5 Signs Your Product Portfolio is in Trouble (And What to Do)
Most middle market manufacturers' product portfolios continue to grow over the years to the point where they are massive. If no one is managing the portfolio as a whole, it can grow out of control. This strains operations because now inventory is piling up with nowhere to go. Individual product sales get watered down and customers start getting confused about which products are right for them.
A weak product portfolio will confuse customers, allow competitors to sell over you, potentially cannibalize itself and strain your resources. A strong, performing product portfolio will deliver value to customers, differentiate you from competitors and work together synergistically to deliver cash to the business. That’s where I want you to be.
Here are some signs that product managers watch for (and proactively work to avoid). Experiencing one or all? I’ve also outlined tools and next steps for facing each issue so that you know how to push your product portfolio to the next level.
- Market Share is Eroding
Market share is the best metric to understand how you are competing against others in your industry. If your market share is beginning to decline, it’s a telltale sign that customers are finding another solution they prefer.
What do you do?
Find the cause. There are a few reasons your share may decline. Competitive products may be smarter, less expensive or come with better service.
Take the time to do a competitive analysis. Is it your product that’s the issue? Competition? Both? The channel may be your key. Talk with the channel to understand to learn about shifts in customer behaviors or new competitive products customers and why customers are choosing them. - Sales are Declining
Declining sales may be caused by multiple factors. It may mean the product has peaked relevance in the market and is now entering the declining stage in the product life cycle. It may mean that one of your newer products has stolen the spotlight and customers are no longer buying the older one. Another possible reason is that product market fit may be losing relevance.
What do you do?
To understand why product sales are declining, evaluate your sales data to find any correlations between products losing or gaining sales. Conduct research to understand customers’ current needs and pain points (they may have changed a lot since you last checked) and how your product lines up with those pain points and needs.
No matter the cause, innovation is the answer–whether that means revamping an existing product or introducing a new one that better answers customers’ changing needs. - You Feel Product Portfolio Bloat
Do you have lots of products but they don’t all have a unique reason to be? It’s common for a middle market manufacturer to continually add more products at a faster rate than obsoleting ones. The result over time? Your product portfolio may be overgrown and in need of some serious pruning.
Have you ever cut away bad parts of a shrub and then watched it thrive with new growth? A product portfolio can work the same way.
What do you do?
Evaluate your product portfolio according to the 80/20 rule by looking at your sales data to see the top products that bring in the most revenue.. The Pareto Principle, commonly referred to as the “80/20 rule”, states that 80% of the effect comes from 20% of the cause. Meaning that 80% of your revenue typically comes from 20% of your product portfolio. This is a great way to separate out your most important cash cow offerings and potential candidates for end of life phase out. - Your Channel isn’t Helping
The sales channel may be overwhelmed with all your products so they only sell the products they are comfortable selling. If they don’t understand everything, they can’t sell everything. Regular training and education for your channel is essential so they are confident–and excited–to talk about products that meet customer needs.
What do you do?
Talk with your channel about your product portfolio to gain insights on what is resonating with customers. They will surprise you with how many insights they can offer! At the same time, discuss ways that you can improve educating their sales team. This may be as simple as creating email campaigns for the sales channel, offering live webinars, visiting in person for lunch and learns, or creating a video series. - Your Marketing is Missing the Mark
The hero of marketing communication is the customer. If the focus is more about your business and the products without linking the value to the customer, it may be time to change the tone of your marketing communication. Subtle language changes can resonate strongly with customers so they feel that you’ve created offerings with them in mind.
Communication needs to follow the customer journey and meet them where they are at with clearly communicated benefits that will resonate with their needs or fix their problems.
What do you do?
Write a value proposition for every one of your products. Connect the value proposition to pain points and needs of your customer. Then find a compelling way to communicate your benefits.
During this process, ask yourself: how different are my products from one another? If it isn’t clear to your internal team, it isn’t going to be clear to customers.
Test your marketing to see what works and what doesn’t. Simple A/B testing can help you evaluate the effectiveness of campaigns with data to support pivots where needed.
So, what next?
If you see several of signs, here’s your short list for what to do next:
- Determine fluctuations in market share and causes
- Determine your sales fluctuations across the portfolio and why
- Identify top product performers in your portfolio and any unnecessary dead weight
- Seek insights from your sales channel and empower your sales teams
- Evaluate your marketing communications and improve where possible
Each product in your portfolio should have a purpose, both on its own and together as part of the set. Now you know how to evaluate your product portfolio, both product by product and overall, so that you can learn how to make it stronger, more competitive and more profitable.
If no one is managing the product portfolio or you feel it is confusing customers, it may be time to add a product manager, who can audit your product portfolio from an expert perspective. Ready to think about how product management can make a difference? Here are some ways I can help.
Posted in Product Innovation | Tagged Management, Product Portfolio, Strategy
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