A comprehensive understanding of product strategy is crucial in today's ever-changing business landscape. Here is SaasStock 2023, Lucie Buisson, CPO at Contentsquare, Meron Colbeci, CPO at Checkout.com, and Wes Bush, Founder and CEO of ProductLed, engaged in an insightful discussion that shed light on several vital aspects businesses must consider.
The panellists discussed why companies should adopt a multi-product strategy and emphasized the importance of timing when making this change.
They also elaborated on what businesses should do when transitioning to support a multi-product strategy, the challenges faced by product leaders in making these decisions, and the lessons learned from their own experiences.
What is a multi-product strategy?
A multi-product strategy is a planned approach to business growth that involves expanding the product portfolio in line with the company's strategic objectives, market understanding, and customer needs. It's a complex assignment that, if executed well, could significantly enhance a company's market position, customer loyalty, and financial success.
A multi-product strategy becomes necessary when companies with a successful product reach a point where further growth requires more than just enhancing the existing product.
This strategy is not about increasing the number of products but involves a comprehensive plan considering the company's strengths, market demand, and the competitive landscape.
Why transition towards a multi-product strategy?
By offering various products, the company can appeal to a broader range of customer personas, needs, and preferences, reaching a more extensive customer base. This expansion is not just about adding numbers but about deepening the value proposition across different customer segments.
When you solve various customer problems and meet different needs with a range of products, a company can become more integral to customers' lives or operations. This increased dependency strengthens customer loyalty, potentially reducing both customer acquisition costs and churn rates.
A multi-product strategy diversifies a company's revenue streams, making it less vulnerable to market fluctuations affecting specific products. Especially in uncertain times, having a variety of offerings can safeguard a company's financial health and stability.
Why is timing everything?
Launching into a multi-product strategy too early, especially without a solid base, can be expensive from a development standpoint and might strain resources, leading to potential failure. The timing is also tied to understanding what products can provide a competitive advantage and align with the company's overall strategy. Businesses need to consider how new products fit into their broader market strategy, how they will help the company win, and whether they align with its capabilities and goals.
If the market is not ready or there is no clear demand, the new product may not gain the necessary traction for success. Timing the launch when there is a clear demand or a gap in the market increases the likelihood of success.
Businesses should learn from their existing products before expanding. Feedback and data from current operations can provide invaluable insights into customer preferences, market trends, and operational efficiencies. This information is crucial for timing the introduction of new products effectively.
Getting the timing right ensures that resources are used efficiently, opportunities are maximized, and risks are mitigated, setting the stage for the successful launch and sustainability of new products.
8 Key steps to launch a successful multi-product strategy
Before transitioning to a multi-product strategy, businesses must undertake several critical steps to ensure they are prepared for the complexities and challenges of this change.
1. Establish a Strong Initial Product
The foundational product should be robust, enjoy a stable market position, and have a clear, positive reception from customers.
2. Ensure Financial Stability
You must have the financial stability to support this strategic shift without jeopardizing operational integrity. This means a clear understanding of the costs involved and ensuring there are sufficient funds and revenue to support new product development.
3. Understand Your Market and Customers
Before diversifying, understand your target market and customer needs deeply. This involves identifying gaps or needs that current products don't address, understanding customer pain points, and being clear about how the new products will provide solutions.
4. Develop Internal Capabilities
Assess whether you have the necessary internal capabilities: the right talent, technology, and operational processes. If specific capabilities are lacking, consider if it’s possible to develop them internally or need to acquire them through other means.
5. Strategic Alignment and Competitive Advantage
Any new products a company considers should align with its broader business strategy and contribute to its competitive advantage. Businesses need to evaluate how new products will fit into their overall portfolio and how they will help the company achieve its long-term strategic goals.
6. Product Viability and Value
It's crucial to ensure that any new product under consideration will be both valuable to customers and viable for the business. This means it should address a real customer need or problem and have a clear market demand. It should be financially viable, with a clear path to profitability.
7. Preparedness for Change
Transitioning to a multi-product strategy will impact many areas of the business. You need to be prepared for this change, which may involve adjusting organizational structures, internal processes, and team dynamics.
8. Learning from the First Product
Apply lessons learned from the initial product experiences. This includes understanding what worked well and what didn't and applying these lessons to developing and launching new products.
Mistakes to avoid
1. Launching Too Early
One of the most critical mistakes is transitioning to a multi-product strategy prematurely. Companies should wait until they have a well-established product with healthy traction and retention.
Launching new products too early, especially without a solid foundation, can lead to overextension of resources and a lack of focus, ultimately affecting both new and existing products negatively.
2. Neglecting the Importance of Product-Market Fit
Eevery new product must be both valuable to customers and viable for the business. Companies often make the mistake of investing in new products without ensuring these criteria are met, leading to products that don't resonate with the market or contribute to the company's financial health.
3. Underestimating Quality Expectations
There is a significant shift in expectations regarding product quality as a company grows. How a business built its first product may not work for subsequent products. With growth, customer expectations rise, necessitating a more strict development process to ensure high-quality offerings.
4. Failing to Align with Competitive Advantage
New products should contribute to the company's competitive advantage and overall 'win' strategy. A common mistake is developing products without considering how they fit into the broader market strategy or strengthen the company's position. This lack of strategic alignment can lead to wasted resources and opportunities.
5. Overlooking Alternative Approaches
Companies sometimes focus solely on product development as the path to growth, neglecting other potentially less resource-intensive strategies. These alternatives could include content creation or partnerships that could drive competitive advantage and customer value.
6. Not Adapting to Scale
Companies must adapt their approaches as they grow, especially concerning new product launches. What worked for a small company with a handful of customers might not work for a larger one with a more diverse customer base.
The product launch strategies must be more structured and progressive, considering the broader impact on the market and existing customer base.
Contentsquare journey
Lucie Buisson, shared insights into ContentSquare's journey, particularly focusing on the transition phase when introducing a new product.
When ContentSquare launched its second product, they were still a relatively small company with around 10 customers and approximately 20 team members. The first product had set a certain level of expectation in terms of quality, maturity, and readiness. When they announced the second product, they faced overwhelming expectations from a larger and more diverse customer base, particularly concerning product quality.
This transition brought to light a crucial lesson: the approach to building subsequent products cannot be the same as the one used for the first product. Lucie emphasized that the expectations and stakes become higher as the company grows. ContentSquare realized they needed to implement more structured development phases for their new products.
To address this, they established strict alpha and beta phases for product testing. The alpha phase involved internal usage and testing, while the beta phase was more customer-oriented, allowing them to gather extensive feedback and ensure the product was used as intended. This strategy also included a progressive deployment approach, where they initially rolled out the product to a limited customer base (around 600 customers) before extending it to a wider audience.
This methodical approach was essential for several reasons. Firstly, it allowed ContentSquare to validate each step of the product development process with quantitative data.
Secondly, it helped avoid the pitfalls of a rushed product launch, which could damage the company's reputation and customer trust. Lastly, it allowed them to learn from each launch, refining their process for future products.
Final thoughts
The transition to a multi-product strategy is not a mere shift in operations; it's a transformational process that redefines a company's relationship with its market, customers, and even its internal culture. It's about creating a symphony of products that not only resonate with the market's current tune but also have the versatility to adapt to its future rhythms.
