If your products sell themselves, don’t read any further.
Product leaders who help their companies grow revenues faster than their industry and competitors have a different mindset than their peers. They approach product development from the perspective of “what can I sell” instead of “what can I build.”
Product strategy defines the direction for the company’s products. The point of the product is that it has to be something that sells, and wins, in the marketplace. The product strategy should set up the marketing and sales strategies for success.
Some would argue that you can only win if your products are best in class and, therefore, the answer is more developers or more engineers. Sales and marketing teams are an afterthought.
Evaluate your Product Strategy at a deeper level by downloading our 10th annual workbook, How to Make Your Number in 2017. Turn to page 110 of the PDF and review the warning signs to look for to see if your product strategy is a problem.
The place to start before reviewing the seven questions is to first understand your primary competitive advantage. There are three competitive approaches for your company to choose from in the corporate strategy. These may feel over simplified, but they are powerful to bring focus. The three options include:
- Product – You win with a superior product
- Price – You win on price because you have a superior cost infrastructure
- Customer Intimacy – You win on your approach to the customer providing the best experience
In practice, there’s an element of all three in most strategies, but the key is focus and choice. You must have one that’s primary.
If your strategy is to have the superior product, then you win because customers value the better solution to their problem that your product delivers. More importantly, they’re actually willing to pay for it. You need good enough sales and marketing in order to generate the demand and then, of course, to turn it into revenue.
If your strategy is to provide the highest customer intimacy, there is a point where your product is good enough. As a cohesive leadership team between product, marketing and sales you have to move out of the silo mentality as a product leader and build a product that’s good enough. Building the perfect product eats up R&D dollars that need to be routed to the customer experience.
If your strategy is lowest price then attaining good enough applies to product, sales, and marketing. This is because you’ve driven the cost structure to a low point that your competitors can’t match so you can make money where nobody else can go.
Even when pursuing a superior product approach, the VP of product development needs to remain in alignment with the VP of sales and marketing. This is particularly true later in the adoption curve when the competitive advantage could switch. You may need to shift to customer experience because you’ve made a determination that product differentiation isn’t going to be as strong at some point in the future.
7 Questions ask when Your Product is Not Selling?
When experiencing a problem with product sales and not getting the revenue growth expected, there are questions to put on the table. The leadership team should sit down and review these questions to see if any obstacles are present in your competitive environment.
1. Are buyers confused by the product? You must test in the market how potential buyers view your solution. The confusion could be in the application, its’ use, how it fits in the customer environment, or what the value they receive. Determine if there is confusion in the market place as to the value you are providing.
2. Is there product conflict? Let’s say they’re not confused but when the buyer understands how your product is supposed to be used there is a conflict. This conflict may be with something else they have in house, some other solution, some other process, or some other policy. In a perfect world the product works but there is an encumbrance. This conflict is likely preventing buyers from purchasing.
3. When entering the market were the customers you attracted the ones that you expected? If not, you probably don’t understand the problem correctly, or deeply enough.
4. Have you re-validated the problem that your product solves? What prompted you to build the product in the first place? How did you originally define the problem you were solving? Your product may have experienced the first rush of market success, but since then has the problem been re-validated? Quite possibly the market has shifted and the demand driver went away.
5. Have you looked for near substitutes? It’s possible the encroachment on your market isn’t a direct competitor, but a different way of solving the problem. This may explain why demand dried up.
6. Did your original customers get the expected payback? Early adopters buy on impulse and made their decision without proof from peers. Did these customers get the value you said they would receive? Do you struggle to get customers to agree to case studies?
7. Finally, are your customers referring you to their peers? Are you seeing positive word of mouth? What does your social listening tell you? Things might not be as attractive as you thought they were for your product.
If you need more help, download our 10th annual workbook, How to Make Your Number in 2017. Turn to the Product Strategy section that begins on page 108 of the PDF. To request a workshop with a product development subject matter expert simply sign up for a MySBI account and check the box in your preferences to request a workshop.