Harms: We’ve been speaking about business and understand it is all about providing value to the market. 

So far if you can take one big take away it is we need to solve the markets problem, especially the niche market that we’ve identified. 

We showed you how to find out what people’s real problems are not gut instinct. Not my friend down the pub says or my wife says this, my cousin says this it’s finding out what people’s real problems are based on search queries based on what they search for in Google.

We left you in a position where you may have been starting to think about products, ways, services in which you can solve these problems you’ve started to discover.

The way we’re going to provide value is by fundamentally solving their real problem not assumed problem.

All successful businesses are built upon problem-solving. 

We create something of value and the only way to create something of value is to solve people’s problems, we looked at how we find out what these problems actually are. 

Then we can dig a bit deeper to get to those true problems. 

This is vitally important we’re solving their problems, not about our problems.

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Solving problems

Kyle: It’s not about how we make our business successful. 

It’s about how we serve other people. 

If you are not on board with this and this is a mind shift switch I would say take some time to reflect a bit. 

I wouldn’t bother at the moment proceeding with the rest of this guide because we’re really going to be coming from that direction by deciding we are going to be serving other people. 

We’re going to be solving their problems. 

We have to do that exclusively. 

We will also help ourselves later, absolutely. But right now we need to commit to solving their problems. 

We’re going to be looking at how we provide value, maybe you’re already starting to think about products and services and different things you can produce in the market that’s absolutely great. 

Most people start with those ideas before they think about the market before they think about units of value. 

By holding off until this point we can start to outline what our product and service offerings are going to be. 

It is a totally flipped way of doing this, we didn’t start with the products instead we started with the market. 

We worked out what is valuable for them, what their problems are and now we’re going to look at how we deliver value to them, how we package up value and get out into the market.

HOW do I solve their problems then?

Harms: That leads us onto the next question which is how do we solve their problems? 

That’s the key. 

In the MBA book one of the things highlighted was what is a business? Also in that book he talks about different forms of value and highlights 12.

He speaks about 12 standard forms of value as one of the chapters or segments in the book. 

Any of these could become the basis, the foundation of your business and let me list these out for you. 

Number one in terms of form is a product, next is service, another one is shared resource then you’ve got subscription, resale, lease, in the form of an agency you got something called audience and patient to explain the form of an agency, audience aggregation, loan, option, insurance and capital. 

That’s 12 different forms in which you can base your business on. 

These are going to be different and you will be operating different business economic vehicles to deliver that value.

Kyle: We are going to be focusing on the ones relevant to online business because that’s what we teach, that’s our niche any of these could be the foundation of your business and it’s going to depend on your market and expertise. 

These are all different ways of packaging up value and getting it out to the market. 

All are equally valid, just not necessarily in every single market and not necessarily all online or at least some are going to be better than others online. 

Audience aggregation is getting lots of eyeballs in one particular place. 

So lots of people looking in a particular direction whether it’s a billboard or a more modern example, a website then you run adverts. 

That is basically audience aggregation; you have a lot of people paying attention to you. 

You can monetise that by running adverts or sponsored posts or whatever it is, we’re not looking at that. But that is a perfectly valid form of value for online but not for today. 

Agency is another one and in the book it says, market and sell an asset or service you do not own on behalf of a third party, then collect a percentage of the transaction as a fee. 

Great business model.

Harms: In the UK we refer to that as a broker.

Kyle: Online we tend to call that affiliate so I’m promoting or selling someone else’s product, I take a percentage of that sale it’s not my product. 

I didn’t create the product. I’m just saying it is a good product or service. Then I take percentage again perfectly good form of value you can make a lot of money with affiliate marketing but not the focus today. 

Resale is another one which in the book is to acquire an asset from a wholesaler, then sell the asset to a retail buyer at a higher price. 

This is drop shipping. This is fulfilled by Amazon, you’re not actually manufacturing the product yourself you’re finding products, generally from China from Alabama or Ali express, these are where you find wholesale products and then you are basically flipping it and selling it on Amazon to individual retail people. 

Again, great business, not today. Instead, what we’re going to be focusing on our product, service and subscription. 

These are the big three we’re going to be focusing on, they are our preference. 

I would say they’re probably the most relevant in the most amount of markets and they’re going to be a good place to start. 

But that doesn’t mean you should close your eyes to all of the rest of the opportunities, the other ways to provide value.

Products

Harms: All of these are valid. 

We want to come from a place which can be applicable to as many people and accessible to as many people as possible, without assuming things like you’ve got a lot of capital to lend or reallocate or invest. 

We want to strip it down and make it very accessible, let’s start with the first one product and this is the most basic one. 

Typically think about it as a tangible object, a pen, a glass. 

They’re typically thought of as tangible especially in the past we thought of these products as physical goods. 

But also just as relevant in nowadays and people do sometimes miss is a digital product like an e-book. 

I’ve got a bookshelf of physical books but also an ebook.

Kyle: Often you can buy the same basic product in both forms, physical and digital. I’m looking at a PlayStation game I want to get, I can buy from the store or just download it. 

There is no physicality, just download it onto my hard drive or I could buy the same thing, same product as a physical disc and I get the same value either way, but the line between physical and digital is increasingly blurred.

Harms: The big advantage of products in general is scalable. 

So, for example, you make it once and it can be made again and again and again. 

But in the case of physical goods there’s a cost connected to that, the manufacturing, shipping, logistics, the quality control, supervisors, all of that is a part of the manufacturing and distribution process. 

It’s not like the more you sell the fixed cost stays the same, actually the fixed cost sometimes rises with the higher quantity you’re selling. 

If you translate this to digital it is infinitely scalable it’s incredible, and often the fixed cost doesn’t change the more they sell, that’s the reality of it. 

They may have to have bigger servers, but they are very marginally compared to distribution. Manufacturing costs associated with the physical product. 

Our preference is digital products for those main reasons it is just scalable in an incredible way that physical products can’t be scaled.

Remember our products need to solve the problem, that’s the key and the way in which we do that is we ensure that our product that we create matches their problem and provides a solution to the market. 

What we don’t want to do is start conjuring up product ideas that fit and match so the product purchased by the end consumer actually solves their problem. 

For example we talked about backyard chickens, we can produce a physical product like a very secure coop that doesn’t allow the chicken to fly away. If it’s digital that could be an e-book detailing the best methods in which to ensure the safety of the chicken, we want to match the problem and solution here.

Kyle: If you sell a physical coop it’s a big item made of wood and mesh that needs to be shipped over and it’s going to cost you a lot to ship, what if instead you created a PDF which shows people how to create that coop using stuff they can buy from B&Q or Homebase, or if you’re an American from home depot. 

You get these pieces of wood, you need this and this, you need X square metres of chicken wire, etcetera and then these are steps to build it yourself. 

So yes, you might still sell the product to people and that’s $500 or £300 or whatever it is, but then you can say okay if you don’t want to buy this premium item that’s absolutely fine, you can also buy a PDF which has the step-by-step instructions and the blueprint for building it yourself, or you can get a video course which includes the PDF and I’m going to be walking you through the steps. 

It’s just another way to consume information. 

These are all products and they are all solving the same problem. 

The problem is my chickens are escaping. How do I stop them from escaping? 

Instead of just having that one product which is this big, bulky chicken coop we’re having to send all over the world, now we’re being smart about it and we are continuing to solve the problem using a more scalable and cheaper digital goods, which opens up our market and allows us to solve the problem for  more people.

Services 

Harms: That’s a product. 

Now, what about the other area we want to focus on the other four which is services.

Kyle: Services are again just another way of solving our markets problems, so unlike products and this is the big difference. 

They are not easy to duplicate. 

A product once you’ve created it once can be duplicated to be made again and again and again. Whether it’s a physical good made in a factory or it’s a digital good where you just copy and paste. 

A service cannot be duplicated in the same way. 

Instead, each time you perform the service each time you serve a client, it’s going to take time and there’s no way around that. 

It’s always going to be tied to the amount of time it takes to deliver that service whereas with the product there are no such time connections. 

We did some podcasts with people in osteopathy and physiotherapy recently, and these are fantastic examples of a service that’s really hard to productise because the basic form of value delivery is a service. 

It is literally a hand service where the physiotherapist will have to actually literally hands-on with your muscles and bones, finding out where the problem is. 

Let’s say I am a massage therapist and I provide massage as a service. 

My client’s problem is they have sore muscles and they want somebody to help them solve the problem. As a massage therapist I can do that. 

I can help them with that particular issue that’s a service. 

So what happens if that massage therapist or myself suddenly has a hundred thousand bookings? 

If it were a product we would just sell a hundred thousand units and we would take that to the bank and we would be very, very happy. 

If it’s a service we suddenly have a huge spike in demand. 

We can’t fulfil, we’d have a backlog of clients for the next four or five years, probably longer than that because a service is inherently not scalable in the same way that a product is.

Harms: On the flipside, a service is typically more lucrative than a product. 

For example, the chicken coop may produce an e-book or video course that can be build it yourself, and that kind of information. They could probably sell it for £15, £20, £25, the service product off the back of that may be a chicken coop. 

Now the service could be I come and install the chicken coop for you that often increases profit margin and starts to act as a premium offer. 

The same can be put in the world of consultancy. 

The consultant may download their thoughts and knowledge and information to an ebook, the eBook sells for £10, £15, £20 but to hire the consultant in to come consult on the business would have a premium fee associated with it. It could be £500 for the day or they could charge double somebody’s working salary to spend a month with that business putting together a strategic plan. 

They can be more lucrative and just expand on what kind of services you can provide. 

Think about training, education, events, conferences, giving talks, public speaking appearances, consultations, mastermind sessions, workshops. 

These are all different ways in which you can provide your service for a premium fee, but remember it’s not scalable, it becomes a challenge when you want to scale it. 

That’s where the product has the advantage.

Kyle: When we are thinking about what kind of services can I provide we need to once again and I know this is repetitive but we need to come back to what that problem is. 

Yes, a customer could buy my book on making my garden chicken proof or building a chicken coop or they can buy my £500 product, or they can hire me personally for £1,000. 

I will come and install a chicken coop; I will chicken proof the garden etcetera as a service it’s done for you.

I will do all the work for you but I’m still solving the same problem. 

I’m just making it easier for you and as a result you need to pay me for that.

Subscriptions

Kyle: The final one we want to talk about was subscriptions.

It’s almost an honourable mention because it’s often connected with either products or services, but subscriptions in particular are increasingly especially nowadays a really popular form of value. 

A lot of our salaries now go on subscriptions, things like Netflix is a very common example, any continuity product. 

We think about subscriptions as things like gym subscriptions or subscription to a magazine but it can be any continuity product. Something like a dollar shave club where you sign up and they send you razor blades on a regular basis. 

That’s a subscription. It’s just we are used to using words of subscription for magazines and stuff like that. 

Nowadays it’s an incredibly common and very powerful form of value. 

It’s used by most online businesses who are smart and increasingly off-line businesses as well who need regular revenue coming in the door. 

Really, there’s no excuse not to add one of these into your business once you’ve nailed down your products and your services. 

If you create a recurring version of either a product or service you’re going to be in a very good place.

Harms: Subscription is a fantastic model and I agree it should be part of or starting to introduce it as part of if you’ve got an existing business.

Start to think about how I can introduce that into my existing business on value that can be delivered ongoing and somebody pays for the ongoing value as part of a monthly, weekly quarterly subscription. 

If I think about companies which execute this Microsoft office annual subscription, dropbox annual subscription.

 Kyle: It is a very stable source of revenue over time so small entries unlike services, but it’s also continued and stable, unlike products which are one-off sales, so subscription is kind of the best of both worlds. 

And if you can fit it anywhere in your business model we definitely recommend it.

Harms: The subscription can’t be the subscription for the sake of it. 

It must serve the problem. 

For example, if your market helps people lose weight within a specific niche it could be month check ins, meal plans, exercise tips, it could be escalating someone from a beginner level exercise person to someone who can do 20 pull ups. 

For example, a client wants to learn digital marketing; it could be a monthly drip of content.

Kyle: The key thing there is primarily the recurring nature of this product or service needs to be valuable for them. 

You’re not making it recurring just because you’ve heard us saying this is a really good business model for you. 

Again we need to be thinking about how we solve their problems. 

Yes you’ll get paid on a regular basis, but why would they go for subscription rather than just buying a product, just buying a service so it has to solve their problems. 

With learning digital marketing if we drip feed the content over weeks and months, even years. 

It’s much more likely that the customer, the person who wants to learn digital marketing, the person paying the subscription will actually make their way through the content. 

They’ll actually action it and they will therefore solve the problem of I want to learn digital marketing where as if we just throw 200 videos at them and say, there you go. 

Most people shut down, that’s too hard, so again it needs to match. 

Subscriptions are a fantastic business model for you. 

So that’s a bonus. 

But the subscription has to make sense for solving their problem.

What order?

Harms: The next part to focus on is let’s order these. 

We looked at three categories and now let’s give you our definitive preference of order. 

The best way to structure this is to go for the product first, then subscription then to services. 

This has a particular reason for that because most businesses would actually do this the wrong way around.

Kyle: Most businesses, especially early businesses would start with services and there is a model called the cashflow quadrant by Robert Kiyosaki.

It’s an employee then you go self-employed. Then you go to the business owner then you go to the investor and it’s basically how you make money, you’re either being paid a salary or you are a freelancer and you’re making your own salary as a self-employed person. 

Or you own a business and you have people working for you or systems working for you and the money comes from that, or you are an investor and your money works for.

Harms: The core philosophy is you either exchange your time for money or build an asset based on business where the money comes in regardless of how much time you spent on it, so it becomes an automatic income. 

It is shifting from one side of the quadrant to the other side. 

Most people automatically default to services which actually typically fits on the employee side of the equation.

Kyle: As it is still linked to time so, yes, you might be self-employed so you think you have a lot more freedom, but as long as you’re still providing services the amount of money you can make, the value you can put out into the world will still be tied to your time. 

That’s going to limit scalability. 

That said, a lot of people start in the self-employed quadrant because if you’ve come from a salaried position if you’ve come from being employed and then you’ve struck out on your own, the natural thing to do is to continue to provide the service you provided in your job, but now you’re just providing it as a self-employed person so you make more money and its quick way to get cash in the door. 

But you are still selling your time basically.

Harms: That’s why we start with products as they’re infinitely scalable. 

Especially if you stick with our preference which is digital products. 

They are amazing and they are scalable and that allows us to when we say continuity move into some form of continuity rather than come out of your current position and go into services we go into products, which means continuity in terms of time management. 

Continuity in terms of a consistent product i.e. one product continuity in terms of the income coming in month after month. 

These are all the things we want to get continuity around before we move onto subscription and then services. 

Treat services as the final destination.

Kyle: If you’re just starting out in your business maybe you’ll be doing services on the side but the problem there is that will be your focus. 

It will be services and servicing clients. 

And yes, it pays the bills. 

Yes, it gets you cash but it’s not a good basis to grow the business from that point onwards. So that’s why we go for products, subscriptions, and then services.

Classic online funnel

Kyle:  We’re going to give you what is the classic online funnel. 

This may or may not be the right funnel for your market. 

This may or may not be the right funnel for you depending on your business goals and aspirations. 

But we’re going to give you the classic so at least you have a template that you can make edits to instead of coming to this entirely out of the blue. 

We’re going through products then into subscriptions and then services and we’ll give you different forms of value that we can use or are used in a classical online funnel in each of these categories. 

We normally start off with a very low cost but still high value ebook. 

An e-book is something that can be developed relatively quickly and it allows you to get your value and start solving the problem ASAP. 

This could be a Kindle, this could be a published book, but that means you have to go through gatekeepers like publishers. We tend to suggest sticking with Amazon for now. 

That’s going to be your first form of value. 

You have identified the problem you’re using the e-book to solve their problem. 

The second product will be some kind of course which will be very similar to the e-book but going through in more depth and going through using video which people tend to value more than they do text. 

People will spend a lot more on the video course than they will on an e-book. 

So we’re starting to escalate. 

We’re starting to increase the price point already at the third step and we’re still in products that will be some form of physical product.

Again, this is going to depend on your niche, maybe physical products are totally irrelevant. In which case this would be a more premium digital product, maybe a piece of software. 

But it’s going to be a higher cost product that people purchase. 

We’ve gone from an ebook course to some kind of physical product or a higher cost premium digital product. These are the three products and then we’re going to move into the next category, which is going to be subscription. 

Normally we would have some form of membership or subscription here. 

If you do have physical products it might be a subscription for the physical products to continue delivering X amount of units per month. 

If you’re entirely digital, then it’s going to be a membership group where you continue to help them solve their problems by adding accountability, by adding community, by adding a constant feed of new content, helping them action the information you’ve been giving them and helping them to move towards a goal. 

That’s our subscription then and only then, once you’ve built this foundation of products and subscription service, then we can start to add in events and services. 

We’re moving to services here starting off with one-off events and then things like masterminds, coaching, consulting, one-on-one where you are actually selling your time. 

That’s really at the high-end once you have delivered a lot of value to a lot of people earlier on in the funnel with your products. 

You have a continuity offer in place, then you can start to sell your time because you’ve built all this value up until this point, the price point of your services is going to be high enough for it to be worth your time.

The value ladder

Harms: Another way to describe what we’re talking about here is a value ladder. 

We are escalating people through a value ladder but at each stage of the ladder we’re solving the problem. 

Now the problem that we’re discussing this entire ladder will ideally solve that one problem that’s the key. 

The other element to consider is each of these items should be a complete solution so this item shouldn’t intentionally be built to leave someone hanging off the cliff saying you have to buy my next product to get the complete solution. 

The challenge with this is people in today’s marketplace, understanding marketing and how many products are available to them get turned off. 

It becomes a feeling of you just wanted me to buy things, whereas how do we do this in a way in which people are comfortable to naturally escalate through the value ladder? 

The way we do that is by ensuring each element is a complete solution and that’s another big mindset shift massively. 

Kyle what are some common objections with what I’ve just shared?

Kyle: We show them that and we say we will be answering the exact same problem solving a problem all the way through, focus, focus, focus, focus. 

We’re just solving a problem in different ways, using different forms of value. 

They’ll say no they’ll just buy my five-dollar e-book and that’s it. They won’t buy anything else; they won’t come to my events. 

Basically, this is not how the market works, this is not how people get their problems solved because of these reasons, it means we can escalate. 

We can take them from one unit of value to the next unit of value, even if we’ve given them everything they need to solve their problem at each step, even if it’s a complete solution.

Think about the number of weight loss books on the shelf in Waterstones or in a big bookshop hundreds and hundreds and hundreds books. Hundreds more come in each and every year but the basic idea is you need to eat less, eat real food, move around a bit more like it’s quite basic, but there’s still a market there. 

Even though the problem has been solved technically by many books, so don’t worry too much. 

There are two reasons why so the first reason is once you’ve solved an initial problem in let’s say the e-book or the video course the customer out of the market now knows more about what you teach, they have more knowledge and the more you know, the more you realise you don’t know. 

You’re going to have additional questions, so let’s say, my first question is I want to get backyard chickens where do I buy them? 

Okay, now I’ve got another question. How do I feed them? 

Okay there’s a video course it goes through the best ways to feed them to keep them healthy, fantastic. 

Now one of my chickens is sick. How do I protect my backyard chickens from salmonella? 

It’s getting more and more specific, which means we can have different products and different subscriptions, different services addressing all these sub problems that will arise in the mind of your customer as they go through this value ladder. 

So yes, they still have the same overarching problem, but as they learn more they’re going to need to know more and more and more, and that allows for that natural escalation from a simple ebook into a course, to some physical product and then membership and then even into consulting in the service sector. 

That’s the first reason. 

The second reason is a little more brutal but also quite accurate people are lazy. 

The information is already out there and we have the Internet. 

All of this information is out there, you could probably learn how to look after backyard chickens just based on stuff online. 

But that’s hard work so people will still buy an ebook, they will still buy a course, they will still buy a $500 chicken coop. 

Instead of building it themselves because you’re offering convenience. You are helping them solve their problem in the easiest possible way, and that’s what we’re doing with this value ladder with this escalation, we are solving the same problem, but we are making it easier and easier and easier for that problem to be solved. 

At the top end it’s basically done for you, we will take you by the hand and we will consult with you, we will do it for you, and you don’t need to worry about anything at all. 

Obviously, that comes with a higher cost. 

So people are buying results they are not just buying the book they’re buying the result, yes they’ll read the book but if they do not act on it they’re not going to get that result. 

Which is why they might look at something like a membership community so they have other people they can chat with to help them get through small problems to get them closer to that result.

Another example is a PT we know that if we do know squats, press ups we will tone up, so why do we hire personal trainers? 

Why is there a personal trainer industry? 

We could just do it at home and get the same result eventually. 

Because we’re lazy. 

We know, if I spend 30, 40, 50 quid an hour or whatever it is on a PT he or she is going to kick my arse and I’m going to do the work. I’m going to show up to the gym. I’m going to do the work and do it properly and I’m going to get my result. 

I think this is vitally important. 

People need help to sort their problems and that’s all we’re doing with this value ladder; we’re focused on the same problem, this is your problem, this is how you solve it, but we’re just doing it in great detail and with more support, help in order to increase the probability of them getting the desired result.

Harms: The desired result will be applicable to them depending on what stage they are at in regards to what sub problem they’re solving. 

As at the start the sub problem will be very basic. 

We can’t hit them with the overwhelming information that is out there online that leads to no results. 

We want to make it easy for them to achieve the results by answering sub problems and ease them through the process. 

There will be a group of people that will come and purchase our premium product and service, and at that time because we have done steps now we have time to exchange our time for premium price points.

Because if the products in place and it is selling if the subscription is generating this revenue every month, suddenly you are a lot more hands off you have that time, if you so please to run an event, want to do one-on-one consultation, or to put together a mastermind or a retreat to take people to a mansion in the south of France for a retreat.

Whatever it is, you now have that time because you have this basis based on products and subscriptions. 

Rather than the other way around which is start with the services and then you’re so swamped with the services that when someone suggests you write an e-book or you should put together a video course, all you’re going to say is what are you talking about? 

I need to keep working. 

You get stuck in the hamster wheel.

Harms: For example people leave their careers and jobs in order to pursue and be more autonomous and independent. 

They end up at the service stage first and they get fed up and they think why did I ever leave my job?

Kyle: They have just made their own job, they’ve made a job for themselves and it’s a harder job because they’re also having to do the business elements. 

Like accountancy for the business as well as doing the technical skill that they had in their old job and this happens quite a lot.

Harms: If we do it this way, we have a better chance of the holy Grail which is working on the business, not in the business and we appreciate everyone has to go through a certain level of I have to do everything.

I get that but if we build it this way there will be a point where you can step back and work on the business and charge a lot more for your time, your products and premium services, workshops, public speaking talks, etcetera.

We’ve plugged a big gap in the entire guide which is how do we specifically provide value to our niche market? 

We do that by solving problems and how do we solve their problems? 

We provide them one of 12 forms of adding value to the marketplace. 

We narrow down specifically on products, subscription and services in that order because it allows us to produce value ladder in order to free up our time later on for charging more premium price for our services in the marketplace and solving the high-level problem which people will have and they want done for them.

What you have learned so far:

• How to specifically provide value to your niche?
• How to provide value to the marketplace
• 12 forms of problem solving which generates revenue
• Narrowing down to 3 forms which you can implement quickly (and accessible to most of us)
• What is the best type of product to introduce
• What is the best type of service to introduce
• Details on subscriptions as a revenue source
• What order to implement these forms
• What is a value ladder and how it can transform your business
• Example of a classic value ladder

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