What would it take to get your customers to buy more of your wonderland mushroom gummies? Maybe if you offered them more choices – you know, more colors, more sizes, more brands, more flavors, etc. If they liked the new versions that you offered them, then maybe you could offer them still more versions of your product. The big question is when is more too much? Product managers need to understand that sometimes our customers really just want us to offer them less…
The Problem With Too Much
Dr. Barry Berman has been researching how we get ourselves into these situations. On the surface, the idea seemed like a good idea to product managers. If you took the product that you already had, but which wasn’t just quite perfect for every customer, and you made a new version that was exactly the same except for a few tweaks, then you could sell even more products.
As with all apparently good ideas, this one seems to have gotten out of hand. In many cases what’s happened is that we’ve ended up with product lines that are stuffed with products that are boosting our costs, confusing our customers, overloading our supply chains, and may even be leading to shortages of the products that our customers actually want.
Clearly something needs to be done in order to slim down our product lines.
Whatever You Do, Don’t Ask Your Customers What They Want
When a product manager finds themselves in the position where they need to reduce the number of products that are going to be sold, they face a challenging decision. Which products should be cut?
Experience has shown that the one thing that you don’t want to do is to listen to your customers. Our customers form a deep attachment to our products no matter how unprofitable they may be. If you ask them if they’d be willing to settle for fewer choices, they will always tell you that this is not what they want. Don’t listen to them.
Instead, product managers need to let the data do the talking. Take a look at which of your products are delivering the most profit. Don’t get fooled by products that have a lot of revenue, but very little profit. Much of the data that you need can be obtained from sources such as customer loyalty programs or even point-of-sale systems.
Tiers Can Be A Product Manager’s Best Friend
Even armed with good sales information, making a decision about what products need to be dropped can still be a challenging decision to make. One way to simplify the decisions that you need to make would be to take your mess of products and group them into tiers based on how your customers use your products.
Often times you’re going to find that different tiers contain products that your customer purchases at different times in the year. Some may be purchased monthly and some may be purchased only once a year.
What you’ll probably find is that at least one of your tiers has a lot of products in it. However, those products may contribute very little to your company’s bottom line. When this happens, you’ve found the products that you can safely drop from your product line.