Many businesses give their entry-level products less effort than more advanced products. I certainly understand why some might think this way – revenue per customer is lower, support needs are greater and many are ‘tests’ or ‘proof-of-concepts’ of which only a small percentage may become viable products and long term customers. In my 30-year career, I have been on both the selling and the buying side of entry-level offerings. Certainly your team must put the majority of their focus on the most profitable sectors of the business, but here are a few key reasons to love your entry-level product users.
1. They could represent a whole new market for you
Your “entry-level” product could be a winner! As Navi Radjou and Jaideep Prabhu report in a recent article in Harvard Business Review, “CEOs Who Are Making Frugal Innovation Work,” in 2004 Renault launched a no-frills car called the Logan, for €5,000, originally conceived for emerging markets. The model was such a hit in Western Europe that the Renault-Nissan Alliance decided to create a whole product line under the Dacia brand. According to the article, Dacia is now the fastest-growing car brand in Western Europe. Renault’s economy line vehicles “have become the carmaker’s cash cow, representing over 40% of the auto company’s global sales in 2013.”
2. Today’s entry-level purchasers don’t stay there. Where would you like them to go?
I strongly believe in the democratization of apps.
So, as a business focused on SAAS app-building, Mag+ offers free tools so potential clients can experiment with our platform before they buy. Eventually, a good majority of these buy our entry-level product. Most importantly, nearly a third of those quickly upgrade to higher-end packages.
Consider your entry-level product your lifetime customer incubator. At a minimum, those clients will eventually move to other jobs or to larger companies. Let them take that good feeling for your product with them.
The challenge of entry-level products? The product and the customer experience still have to shine. If either of those is terrible, customers will leave instead of exploring your upgrade options. If you can’t profitably provide a great product and experience to those entry-level users, you’re better off not offering it at all.
3. The entry-level folks are often your innovators
At least in software, the people buying your least expensive products generally skew younger or may be working for a startup. Watch what these users do with your tools. Some of the best insight and innovation comes from these customers. They need to do something fresh. Their experimentation can lead to new ideas and efficiencies you can implement throughout your line.
To Do Entry-Level or Not…
Some business leaders really hate the energy drain of very low-end products. They can’t justify the cost. Sure…it does all come down to the business model, and I respect that.
However, as an employer who has always relished mentorship and watching people grow, I am delighted to run a company where we value both the one-off customer and the big enterprise. As a matter of fact, I believe we learn as much from these customers as those on our more profitable products.