The delivery would still involve one-on-one attention that you would have to devote to the customer. But, you know, at least your sales process would be much easier. And if you move down, straight down from that quadrant to the bottom left quadrant where you've got low-touch sales and low-touch delivery, you find things like info products really. So like an e-book or a regular book. It's the kind of thing that almost approaches impulse purchase type of decision for the buyer. So, you know, the prices are usually lower in comparison to your other offerings, much lower in fact, so that more people can, you know, they don't have to think too hard about the decision. They can just buy it. And then in terms of delivery, you don't have to do anything. There's nothing customized about the delivery. It's just either download or automatically delivered to their address. It's very easy to deliver.

Okay, the last quadrant, the one that we haven't talked about yet, is the bottom right. That's sort of an advisory retainer kind of relationship. And this is attractive to lots of people, but because it, to be honest, I think it sounds like easy money to people, but it's the trickiest to navigate into. And I would almost recommend if you're currently operating in the top right quadrant doing custom projects, it's really hard to go straight to advisory retainer type relationships. It's much easier to sort of come around counterclockwise to go from a custom project then to a productized service like a roadmap. Then once you've got all the experience with how to sell a product in that sort of top left quadrant, it becomes easier to move down to the bottom left quadrant and start to sell things like eBooks or video courses based on your experience with a wider, a larger number of customers and getting exposed to more patterns in your industry. And you're able to focus down and really create a powerful focus for some sort of info product that you know is going to sell because you've been selling the sort of done for you versions in the top half of the graph. Now you can create a do-it-yourself version for the bottom left-hand quadrant. I think at that point, once you've got those three quadrants covered, you're going to have a ton of client exposure and you're going to have a ton of, you really have a body of work created at this point. You'll really be an expert at this point. And at that point, you can sort of move into the bottom right quadrant where you have this sort of advisory retainer, holy grail type of engagement. Because at that point, you've built up so much trust and you have so much experience doing what you do that you'll be strongly differentiated from anyone else who shares your discipline. I like to use medical analogies. So I'm going to kind of label each of these quadrants in a medical way, starting at the, let's start at the bottom left. So the bottom left quadrant is low-touch sales, low-touch delivery. And a medical example of this would be like a baby book, like Dr. Spock's, you know, care and feeding of babies or whatever it's called, that like famous medical book. So it's a self-service thing that's relatively inexpensive, kind of an impulse purchase and something that, you know, there's no delivery cost, no sales cost really for the person who wrote the book. Then if we go up to the top left quadrant, sort of a roadmap kind of engagement or productized service kind of engagement is more or less equivalent to your primary care physician doing an office visit with you. So you go into the office and the primary care physician gives you a diagnosis. He might give you a prescription, he or she, or might send you to a specialist to maybe have surgery or go to a dermatologist to have some condition checked out. But they don't do that many procedures in the actual office. At least in my case, just thinking of personal experience, my doctor generally sends me out to specialists whenever I need something specific done. So that's kind of like a productized service or a roadmap. Then, you know, moving clockwise back to the custom project, there you're going to have specialists like a surgeon or a physical therapist or a dermatologist or an optometrist. Those are the kinds of things, you know, and they do a procedure on you. So they're actually doing stuff with their hands to change your condition. And then finally, in the bottom right corner of medical analogy, there is like a concierge type of relationship with a doctor. So it's kind of like having a private or at least a shared private doctor who you can call under any circumstances. So at the middle of the night, if you have some kind of weird cough or swelling or something, you can get in contact with a doctor if you have a concierge medicine relationship with them. If you've never heard of concierge medicine, it's a thing and you can Google for it and also link to it in the show notes. But I like to have this sort of analogy for each of those quadrants in a different kind of industry because sometimes it's hard to see the forest for the trees when you're just thinking about your own industry. Okay, so the moral of the story here is to, as you're thinking of new offerings for your business and branching out from just doing custom projects, it's important to consider the high-touch, low-touch nature of the sales process for the offering and the delivery process for the offering. And what I'm recommending here is to step down one at a time. So to go from custom projects to make your sales process easier by offering a productized service like a roadmap and then make your delivery easier by going down into some sort of info product like a book or an e-book or a video course or something like that. And then as those things, as your business grows in those ways,

Eventually, you can consider offering advisory retainer relationships where your customers or your clients pay you to have 24-7 access to your advice and opinions on whatever they might be facing. One more concept to touch on is leverage. I can remember having this thought back when I was really doing just custom project work. The notion of writing a book struck me as a good way to increase my notoriety, but it was more of a strategic move to sell other services than it was a way to directly make an income. I've changed my mind about that over time, and I would urge you, if you think spending 100 hours to write a book that you're going to sell for $20, if that seems like a waste of time and you're kind of calculating, well, I'd have to sell like 5,000 books before I was making a reasonable hourly rate, you're thinking about it in the wrong way because things that have really low touch sales and really low touch delivery give you leverage because you can resell each of those things without any incremental cost on your part. And what this does is as you create more and more products in that bottom left-hand quadrant, you end up with an annuity. And if you're making even $1,000 a month from this annuity, it doesn't sound like that much money, but once it's done, it's done, and that $1,000 keeps coming in. And that's the equivalent of having $500,000 under management that's throwing off dividends to you. So, I mean, I'm not a financial guy, but that's the idea. So if you're thinking about the amount of work that needs to go into creating an e-book or a video course, don't worry about that too much. If you know that your sort of area of expertise and the expensive problem that you're solving have been validated by doing custom projects and productized services in that sort of high touch delivery zone, then it's pretty low risk bet to say that, oh, if I wrote a DIY version of how to do this sort of thing, it's probably going to find an audience because I already have an audience that is interested in those things. So if you look at it instead of at an hourly rate as more of an annuity, kind of like saving for your retirement, these things can build up pretty quickly. So don't discount those as you flesh out your product mix. That's it for today. I'm Jonathan Stark, and this is Ditching Hourly. See you next time. The next time someone asks you for your hourly rate, go to valuepricingbootcamp.com to sign up for my free email course. Again, that URL is valuepricingbootcamp.com. Hey, Jonathan again. Do you have questions about how to improve your business? Things like value pricing your work instead of billing for your time, or positioning yourself as the go-to person in your space, or maybe productizing your services so you never have to have another awkward sales call or spend hours writing another custom proposal. Book a one-on-one coaching call with me and get answers to these questions and others in the time it takes you to get ready for work in the morning. Best of all, you're covered by my 100% satisfaction guarantee. If at the end of the call you don't feel like it was worth it, just say the word and I'll refund your purchase in full. To book your one-on-one coaching call, go to jonathanstark.com slash call, C-A-L-L. That URL again is jonathanstark.com slash call. Hope to see you there.