Launched a new product? This will help you measure its success
According to Harvard Business School, of the approximately 30,000 new products launched each year, about 95% fail. Of course, the product failure rate varies from one industry to another—for example, grocery products fail at a rate of 70-80%—but think about it: When you launch a new product, generally, your odds of success are 25 to 1. If casinos offered those kinds of odds, they'd go out of business overnight.
So, why do so many new products fail, and how can you measure product success?
Why do product launches fail?
New products fail for a variety of reasons, but the number one reason, according to Harvard Business Review (HBR), is that companies become so engrossed in the nuances of design that they don't adequately prepare to go to market:
"Numerous factors can cause new products to fail…The biggest problem we've encountered is lack of preparation: Companies are so focused on designing and manufacturing new products that they postpone the hard work of getting ready to market them until too late in the game."
Of course, the failure to leverage effective marketing strategies isn't the only boondoggle that condemns so many new products to the ash heap of history. According to The Business Journals, there are others, including the following three:
1. Not adequately defining a target audience for the product.
Many businesses fail to define the customers most likely to buy their products. Doing so means scrupulous targeting, effective market segmentation, and the creation of detailed buyer personas.
2. Not fine-tuning value propositions.
Every business worth its salt has a value proposition, but that promise made to consumers should vary somewhat based on the target audience for your product. For example, a product-based value proposition should demonstrate how a new product is superior to similar products offered by the competition.
3. Not establishing relevant, realistic, and measurable key performance indicators (KPIs).
This is perhaps the most harmful of product launch mistakes. To increase their odds of success, businesses need to enumerate clear, realistic, and measurable goals for things like revenue, price point, the number of total sales needed to meet revenue goals, number of needed prospects, leads and conversions, and the number of sales expected from new vs. repeat customers.
What key performance indicators (KPIs) should you use to measure product launch success?
Every business — and every product — is different, which means the product marketing metrics you use to measure the success of a launch will likely be different from those another company in another industry. That said, some KPIs are applicable to virtually every product launch, such as:
- Launch campaign metrics
- Product adoption metrics
- Market impact metrics
- Qualitative feedback
Let’s take a closer look at these KPIs and how you can leverage them to guarantee product launch success.
Launch Campaign Metrics
You can't expect a successful product launch without a smart marketing strategy. Marketing metrics will tell you how effective your launch campaign is, which strategies are most effective, and which need to be tweaked or eliminated.
Which metrics are most important to you during a new product launch?
While the exact campaign metrics you track will depend on your larger product marketing strategy, here are the most common launch metrics to track:
- Leads generated: Generating leads as part of your product launch campaign is the first step in generating interest in your new product. Leads could be trials started, demos requested, or even thought leadership content downloaded that’s related to the new product.
- Promotional channel metrics (email, advertising): Chances are, channels like email marketing and advertising will be central to your lead generation efforts. Measure your email open rate, as well as click through rates, to measure your effectiveness in positioning your new product as part of your overall promotion strategy. If you’re using online product advertising to promote your launch, look at the costs and click through rates to measure, once again, your effectiveness at positioning and promoting this new product.
- Website traffic / page views: Be sure to measure views of all of your launch content as well, which includes website traffic or page views to new product pages, landing pages, and related content.
- News coverage: For major launches, you may also want to target PR coverage for your new release. Measure the quantity and quality of these articles or mentions to gauge your effectiveness at getting coverage.
Product Adoption Metrics
Once you’ve launched your product, it’s time to focus your attention on how your product is resonating with your customers. Product adoption KPIs tell you whether you have been successful in releasing and marketing a product that serves a market need —ultimately serving revenue and related business goals.
What are product adoption metrics?
Think of tracking product adoption metrics as taking a glimpse into the mind of your customers and prospects. If they are quick to flock to your newly launched product, use these KPIs to keep up momentum and steer continued interest in your product. If your product adoption rates aren’t yet where you expected them to be, use these KPIs as goals to aim for as you continue marketing your product launch.
Here are a few typical product adoption metrics to track:
- Product trials: Trials started by customers or prospects, if you’re offering this option, is a great metric for evaluating real interest in what you’ve launched. This is also a good first step in getting long-term product adoption.
- Customer usage: Setting and tracking goals around customer usage over time - not just customers trying the product but also continuing to use the product over a set timeframe - is a good measure of your product serving a customer need and your marketing effectively guiding them into that product.
- User retention: While the primary goal of your launch may be to generate awareness and interest in your new product, it is also important to retain those users to ultimately impact key business metrics like revenue.
Market Impact Metrics
In a competitive landscape, measuring your penetration into the market and the impact on your sales is key for measuring the success of your launch.
How do you measure market impact?
By measuring the market impact of their product, businesses are able to assess the achievement of their launch across product, marketing, and sales. Key market impact metrics to track include:
- Revenue: If you are charging for this new product separately, revenue will be a critical KPI to measure the success and impact of your latest product launch. This is how customers show you that you have truly delivered value with your new product release.
- Market share: Odds are there are many products like yours in the market. It's important to know what portion of the market for that product your business is capturing. The market share KPI, in other words, tells you how well your product is performing compared to your top competitors.
- Competitive win rate: Another measure of your success in overcoming competitors in the market is your competitive win rate. If your new product competes head-to-head with existing solutions in the market, your competitive win rate should increase with a successful launch.
Finally, not all product launch KPIs can be quantitative in nature. You can also complement each of these other metrics with qualitative feedback from internal and external audiences.
How do you evaluate qualitative feedback?
Measuring qualitative feedback is like taking a temperature check of your customers and prospects. How are they feeling about your product launch? How are they communicating these feelings to your business? By tapping into the qualitative feedback generated by their product launch, businesses can develop a holistic understanding of their degree of product launch success.
Qualitative feedback metrics to track include:
- Internal feedback: Collect feedback from internal audiences, including sales reps, marketers, executives, and product managers. Be sure to get their desired outcomes before the launch to better prepare to meet their objectives.
- External feedback: Collect feedback from customers and prospects to get reactions and constructive notes about the positioning, channels, and other launch elements. You may even discover areas where you can follow up to maintain momentum post-launch, such as creating additional customer help documentation or marketing content.
Admittedly, launching a new product — and choosing the best metrics to determine whether that launch is successful — can be challenging. The high failure rate for product launches noted above is proof of that. However, by setting clear goals around these KPIs, aligning your product and marketing teams around these objectives, and ultimately measuring performance against these metrics will keep your entire company marching towards an effective product launch.
Author: Madison Blask