My issue with most product launches is too much emphasis on the deliverables. Who wants what. Who gets what. Who demands what. More focus on outcomes is needed. Deliverables are not outcomes. Deliverables are things, and they are necessary things but not a measure of success.
In this article, I present a simple, practical way to discuss how to measure the success of a product launch with your team and leadership. But first, we need to have a quick conversation about how to define a product launch.
A product lunch is an intentional effort that is cross-functional, purposeful, and designed to increase the fortunes of a business. The challenge is to define "success" as something mere mortals can understand and support.
Every business cares about three major business objectives:
Win more customers.
Keep the customers they win.
Grow the customers they keep.
It is simple, straightforward, and easy for anyone to understand.
Another thing to discuss is defining objectives that are measurable and time-bound. Selling as much as possible is not an objective; it's a wish. Every win, keep or grow launch objective must have an amount - how much we want to get, and a timeframe - when we want to get it. A quantity and timeframe set a target that is easily understood. It helps align a team and gain support from those who control budgets and resources.
The win launch objective defines how many new customers we will win. That is, new revenue from companies we have not done business with in the past or not for some time.
The keep launch objective is the revenue we will keep from existing customers. Some refer to this as retention or a reduction in churn.
The grow launch objective is the revenue from the customers we keep. For example, cross-selling other products and services to existing customers, upselling products and services at the time of renewals, or expanding the number of users.
Let's reflect on a recent product launch. Were any of these three launch objectives used to define product launch success? What were your launch objectives? How was launch success determined? Or were you in a race to deliver PowerPoint decks, sales collateral, sales enablement, and a press release? That's not a measure of launch success; it's a measure of project success, and it just means you got stuff done.
The Win Launch Objective
Let's dive into the win launch objective further because there is some nuance that can be helpful. Defining a win success metric around revenue is challenging when the product sales cycle is long. And the revenue impact may not be seen for a very long time.
Every company wants to win new customers, increase revenue and build their business. It's fundamental to business success. Launching a product is that moment in time when it's possible to accelerate winning new customers.
What is a good Win launch objective?
When defining a Win launch objective, it's critical to assess the capacity of your sales engine to deliver and your marketing team to develop a pipeline of qualified sales leads. It's also essential to know the market segments you're targeting.
You can break sales down into sales where no human is required (online) and sales where humans are needed. Online sales are the easiest. You have a product and a way for customers to buy online, and they choose a product and provide payment. You only need to worry about the ability to receive payments, deliver a product, and ensure your website can handle the traffic volume you anticipate.
For human-led sales, it's another story. A sales team has a limited capacity to sell, so human and organizational limits must be factored into your win objectives. Like, how long is the sales cycle? It's OK if you don't know; make a reasonable guess and go from there. You also need to know the close rate, which is the percentage of deals worked (the opportunities) that close. And finally, the number of sales opportunities each salesperson should manage on average and the average deal size.
If there is a revenue target for a product launch that is already defined, you should reverse engineer the number to determine how much revenue impact the product launch can affect.
Now let's talk about marketing and their ability to fill the pipeline with enough deals to make a win objective possible. If you've arrived at a revenue number, you find the number of sales needed to close. You can think about what the marketing team needs to do to build a large enough pipeline to make the revenue number possible.
Assume the revenue number for the year is $23M, and you've determined that the launch could impact $15M of the annual target. You expect the average deal prices to be $150K and the average close rate to be 25% (1 out of 4). Use this to work backward to the pipeline.
Example Launch on revenue = $15M Average deal price = $150K Average close rate = 25% Pipeline opportunities needed = (15,000,000 / 150,000 / .25) = 4,000
If the sales engine can produce the revenue but the marketing engine can't, you have a problem. It's the same if the marketing engine can build an adequate pipeline but the sales engine can't deliver on the sales. You have two options; increase the resources or change the win launch objective to match the ability of your team to execute.
A particular form of a win objective is the steal objective. A steal objective is more common in mature markets and product categories where winning can only be achieved by stealing a customer from a competitor. In this situation, the demand for your type of product has stabilized. Increasing market share only comes when a competitor loses. It's also referred to as a "zero-sum game."
Indeed, winning over customers from a competitor occurs naturally daily; stealing them takes a specific path. It's a conscious effort to take customers from a competitor.
Effective stealing requires a strategy and tactics to backup up the strategy. Going after a competitor's customers without the ability to steal them is a wasted effort. You need a weakness to exploit. And you need to have the goods to back it up.
In the software business, it can be complicated for a customer to convert from a competitor's product to yours. An effective steal strategy would make that transition as simple and painless as possible.
Most companies assume the way to steal a competitor's customers is through lower prices, but remember that a competitor can always match your price to keep the customer. The optimal time to strike in pricing is when your competitor raises prices too fast as a cheap way to pump their numbers. It's short-sighted and gives you an opportunity to
offer a competitive price and a reason to offer a better value.
The Keep Launch Objective
A keep launch objective is a target to maintain or improve the retention rate of your customers. After all, it's much easier to keep the customers you have than to win new ones.
The tricky part of a keep launch objective is that it's typically tied to the product, packaging, or pricing. Customers lost due to product problems cannot be fixed by merely adding new features; it requires fixing what's broken.
Many say that keeping (retaining) customers are essential, but only some have a keep objective as part of their growth efforts. It's something delegated to the Customer Success team. Correcting a customer retention problem usually gets attention when the problem is already too big. The right approach is to monitor the situation and identify trends that indicate a loss of customers is imminent.
An example of what to monitor is dissatisfaction with the product. That could be due to failures in the product, design issues, frustrating workarounds, poor quality, or a convoluted user experience. Pricing can have a harmful effect on customer retention too. All companies raise their prices at some point. But dramatically raising prices on customer renewals is a formula for customers to flee.
If you have a customer retention problem, the first step is identifying why customers leave. That starts with talking directly to them to understand their reasons. Once the causes are known, a plan for corrective action can happen.
The Grow Launch Objective
A grow launch objective focuses on expanding revenue from existing customers. This can be accomplished through new, paid product features, new add-ons to existing products, new services supporting existing products, or expanding the usage of the products your customers already have (more seats).
Growth from existing customers can also come from selling additional products to existing customers. Growing by selling other products is also known as cross-selling. Cross-selling can be selling additional products to the same buyers or finding different buyers within the same organization.
Services are a way to grow revenue from existing customers by offering services they should have considered in the past or introducing new services that help customers get more value from what they have.
Packaging can play a significant role in a grow strategy by bundling products and services to increase the value delivered to your customers. The bundled offering could be more valuable than buying things individually and increase revenue overall.
The Objectives Worksheet
The Objectives Worksheet is a way to help you define your objectives, whether for determining the success of a product launch or for the overall objectives of Win, Keep, and Grow in your business.
The design criteria for the Objectives Worksheet were twofold. The first is a thinking tool to help you think through developing and refining meaningful objectives. The second is a communications tool with your leadership to demonstrate that you followed a thoughtful process and didn't make stuff up out of thin air.
There are three columns, one for each objective. Each column has room for objectives, leading indicators (KPIs) to track progress toward the objective, and the obstacles that could hinder achieving the objectives.
Objectives are often too loosely defined, so let's take a moment to clarify this. Every objective must have an increase or a decrease of some metric within a fixed period. You might want to increase revenue or decrease customer cancellations, but without a timeframe, there isn't as much urgency.
Use this template and examples to help you form good objectives.
Increase/decrease [metric] to/by [quantity] by [date] Increase pipeline growth by 25% by end of Q4 Reduce customer churn by 10% by end of Q2 Increase revenue to $15,000,000 by end of Q3
It's Your Turn
Reflect on the process of building Win, Keep and Grow objectives. Is something missing you need? Add it. Is something not needed? Remove it. Make it yours so it fits with your launch planning workflow and process.