What is a service market fit?

Operating a business is an exciting challenge for most people. The sense of freedom and liberation that comes with being your own boss is something that people genuinely crave.

In reality, the last 12 months have seen lots of people reflect on their careers and carefully consider the direction of their professional lives. For some people this has meant looking for new roles or even changing careers. For others, it has resulted in them exploring the entrepreneurial route.

While there is no right or wrong answer, it ultimately depends on you and your mindset. When it comes to starting a business, especially for those that are launching their first business, the franchising route does look appealing.

This is principally because of the level of support, guidance and help that is afforded from day one. Franchising provides a low risk entry into the business world as it usually gives you the freedom to make decisions but have the back office support that is important when first starting out.

In this week's blog, we wanted to focus on something called ‘service market fit’ which basically means matching the right service with the needs of your clients. This is crucial because providing a service that your clients desire is one of the key components of building a long term, profitable business.

Defining a service market fit
A service market fit, which is also sometimes referred to as a product market fit, is basically offering something to your clients that they actually need. It is about matching your services with the desires of the market.

For example, we can illustrate this point with the services provided by an accountant such as end of year financial accounts or tax returns. There is a legal requirement for companies and self employed individuals to submit their returns for tax purposes at the end of the financial year. This service is provided by accountants because they understand the need of their target market.

Another example could be providing certain digital solutions to local businesses. The pandemic has accelerated the desire for almost all businesses to connect with their customers online. Looking at major companies like Facebook, Google, Amazon and Netflix, they have all reported an increase in usage over the last 12 months.

Businesses all over the world, in all industry sectors, understand the need to invest in technology solutions. The whole landscape has changed and the conversation around digital solutions has moved forward by at least a few years as a result of the pandemic.

Therefore a service market fit could be something as simple as websites. With websites being a key component of a businesses online presence and something they control, there is a desire for businesses to have their own modern website. As a result, providing solutions such as a website would guarantee a perfect service market fit.

Why is it important?
Now that we have defined a service market fit, it is important to consider why it is important. When starting a business, it is imperative that there is a genuine market for your product or services.

When people think about starting a business from scratch, they often explore their passions and interests first. They typically then build a business around this passion without carefully examining if there is a need for their business.

The businesses that have the most success and achieve longevity are usually the ones that are solving a problem. It is for this reason that you should always consider a service market fit.

Here at iOB Business, we specialise in helping people launch a Digital Agency so they can assist local businesses with improving their online presence. The service market fit is clearly defined as we are all using more technology and businesses that fail to engage online are largely becoming invisible.

So before starting any business you should always consider if the products or services you are providing have a good market fit otherwise you will struggle to scale over time.

How can you identify a service market fit?
This is where your research plays a pivotal role. Understanding your target market, what their pain points are and the solutions currently available will help you identify a service market fit.

Lots of people are concerned when they see competition as they feel they will struggle to penetrate a given market. However, in our opinion, competition is actually a really good thing. It shows there is a market out there for your business and also gives you ideas around how you can differ your solutions in comparison to what is already available.

Let's take something like our Food Ordering platform as an example. Companies such as Just Eat and UberEats have shown that customers are very comfortable ordering and paying for meals online.

However, these companies are content aggregators and place thousands of restaurants onto their platform, essentially competing against each other. Throw in the excessively high commissions of upto 20% per order as well as never releasing the customer data back to the restaurant, it’s no wonder that food/drink businesses are looking to develop their own ordering system on their website.

In this example, our Food Ordering platform has a perfect service market fit as it can significantly reduce the restaurant's costs and also provides full access to the customer data.

Easing the pain points for a client is an important part of the service market fit and it’s for this reason that all of our Digital Agency services have been validated to remedy the challenges of local businesses.

Personalising your approach to every client
Every client wants to feel special and unique. Trying to close a client with a general approach will never lead to stellar conversion rates. As a result, we always advocate personalising your approach to every client.

In commercial reality, this means researching each client to identify how you can genuinely make their lives easier. Your product or service should aim to help your clients but this can only be achieved when you understand the challenges your target audience are experiencing.

Research can help you uncover these pain points and provide an angle or context for the services you are providing. For example, if your client is spending lots of time on repetitive tasks and your solutions can automate this process, you should be focusing on framing this service in the most impactful way.

Asking open ended questions and really drilling down to the main obstacles can help you tailor your approach in a truly personal way that will ensure you always have a service market fit.

The dangers of not having the right fit
We have seen that there are lots of benefits to having the right service market fit such as better conversion rates. However, there are many pitfalls of having the wrong service market fit.

These can include a lack of sales, no longevity and ultimately a business that is not fit for purpose. The good news is that almost any business can pivot to align their services to their market.

Research and constantly evaluating your options are crucial traits of business owners. For example, the pandemic has demonstrated how lots of businesses have realigned or refocused their business to meet the unique challenges that have been posed over the last 12 months.

Being stubborn and failing to review your services in light of your target market is a recipe for disaster. You should always look to better understand your customers and modify your products or services to remedy their pain points.

By conducting research and always evolving your services, you can ensure that you have a great service market fit and enjoy the benefits of growing a long term business.

Summary
A service market fit is all about matching what you provide to the needs of your audience. Having this synergy gives you the best possible chance of success and also provides genuine value to your clients.

Research your customers' pain points and framing your solutions as the remedy will boost your conversion rates and give you a competitive edge in the marketplace.

To find out more about how we help people just like you launch a Digital Agency with a service market fit, please contact a member of our team.

Until next time, take care.