NOTE: This article was originally published on LinkedIn on August 20, 2014, under the title “The Usual Suspects: Common Types of Product Portfolio Challenges”. Minor edits have been made to this updated version.
One of the most exciting positions in which one can find themselves is at the helm of a new product portfolio. It can also be one of the most challenging assignments there is. Coming in fresh allows you to assess the strengths of the portfolio critically, determine what offerings are no longer relevant, and work with your colleagues to help make your sales force more effective. The difficult part of this opportunity is that the seemingly obvious corrective actions remain untaken for a reason. That reason is usually tied to people.
In some cases, a new product management leader inherits a solid, well-structured portfolio. In other cases, they inherit a mess. Inheriting a mess can mean hard work and difficult decisions on the front end, but conversion of a confused portfolio to a strong one is incredibly satisfying – and makes you a great friend to your sales team.
Over the course of my career, I have taken charge of several product portfolios and have come to see some consistency in those that need help. If you have a new product set that doesn’t quite make sense, see if it fits into one of these categories. I am including some thoughts on how to handle them.
I have also thrown in a four-song playlist just for fun.
1. Numerous Versions of the Same Basic Service or Flavor of the Weak (SIC) (American Hi-Fi)- This portfolio usually emerges when the product management team reports into a sales executive. Repeated requests by high-performing reps have resulted in products that “got the deal done” or met a specific competitive threat. Often, you can create a timeline on which each offering was “flavor of the month” and when the next version replaced it. There is usually little equity in products (and maybe even the brand) because direction has shifted so many times.
RECOMMENDATIONS: 1) Kill off products that no longer sell – especially if those products are merely different price points or bundles – by “clumping” the many offerings into a few. This should provide some P&L relief as you cut marketing, support, etc. for many offerings. 2) Place the old products on a “dormant” list where no new sales are allowed (it is probably OK to allow exceptions since the value of removing them from general sales is saving costs and strengthening your message). 3) Take stock in your primary line, invest in that messaging, and offer incentives (customer and field) for migration.
2. Dormant Products from Random Sources or Never Let You Go (Third Eye Blind)- This portfolio problem presents itself when a business spends years adding products to its portfolio but never removing any that are outdated or have become unprofitable to support. These legacy lists often exist due to acquisitions or corporate restructuring, where products are forced into the best fit, even if that fit is tenuous. Whereas #1 above reflects rapid changes in the attempt to serve the core market, this portfolio has a whole bunch of offerings that reflect old strategies, never-executed plans, and random instances of organizational “storage” decisions.
RECOMMENDATIONS: 1) Package the off-strategy assets and find a buyer for them – a buyer that can make more of them and that doesn’t compete with you. 2) Kill or migrate very small lists. I once had to fight for months to kill a product with four subscribers and total annual revenues under ten thousand dollars while I was spending twice that to support the line. 3) If the lines create critical mass in a market that you currently do not serve, consider hiring a small team of sales specialists to validate or reject your expansion into that market.
3. Failure to Separate the Enabling Tech from the Product or Give It Away (Red Hot Chili Peppers)- Especially in the online realm, it is common to find that some saleable offerings are either routinely given away or ignored because they are considered tertiary to the actual service being provided. In many cases, the true benefit of such enablers inures to the vendor rather than the customer because the apps or services drive usage or improve the user experience (and thus increase retention and reorder). Some customers love these products, but most have chosen to save money by living without them.
RECOMMENDATIONS: 1) Compare the business case for keeping a product on the price list with the potential benefit of using it as a no-cost usage driver. 2) If you choose to keep enablers as products, use low-cost tactics to highlight their utility (“tips videos”, user stories, etc.) and consider a telesales campaign, especially if that campaign can piggyback inbound calls or other customer touches. 4) If you decide to start giving something away, be loud and proud about your no-cost value add. Make sure every customer and prospect knows that you are adding value to your service.
4. Way, Way Too Much or Overwhelmed by You (Tim McMorris)- One company in my past had more than 800,000 products available for sale by its B2B reps when I arrived (my profile will offer some insight as to where). The bottom line was that every conversation with a customer resulted in something sought out from a vendor and added. As far as I know, no prospect ever mentioned that they needed a pony for their child…or the product team would have sourced one. The good reps had committed to their “go to” offerings, and the new reps had no clue.
RECOMMENDATIONS: This is as much a strategy problem as it is a portfolio problem. The first issue is to clarify whether all of the unnecessary products are a result of a current lack of focus or a past lack of focus. 1) If the issue is a past lack of focus, you should be able to pull sales info and kill many items that are not needed. Step one would be to remove anything that has no sales activity over some period of time. Step two would be to remove anything that does not have an active value proposition with your target customer. 2) If the issue is a current lack of focus…well, that’s dangerous ground and the subject of a longer discussion.
I would love to hear about other common forms of portfolio problems that product leaders have encountered.
