How many sales did we make yesterday? What is the total revenue last month? These are probably the most devastating questions any product development manager can get after only a few weeks of being on the market.
For some reason, we have become accustomed to measuring our success only in the amount of revenue and the number of sales that we make. Especially when it comes to digital transactions, or products that are sold on the Internet, we believe that the sole metric to measure success is revenue.
But, was this always the case in the product development?
Product placement is still relevant
Up until the late 90s, marketeers understood that in order to launch a product you would need to reach a certain market segment. They spend a lot of time thinking about the type of communication around the product and how to create a need for the product.
Product placement was just as important to reach the masses as the communication around the product itself. I think that any marketeer would agree, that in order to create buzz around a product, one needs to create a certain amount of marketing pressure.
It is important to show your customer or your potential customer what the product is that you’re trying to promote and how he or she can use it.
However, when it comes to products that are sold online (only), entrepreneurs and company like tend to think that: just putting the product online is enough of a promotion effort, for it to take off.
There is a common misperception when it comes to digital sales, that product placement is done as soon as a product is featured online. The biggest problem with this is that we tend to forget, that by just having the product online it does not mean that it can and will be found by anyone, especially not without promoting it.
It takes more than just a product page to be found in Google
Promotion = placement
The ways in which we are able to promote a new product, are vast. Especially, when it comes to digital sales. The promotional aspect of launching a new product is far more important now than it was a few years ago. This is because the distribution channels have become more diverse.
What entrepreneurs need to understand, is that the target group is the new placement. It is not only about placing your product on the right shelves, but reaching your target demographic both online and offline.
Focus more attention on reaching the right target group, and less on the channel
To a large extent, the channels that we are able to use are not what defines our product placement success. A channel such as Google or Facebook or even Amazon, reach a tremendous demographic, that is bigger than anything we can possibly imagine. Hence, it is important for us to segment these channels into potential target groups that can actually benefit from using our product.
Do you really get the most out of your Amazon account? How do you promote our product, make sure that it can be found and is shown to the right target demographic?
One other important thing to note: I believe that too many entrepreneurs and companies alike focus on the channels themselves and not so much on the different target groups and the way they need to be approached within these channels.
A performance marketing professional, can spend his whole day optimizing and working on one single channel. However, most teams are not set up this way. Marketing employees are “forced” to work on many different marketing channels at the same time. This practice leads to highly inefficient results and can waste a substantial amount of money.
There is nothing wrong with “owning” one channel, and one channel alone. Thus, I advise many if not most of our clients to focus more attention on understanding the ins and outs of the channel they deem most promising, before diversifying their attention too early in the process.
Regardless of the budget that you are using to reach your target demographic, you need to understand how to use the tools efficiently and effectively. It could very well be that you have spent over $100,000 on Facebook ads, and not reached the actual target group that you were trying to reach – with the right message.
The main problem is, that we tend to blame the channel for not reaching our target goals. In my personal experience, the channel is hardly ever to blame for a failed product launch, though.
Create a team infrastructure that allows the marketeers to focus on one channel at a time – learn to understand how you can reach your target audience, best
Focus on engagement
I personally believe that engagement is the most important factor to look at when launching a new product. When you see that the engagement rates with your product and your services is going up, you have started to reach your target group effectively. The engagement with your product, this could be your website or comments and likes on your social media posts, will determine how interested potential users are in your services.
It could very well be that these users do not purchase your product straight away. However, you will know that you are going in the right direction. Whether or not your product is bought by end consumers, depends on a lot of different factors. These factors include things such as: the price of the product, the size of the package that you’re trying to sell, the timing of your product offer, and the perceived value of your product (usability).
Therefore, we need to be sure that we do not only measure our product launch success, by looking at the total revenue that has come in.
The community aspect of any product launch might be the single most important. Does your product have the potential to create a following? And are there signs that your product might be able to create community around it; a community that will be able to help you develop a sustainable business in the long run?
Of course, it depends on the type of product that you are trying to promote as to how long is your launch phase will be and should be. The only thing that I would like to make a plea for, is the fact that I urge companies and entrepreneurs alike not to focus on revenue too early.
If you need some help to define the right key performance indicators for your product development stage, Feel free to reach out to me using the contact form on our website of course.