Updated: Nov 11, 2020
When it comes to your product USP's, you are the expert... But are they really working as hard as they could be to deliver the most profit to your business
It is safe to say when it comes to your products, their USP’s and your target customers, you are the expert!
You will have a strong knowledge of your competitors and have a clear strategy of your route to market.
But how well are you managing each product's contribution to your business?
And how do you know you are focusing your sales and marketing activities on the right products?
Here are the 5 key questions every successful, product-led business should know about their products:
How well do your products serve you?
How sustainable are your current product margins?
What insight does your data provide to unlock new revenue streams and mitigate risk?
Is your stock investment reflecting your optimal product mix?
Are you maximising your route to market strategies?
The most common challenge I am asked to investigate is why a product range no longer performs as it should. This usually manifests in eroding margins and low stock turnover.
To get to the root cause, here is a simple 4 stage process to follow:
Establish your Point of Truth
To plan effectively, every product-led company must have a single point of truth. This data set provides information of every product within the range. It should also include all accessories and ancillary products.
Many companies focus solely on their key products losing sight of a large proportion of their stock investment. This is especially true for long established business' with a wide or deep portfolio.
Establishing a single point of truth is key to understanding your business potential. A well designed central reference point should detail every SKU/item including cost & sales price and margin contribution.
Examine your historic data
Keeping a record of your sales is not enough as an indicator of performance. You need to use historic data in conjunction with your Point of Truth to establish performance at a product level. By doing so you will have a clear view of trends, problem areas and opportunities for growth.
This method enables you to plot your products along the product life-cycle. This is vital to successful supply chain management and should also steer product decisions and strategies.
Effective use of these 2 elements is an extremely powerful tool in any product-led business. It can highlight new emerging trends which could lead to new revenue streams. It allows you to mitigate risk by highlighting downward trends. It also pinpoints redundant products that drain your resources and offer no contribution to future growth.
If you have several routes to market, it is an important tool to assess the effectiveness of each. You can easily compare profitability, and trends within each channel. And If you offer different product ranges, it will highlight missed opportunities.
Assess your stock exposure
Storage costs, shelf life, minimum order quantities are all a constant concern. Including this information to your central database will give you a complete picture of your exposure.
This insight will enhance your supply chain management. For example, identifying low performing products to drop, or key products to invest in. Managing this effectively will have a significant impact on your cost base.
Regaining this focus is not only a key driver to optimising your stock turnover. It will offer opportunities to leverage and negotiate better rates with suppliers.
Optimise your Portfolio
Once you have all the data in one central repository it becomes a much simpler task to build an optimised product mix.
Rationalising your offering by cutting away low performing products with no growth opportunities.
Categorisation to examine gaps and opportunities within the range.
Price positioning to provide a clear and competitive proposition to the customer. Governance of which, ensures margins are not eroded and profitability are safeguarded.
Having a well structured product proposition facilitates more effective sales and marketing activities. This in turn will deliver a stronger return on investment.
Product Management is often seen as an administrative role within Marketing. Concerned only with launching products and providing technical expertise on features.
True Product Management is a science. It involves research, examination of CRM data and modelling the impact of decisions. It is an iterative process of constant review and adaptation to market conditions.
It is not just a support function. It should play a vital role in a product-led organisation's DNA. And should form the basis for all strategic decision making.
Establishing such a data set within an organisation can seem like a laborious task. It will however save your time, resource and money in the long run.
Having access to this insight at your fingertips is extremely powerful. It will not only enable you to make faster, smarter decisions, but more importantly assess your return on investment.