Over a series of weekly posts I want to create a story around a product launch scenario.  I thought it would be a useful exercise for me personally, but more importantly I believe it will be of value to those of you who are in various stages of launching a product.  Your comments will help drive the direction of the story and its outcome, so the more comments that come in the better.

You see the thing is we didn’t have access to a class in school on how to plan and execute a launch, and there is a nearly infinite number of permutations of what can go right and what can go wrong.  Experience becomes our compass to navigate this dangerous and unforgiving territory.

Even with all the planning and rationalizing of what will work great and be cool,  “No plan survives contact with the enemy” - to paraphrase Prussian Field Marshall Helmuth Karl Bernhard Graf von Moltke,

Widget Software and Chen

Our story begins with Chen, the product marketing manager for Widget Software.  Widget Software is a $30M software company that builds enterprise scalable, open, extensible, and state-of-the-art solutions (insert your trite and meaningless adjective). Chen is responsible for the Go-To-Market (GTM) strategy and execution of a new product, the Widgetizer.  Chen is in unfamiliar territory.

He has lots of experience in point activities around product marketing - positioning, presentations, demos, packaging and the like - and doesn’t consider himself technical.  He hates being called a “Demo Dolly”. Chen spends most of his time working with marketing communications (Marcom) people. He has good working knowledge of Widgetizer but relies on the Widgetizer product manager for technical information.  This is the first time Chen has been given the responsibility of developing a GTM strategy and been held accountable for the results.  The only GTM tools at his disposal are:

• What Widget did for the last launch
• What can be derived from how competitors have launched
• Hit or miss information from searching online
• Plenty of unsolicited ideas from the Sales team

Robin the Product Manager

Robin is the Widgetizer product manager.  She has done an impressive job of identifying a need in the market and translating that need into requirements for the Development Team.  Robin is counting on Chen to launch Widgetizer in such a way that it generates the revenue that was projected in her business case.  This will be an important personal win for Robin.

Up until now Widget Software has largely been a Development-driven organization.  Meaning that Widget developers would decide what would be built and product managers would largely be project managers.  Robin was determined to change this approach and be Market-driven. The success of Widgetizer would set the stage for the transition.  Even with a great product, Robin knows that if the market doesn’t know about it and if Widget Software isn’t operationally prepared to sell and support it, her efforts will have been in vain.

A History of Bad Launches

The CEO of Widget Software conducted an audit of previous launch efforts and found what they already knew.  Widget has done a great job of engineering products and lousy job of bringing them to market.  But the excitement of finishing a new product would quickly give way to the disappointment of missed revenue projections, followed by finger pointing and blame.  You’ve probably heard it before.  The product sucks.  The price is too high.  The sales guys are useless.  The customer’s don’t get it.

There is cautious optimism for the Widgetizer launch from the management team.  The product quality is high and the early feedback from evaluators is better than expected.  With a history of  bad launches, the management team is concerned of a repeat of history.

What’s Chen’s Next Move?

If Chen can pull off a successful launch his personal capital within Widget will go up significantly and he will build a strong ally with Robin.  Robin will prove the value of being a Market-driven organization. There could be promotion or a big bonus in Chen’s future as well as Robin’s.

So where does Chen start?  What should he focus on next?  What misteps could he take now that will doom the launch?

Three guys I know just completed a great new book - "Tuned In". It’s already on Amazon’s and Barnes & Noble’s best seller page.  I recommend you add to your reading list. 

Why is it that some organizations just "get it" and have successful products/services that their customers love and others deliver one lackluster offering after another?  It’s because they’re Tuned In to their buyers.

"Tuned In" is an exploration of this paradox and a framework for getting Tuned In so your organization can identify problems that are urgent, pervasive and customers are will to pay to solve.

Does your organization dream up new product ideas, build it and then find it flops?  If you answered yes to this question you need to make reading "Tuned In" a priority.

Click on this link to request a complimentary copy of "Tuned In" (while supplies last).

Review
This well-reasoned and useful guide argues that successful innovators can develop products that "resonate" by connecting deeply with consumers. This simple idea is delivered in a conversational tone and illustrated in well-structured chapters laying out a six-step "Tuned in Process" and examples that span borders and industries. From anecdotes about countryside hotels that sprouted up to provide respite for Japanese salarymen to Nalgene plastic bottles, which escaped the laboratory to achieve cult status and ultimately mass market consumer appeal, fascinating case studies abound. However, as appealing as the concept and the many examples are, the enthusiastic presentation begins to grate; the repeated invocation of the "Tuned in Process" may tire readers looking for more subtlety and fewer sound bites. Still, there is sufficient fodder for anyone who wants to shake the sleep out of an organization and renew a focus on creating the kind of value that customers are willing to pay for. (June)  (Publishers Weekly, April 7, 2008)

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Early stage companies often start ramping up sales as soon at the product is out of development.  The product is ready and it’s time to sell.  You hire experienced sales guys.  As many as you can.  The deals don’t close as quickly as expected.  You are burning through cash.  It must be the sales guys.  Somehow the wrong guys were hired.  It couldn’t possibly be the product.  Fire them and get new sales guys.

Many of you reading this will probably have at least one experience in your career to relate to this scenario.  I’ve recently read a paper titled "The Sales Learning Curve" by Mark Leslie and Charles Holloway.  Their hypothesis is that like manufacturing, sales must go through a sales learning curve to work out the kinks and shortcomings in the product, and to understand the most effective methods to sell the product.  Once that happens then it’s time to ramp up sales.  More importantly there’s no way to shorten the learning curve.  It varies in duration from company to company and it happens organically.

During the Sales Learning Curve your team will go through the process of learning how to acquire customers, what customers want in the product and the sales tactics that work.  Once you’ve been through the learning curve you can confidently begin ramping sales.

This process unfolds in three phases, each requiring a different size sales force that have different skills:

Initiation Phase - completion of beta testing and have few prospects.  Hire a few salespeople to learn how customers will use your product and to help other people in the organization refine the product offering.  These salespeople must be good communicators, tolerate ambiguity, have a deep interest in your technology, and can make their own sales models and tools.

Transition Phase - a critical mass of customers is acquired and sales are accelerating.  Keep the initial sales team focused on learning.  Now add salespeople who can operate within an evolving sales model, but don’t need to have the analytical and communication skills of the initial sales team.

Execution Phase - you’ve developed the formula for sales success.  Hire traditional salespeople and give them a territory, sales plan, marketing materials and price book.

The trick is knowing when you’ve transitioned from one phase to the next, and The Sales Learning Curve offers methods to identify when transitions are occurring.

If you are in a startup and feeling the pressure to add salespeople quickly, read the The Sales Learning Curve today.  It could mean the difference between success and failure.

Working Knowledge from HBS just published an article by Harvard prof John Quelch, Senior Associate Dean and Lincoln Filene Professor of Business Administration at Harvard Business School. It’s an insightful look at how to compete in commoditized market.

Selling a product in a market where the forces of commoditization are at play is challenging to say the least. John has some great tips on how to make money and prosper in this environment.

Innovate. A new product that better meets consumer needs, even an upgrade of an existing product, can one-up competitors and force them to invest in matching or exceeding the new specifications.

Bundle. Selling a commoditized product with differentiated ancillary services (such as after-sales service) can appeal to buyers willing to pay a premium for the convenience.

Segment. Mature markets are large markets that can be divided profitably into multiple segments. Marketers can focus on providing applications expertise for less price-sensitive customer segments for whom the product is still important.

Read the article here.

Sometimes products are developed that are thought to be standalone solutions, but are really “ingredient products”.  Ingredient products, when included in something else, add much more value.  Think of an ingredient product like a sweetener.

An example of an ingredient product that is sold as a standalone solution today are GPS fleet tracking products.  These products can do some very interesting things on their own (they taste sweet), but when added with other products they can create very powerful and compelling business solutions.  They can radically affect how customer service is delivered by adding location awareness in field service dispatch applications, and allow real-time tracking of customer shipments as an example.

Is your product an “ingredient product”?  You could be selling a lot more if you positioned it as a sweetener rather than a dessert.

The analogy of a funnel is almost universally used to visualize how leads go through a process of qualification that eventually results in a sale. But everyone knows that not every lead result in a sale. A funnel implies every lead is squeezed and smashed through the bottom of the funnel. Wrong analogy.

Think of the lead qualification process like a series of rooms connected by doors. Some doors lead to other rooms but some lead outside. If a lead continues to have an interest in your product and the qualification criteria determines that they are still qualified, then they get to go on to the next room. Eventually the last room is where they purchase.

Now if the lead loses interest in your product or it is determined that it is no longer a qualified lead, it’s time to go outside. See ya. You got nothing to bring to the party. At least not for now. Those leads that bail or get qualified out may turn out to be qualified leads at a later time. Keep track of them for later cultivation. Mystery of the unqualified leads that are magically squeezed into a Funnel is solved.

What is your lead qualification process? What are the most important characteristics that define a qualified lead? Given those characteristics, how many actual qualified leads does your marketing efforts generate?

Technorati Tags: lead qualification process

Have you factored the implementation complexity of your product when establishing the price? By implementation complexity I mean the level of effort it takes for your organization to deliver the product to the buyer in a usable form. As implementation complexity increases you should expect to support a higher product price, as long as a corresponding value is delivered.

A simple way to illustrate this is with the following Product Price vs. Implementation Complexity chart.

The one quadrant to avoid is a product with a low price and a high implementation complexity. It’s a dead-end.

The chart below plots some products you may be familiar with and how they fall into the Product Price vs. Implementation Complexity chart.

Lower Price / Higher Implementation Complexity

The quadrant to avoid is the Lower Price / Higher Implementation Complexity quadrant. A product currently in this quadrant is GPS fleet tracking solutions. These are solutions that enable businesses to record and track the usage of the vehicles in their fleet. From an implementation perspective these are complex systems. A hardware component must be wired into a vehicle. It may require the installed of an external antenna. Once installed, the hardware must be tested to ensure it communicates over a wireless (cellular) network. Keep in mind customers rarely have all their vehicles in one place at one time, so it may require chasing vehicles to job sites often after normal business hours. Typically this requires a qualified technician to perform the installation with coordination from a customer service rep to verify the system is working. Vehicle by vehicle. After that is complete the customer needs to be trained on the use of the software. Customer service issues are chronic and unavoidable. Wireless coverage is incomplete and results in customer confusion. GPS units break. Employees find the units and try to disable them.

From a business model perspective the GPS fleet tracking businesses appear to have tremendous potential. Unfortunately few have delivered on that potential, are poorly capitalized and lose money. One shining example is Qualcomm. Qualcomm carved out a profitable niche with long-haul trucking companies and they charge a premium for their solution. More recently the sale of @Road to Trimble was engineered by founder Krish Panu. The exit was perfect timing.

For some customers GPS fleet tracking systems provide extraordinary value. Unfortunately the industry was heavily influenced by executives from the wireless industry that brought with them a low price/high volume philosophy. From the beginning they established commodity pricing long before there was justification to do so. Given the complexity described above, the typical selling price for these systems should be higher. The hardware sells for around $500 which often includes the installation cost. Monthly fees are charged for the use of a hosted software application and airtime (cellular data transmission) in the $20 to $30/month per vehicle range. Margins are thin and can be wiped out by just a few service calls. Qualcomm commands a price that is significantly higher and justifiable for the value they deliver.

So what can be done when your product is in the Lower Price / Higher Implementation Complexity quadrant? Two things. First, find a way to charge a higher price. You may able to do this by carefully segmenting your markets and identifying where delivering a high value in a segment can justify a higher price. Second, lower the implementation complexity. Carefully analyze your implementation process and find opportunities to simplify implementation.

Summary

Understanding where your product fits in the Product Price / Implementation Complexity continuum can give you tremendous insight that can help you with pricing and deciding on the most effective sales channels. If you’re in the no-mans land of a low price/high implementation complexity you need to identify a strategy for moving out of the situation as quickly as possible.

Technorati Tags: implementation complexity, Product Price, GPS fleet tracking