9 Lessons Learned Going Multi-Product
Jack Cohen / 12.06.18
Jack Cohen / 12.06.18
One transition that almost every successful startup experiences in its lifetime: becoming a multi-product company. The upside is enormous: you will dramatically increase your total addressable market, grow revenue per customer, and enhance product stickiness with customers.
But going multi-product is much easier said than done. Countless companies have stumbled in this transition because launching a new product naturally makes things more complex. Customers suddenly have to choose which product to buy and whether or not they want a bundled package. Your website needs to convey significantly more information. Marketing campaigns are run against multiple, overlapping audiences with messaging that is tailored to a matrix of personas and subscription states. Product releases need to be coordinated across a broadening infrastructure and growing set of teams.
Enter Jeff Titterton. He’s the CMO at Zendesk, a customer service and engagement platform with 125,000 customers, a $6 billion valuation, and yes, multiple products. Titterton recently spoke at our 10th annual CMO Summit about the journey of taking a company from offering a single product to multiple products.
“Far too often companies rush their second or third products into the market,” says Titterton. “Everyone gets excited, testing is rushed or skipped altogether and the result is frustrated customers.” Jeff distilled his experience down to a set of nine highly actionable lessons:
Lesson 1: Set realistic expectations.
There is zero chance that 30% of your current customer base is going adopt your new product in the first three months. As much as your finance or product teams try to convince you this will be the case, it’s unrealistic.
“Finance lives in spreadsheets, product often loves their new baby too much to be realistic and Venture Capitalists are too distanced and focused on the big goals,” says Titterton. “Growth marketers live in the trenches. They know what’s going to happen, so they should be part of setting target goals.”
As a general rule, goals for adoption rates should be in the low single digit percentages for at least the first quarter or two. By setting realistic and conservative goals, you’re allowing your team to experiment and learn how to showcase and message the new product alongside existing products in a way that works.
As a general rule, goals for adoption rates should be in the low single digit percentages for at least the first quarter or two.
Lesson 2: Your individual product is precious — don’t mess with it.
Your company is jazzed about the new product, but at the time of launch, your customers don’t actually want it — nor do they want to hear about it. They’re coming to your website to find the product they know and love, and they don’t want to have to dig around your website to try to find it. In fact, if they can’t find what they’re looking for, they might bail, and you’ll miss out on a sale.
“Don’t take your original product off the homepage,” states Titterton. “It’s what generates all your revenue today and it shouldn’t be given equal billing to your secondary products. It’s your star and should be treated as such.”
Companies so often make the fatal mistake of leaving their original product or products by the wayside in favor of shiny new products. It’s marketing’s job to protect the original product and make it easy for customers to find and buy it.
Lesson 3: Test the experience.
While testing the product and monitoring up-front conversion is a no-brainer, many companies fail to test the full funnel impact when moving from a single product to a multi-product experience. When adding products, the entire process becomes more complicated, so it’s vital to look at what’s happening downstream.
“If you’re selling a bundled service, you need to look at product adoption within the bundles that you’re selling to see what’s going to happen long-term with your product engagement, expansion, and churn,” explains Titterton. “Your customers may buy the new bundled products initially but wind up disappointed because they’re not really using the new products. The result may be higher churn and lower LTV.”
Titterton also recommends obsessing over the checkout and pricing pages. Many companies fail to test and optimize these pages post–product launch, which then don’t convert in the way they should.
Lesson 4: Bundling is your best friend, but it can also be your worst nightmare.
Generally speaking, bundling is a very successful tactic for increasing average deal size and LTV. By attaching your new product to your original, more popular product, you wind up selling a solution rather than a product. However, when bundling isn’t well thought-out, customers will feel like they’re overpaying for unnecessary products.
Titterton outlines three key steps for successfully bundling your products. The first is to test the bundle and how it’s marketed. The second is to find the right balance between marketing your bundle versus individual products. Bundling is a great way to upsell the appropriate clients, but the customers who don’t need the bundled package need to be able to find and purchase your singular products easily. Finally, your clients need to be able to clearly see the discount they’re getting by purchasing a bundled package. Show them the exact percentage they’re going to save. While there’s no hard and fast rule, a 25 to 40 percent discount is advised for B2B companies.
Lesson 5: Cross-selling takes time.
While marketers will face pressure to market new products heavily to their existing core user base, it’s essential to be thoughtful about the customer experience and go slow. Your core users are important, and you don’t want to scare them away or annoy them by hammering them with a new message to buy a secondary product.
“Carve out ten percent of your audience and tell them about your new product with one email,” recommends Titterton. “Do a split test to determine if they wanted to see it or not. Then you can ramp up your marketing from there.”
You’ll also want to review the cadence of your communication regularly with an eye towards balance and skepticism. Internally, there’s going to be a natural inclination to over-promote the new product. Keep that in check and always look at your marketing initiatives from the customer’s point of view.
Lesson 6: Be smart about personalization.
Your targeted personas and customer journeys become more complicated as you layer on products. So it’s important to use personalization technologies to give users different experiences and show them the products most tailored to their needs.
“I find that people often go overboard and segment the hell out of their audience,” explains Titterton. “They develop complicated business rules with a whole spreadsheet full of different messages and journey. This will generally lead to failure.”
The key is to start small. B2B companies should start by segmenting audience bases by company size. Test your communications, then continue to further personalize over time.
Lesson 7: Test and invest locally.
The more complicated your product offering, the more challenges you are going to have to communicate to audiences around the world. You might be able to get away with minimal localization in English language markets like the U.S., Canada, Australia, New Zealand, and England, but countries like Japan and Germany will need entirely different interfaces.
“In general, the Japanese like more detail and are much more conservative than U.S. customers,” explains Titterton. “They also read right to left, and the color palettes and layouts will need to change. Just look at a Japanese or German website of a major brand like Starbucks and it will be drastically different than what we’re used to seeing.”
To make sure your website is appropriate for other cultures, hire an expert marketer in that country to localize your most important pages that will represent more than 90% of your visits. For the hundreds of pages that are rarely seen, outsource those to a solid translation agency for quick and affordable localization.
Lesson 8: Adjacencies must be real.
When adding new products, it’s prudent to choose products that are adjacent to your existing products and therefore useful to your current audience. The more closely aligned your products are, the higher the chance they’ll have of succeeding.
“Your best bet is to develop products your customers are currently using but buying from someone else,” states Titterton. “Then your job is to get them to switch over rather than buying an additional product.”
Of course, there are adjacent offerings that aren’t quite as obvious — offerings that sit next to your core buyer. These are higher risk, but they can also be higher reward. They offer a new uncharted market that your company can logically expand into without totally starting from scratch.
Titterton says that a good way to test product ideas is to run a test with affiliates or business partners. See what kind of adoption rate you get with a few emails and then decide whether or not to build your product.
Lesson 9: Be ready to give it up if it’s not working.
A good growth marketer knows that everything is an experiment. That includes a new product
launch. New products are expensive, and a lot of time goes into building them. But you need to be prepared to cut the cord when it’s not working.
If you’re the person responsible for making that decision and explaining to your partner teams, try to do so as objectively and dispassionately as possible, and make sure you’re armed with data to show that you’ve tested it, iterated on it and exhausted all the possibilities.
Though the journey of moving from a one to multi-product company will be a learning experience, these lessons should provide some guidance for those attempting this process for the first time.
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