Contrary to the 'diversify revenue' mantra, having too many offers increases complexity in marketing, systems, and support, which erodes profit margins. Focusing on fewer, well-promoted offers almost always outperforms a scattered product suite.
High top-line revenue is a vanity metric if it doesn't translate to profit. By setting a high margin target (e.g., 80%+) and enforcing it through pricing and cost management, you ensure the business is sane and profitable, not just busy.
Businesses often create multi-tiered maintenance plans, believing more options are better. However, this complexity overwhelms consumers and makes it harder for technicians to sell. A simplified, single-option plan often leads to higher adoption rates because it's easier to understand and pitch.
Entrepreneurs often assume the product generating the most revenue is the most valuable. However, when factoring in the time and energy required for delivery (return on time), that "bestseller" might actually be the least profitable per hour, making it a poor candidate for scaling.
Even a company with significant revenue can be stuck in the "problem-market fit" stage if it introduces too much complexity. Pursuing multiple products, ICPs, or go-to-market motions dilutes focus and exponentially increases difficulty, hindering the ability to scale effectively.
A large customer support organization signals that a product is too complex, hard to onboard, or buggy. Instead of optimizing the support function, companies should focus on improving the product to the point where extensive human support becomes unnecessary.
Technical founders often mistakenly believe the best product wins. In reality, marketing and sales acumen are more critical for success. Many multi-million dollar companies have succeeded with products considered clunky or complex, purely through superior distribution and sales execution.
Adding numerous features to a service offering can hurt retention. Customers who don't use every component feel they aren't getting full value, creating a perception of waste that leads to cancellations. It's better to offer fewer, high-impact deliverables that ensure high utilization.
Counterintuitively, focusing on a single, powerful SKU can be more effective for initial growth than launching a full product line. It simplifies your message, makes you attractive to distributors who value efficiency, and builds a strong customer base before you introduce new offerings.
The strategy of eliminating the "worst 20%" applies across the business. Beyond firing unprofitable customers, analyze your product lines and even your team. Discontinuing low-margin, high-hassle products or removing toxic employees can free up immense resources and improve overall business health just as effectively.
Many founders fail not from a lack of market opportunity, but from trying to serve too many customer types with too many offerings. This creates overwhelming complexity in marketing, sales, and product. Picking a narrow niche simplifies operations and creates a clearer path to traction and profitability.