article | April 13, 2016
Product Strategy: How to Bring A New Product to Market
SBI recently spoke with Marc Osofsky, the senior vice president and general manager at Lionbridge Technologies. Lionbridge is a $600 million dollar public company and is the global leader in translation services. While at Lionbridge, Osofsky faced a unique challenge. He was tasked with growing revenue by bringing a new product to market.
He did this through his product strategy, specifically the development of Lionbridge On Demand. It is the industry’s first eCommerce solution for translation services for all content types. He built an entirely new go-to market model for the innovative product that blended inside sales and eCommerce. And he was able to build a predictive sales model, and grow revenues a staggering 500%.
This was no easy task. But it’s one many product leaders face. What can be learned from Marc’s success story? For example, what was his product development strategy? And how was he able to take his new, ground breaking product to market, and become the fastest growing division in the organization? Marc shared his experience with us, and provided insight into how he was able to reinvent himself and ignite revenue growth by marketing a new product.
Companies looking to accelerate revenue growth by entering a new market with a new product have a better chance to succeed if they first get themselves in line with the external marketplace. How did Marc find the growth opportunity?
He began by looking at the size of the overall market, and growth rates. Then, he advised, “My bias is always to look for change. It is really hard to get someone to buy a new product when everything’s going fine, they’re not under any pressure to change, and nothing’s really underlying. That’s a very tough situation to go in and try to have a knife fight and get people to throw things out.” He also paid attention to changes in behavior in the market place. What were the buyers doing differently? And how can he use this to his advantage?
Once he located the opportunity, and recognized behavioral changes, he had to next determine if he would be able to win. What is the best way to know this? Marc recommends testing. At Lionbridge they tested market solutions with a small investment first. This understanding from this initial assessment gave them the confidence to move forward in the process and invest more.
After locating a hidden growth opportunity, then what? Marc’s next step was to collaborate with his CEO and build an entirely new business within the organization. Ultimately, how was he able to do this?
“Not only was it a new business model, it kind of challenged our existing model as well. We took it in a stage gate process. I didn’t try to go in with some big huge 5 year plan asking for a massive amount of money. I went in with a pilot,” recalls Marc. He was able to create buy-in and secure enough funding to create a minimal viable product. It was the smallest amount of investment needed to get the product to market and start selling.
This, of course, caused concerns throughout the organization. If you’re in an established, mature company and you’re creating innovation within the same general space, it can make some people uncomfortable. Marc was able to overcome this using communication. He addressed it in stages. Again, it began with testing. They started with smaller clients and projects. And kept moving upwards as more and more success occurred.
As Marc moved forward with innovation, there was one consistent theme. Every piece of the roadmap was designed to do one thing – make it easier for the customer to accomplish their objectives. Lionbridge was different in that they were able to avoid the waterfall approach used by many large companies. Instead, Marc operated in an agile way, which allowed him to create the product quickly with minimal development effort. “That was really a key to our success, especially early on,” explained Marc. “We got to market quickly and avoided letting a big company with all its interested parties put too much weight on something and crush it.”
The next step was pricing. In the case of Marc’s new product, he wanted to simplify the pricing model, and put in a context that his buyers could understand. To do this, he used a single flat price that allowed for instant quotes. In order to streamline everything, Marc knew that every customer would be buying the same product. He was able to throw all of the revenue and cost into a single bucket, and build the pricing from there. It was a very efficient way to manage the economics and enabled him to think about pricing from a product perspective instead of from a client perspective.
Once Marc realized he had a product that was going to work, he needed to pour some gasoline on the fire. How was he able to successfully launch the new product? “We took much more of a sales heavy model, if you’re looking at our mix between sales and marketing, and built the sales team” he explained. It was challenging to create a predictable revenue model based on sales hires, and get that funded. A new model required proof. Because of this, the first year was all about capturing the performance metrics and building a ramp curve for revenue.
Marc ended up with an interesting model where he has given new hires 3 months to be cash flow positive. Then their monthly quota grows 10% every month. It’s positioned as a sort of wave new reps have to stay in front of. If that wave catches up to them, they go on a plan and hopefully can turn things around. From that approach Marc was able to build a model and show that it could be predictable based on his early results. It gave him the confidence to go in with a 40 to 50 person hiring plan and really build out his team.
Another key input into his success was his hiring profile. Marc understood the type of sales rep that would be most successful in his new model, and hired to this profile. He also structured his training for the new reps. New hires went through an intensive two week process to learn exactly what they needed to know to be successful. The focus for this training? Ensuring that all new reps can communicate the core message and handle any objections that may come their way. Immediately following the two weeks, reps are on the phone selling. No time was wasted.
So, if you are hired by a company tomorrow to accelerate revenue growth by entering a new market with a new product, what are Marc’s recommendations for the first few years?
Marc’s initial suggestion is find the change. “If you’re trying to bring a new product to market, there’s got to be some underlying change that’s forcing buyers to look for something different, that’s forcing buyers to feel pain, and that’s causing them to want to look into the marketplace for better solutions,” says Marc. This is a step that is often missed. There’s a lack of understanding of the underlying factors that are impacting the buyers.
Next Marc recommends finding repeatability. This is more about sales and marketing than the product itself. If the product concept is right, the roadmap becomes pretty clear. And now you’ve got to execute and get the product to market. There are several key questions to ask yourself at this stage. What are the sales channels? How will you sell the product? What is the average sales size? You need to build a scalable model. Because once you’ve got the product, and repeatability, it’s all about having the confidence to scale.
Entering new markets with new products in pursuit of revenue growth is hard to do. Marc was able to be successful at Lionbridge by using a well thought out product strategy. This sounds simple, but don’t confuse simple with easy. Without a documented strategy Marc would not have been able to build his new division which is now at $100 million in revenue and still growing.
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