Making New Product Introductions Pay with Product Configuration

Louis Columbus
Cincom Systems

In this recession product introductions are the lifeblood many companies are relying on for future revenue.  It’s the single biggest sales-producing event that many of them have.  Getting it right requires an inordinate amount of coordination, communication, and planning from a product transition standpoint.

As a member of a study team that was funded by a Japanese electronics manufacturer with McKinsey & Company several excellent take-aways emerged on how re-defining built-to-order strategies online can increase the likelihood of success of the launch of entire new products and product line extensions. 

Here are the key take-aways:

• It takes a minimum of 16 weeks to launch a new product successfully.  An aggressive timeline for new product introductions like this assumes that a senior manager, in the case of this Japanese manufacturer, their General Manager, take the lead and prioritize work across the entire division.  This served to remove many of the roadblocks to getting the launch done.  It also did something far more valuable: it started changing the culture of the division to see the launch process not as a long, drawn-out cross-functional effort but more of a quickly and aggressively completed distribution strategy against competitors trying to take their market share.

• Creating product configurations that focused on increasing reseller margins matter most.  Everyone likes to talk about mass customization at the consumer level, yet this product launch used these powerful principles to create a stronger reseller base.  This Japanese manufacturer had done their homework, spending hours of face-time with both large and small resellers to understand how to use the combination of product catalogs, product configuration, pricing and service offerings online to actually strengthen their channels.  In the battle for reseller mindshare, this was a strategic weapon that worked.

• Cut the technical arrogance and sell more. At the time of the study less than 10% of the entire reseller base was using the online product configurator.  During one of many conference calls to understand why the adoption rate was so low one reseller said “get product configurators out of the ivory tower and do what you did with catalogs – make it intuitive!” The other resellers agreed that the navigation in the product configurators were way too complex – and when they asked for assistance they were told how it worked, not how to use it.  Frustrated, they had given up.  The entire graphical interface needed to be re-defined.  The project manager for product configuration was then turned over to Sales, not IT, and adoption, over time improved. Serving the channel with product configuration mattered more than telling them how technically awesome it was. 

Bottom line: In this recession every product launch counts. Get online catalogs, pricing, product configuration all aligned to your channels’ needs way beforehand and let them own it.  You increase your odds of success significantly by doing this.