So, you have a new product investment you are excited about. How do you ensure that your idea holds up to leadership scrutiny, and has a big enough ROI to be considered a success?
Understanding and building a business model to ensure return on investment is one of the key duties of a product leader. Many product leaders fail in this step; they may underestimate the cost to commercialize, overestimate the available market, fail to consider product cannibalization, etc..
A failed product launch or a poor investment decision can be damaging to your business. A recent article by my colleague Daniel Korten How Product Launch Execution Can Make or Break Your Forecast, explores how failed product launches can hinder your ability to be successful.
To help you working through this exercise, download the New Product Launch Considerations & ROI Calculator.
Do I Have the Correct Organizational Structure for Launching in a New Geo?
Your products are successful in the markets you first introduced them in. Now you are taking the step many companies are faced with; How do I launch in a new Geography? This scenario can be increasingly stressful depending on the footprint your organization currently has in place.
Think through everything your new product would need to be successful. Are there additional resources or a change in the compensation plan needed for an existing sales organization? If no sales organization exists, consider what it would take and cost to find a channel partner in the region.
What additional marketing would be needed in this new geo to make customers aware? If customers are already using your product a campaign through the sale organization might be the right play. However, if your products and company are unfamiliar to the customers you are going after a more robust marketing plan would be required, adding additional costs.
All these considerations should have a cost estimate behind them. This will ground your investment decisions, and help you understand what you need to achieve in order to be successful. Launching a new product into a new geography can be stressful, but with proper planning it doesn’t need to be.
In his article “Is Your Legacy Sales Structure Right for the New Product Launch?” , Chad Whittenborn guides you through thinking about the correct structure.
Consider Cannibalization and Build It Into Your Success Plan
New Buyers are often the target when you are choosing to expand your portfolio offering. Going after these new buyer’s especially when targeting existing customers can create relationship and cannibalization issues.
Cannibalization doesn’t have to always be a bad thing, and in fact it can be built into and part of your business model for consideration of investments. Consider if there is space for your new product to sold alongside existing products to buyers. Maybe your new product could be sold as an upgrade?
If the margin of the new products is better than existing products, consider modifying your sales compensation plan to encourage cannibalization. Likewise, verify your sales compensation won’t have a negative effect as well.
Understanding the affects and likelihood of cannibalization on your products and working these affects into your business model are key to ensuring a solid business model.
When Launching Into a New Vertical, Ensure Your Customers Are Bonded to Your Organization
You may find that your existing products have made you the leading provider for certain market segment or industry. Now you want to expand your offering within this industry and go after new verticals. This scenario can present its own unique challenges and opportunities. Gaining an understanding of which customers to target, and how much wallet share is available for your business and the new products.
Work with your sales leaders to ensure your product launch has plans to ensure your existing customer base continues to buy current products, while new products are being introduced. You should also gain an understanding of how much total wallet for customers exists, and how much is gainable through your new products.
You should also consider how to position new products to customers to grow lifetime value, and to become a true partner with your customers through your products. Setting up your customer success and sales enablement organizations with additional product knowledge and ensuring great customer experience from the beginning is key here.
Why You Can’t Get Your Reps to Sell the New Products: The Importance of a Sales Enablement Plan by Dan Bernoske, is a must read when thinking through setting up reps for success.
Ensuring the success of your customers and maintain large strategic relationships can drive success in new vertical product launches.
Now Go Make Your Product Launch a Success
Download the New Product Launch Considerations & ROI Calculator, and spend time cataloguing all the areas which can impact the commercialization of your products outside of the total development costs.
Once you have a handle of these, review your product launch plans and ROI estimates to ensure you have factored these in. Doing these things can ensure you have a solid business plan, ready to stand up internally as well as execute to your customers.
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