Creating a Product Family for Your Customers
How to Create a Product Family to Maximize the Lifetime Value of Your Customers
In some of my previous blogs I’ve often highlighted case studies of killer products from Lexus and upstarts like ClearVue. These were instances where the company needed a standout product to get their ventures started. However, once they establish themselves, what happens next?
Business Growth Strategies: Two Options for Maintaining a Competitive Advantage
1) Ride the Hot Hand
Clearvue did this successfully by targeting a market segment where they could maintain a competitive advantage and avoid confronting national brands. Their primary strategy was to maintain a loyal customer base.
For B2B SaaS companies out there, this is not the best strategy. The shelf life of any innovation in the SaaS space is too short to rest on your laurels. You could iterate and improve your product, but then you’re limited to one market and the applicable segments.
2) Seek Growth by Building Out a Product Family
Companies have a few options when it comes to this route.
a) You can offer tiers of the same product to allow for scalability: Airbus has followed a similar formula which has contributed to their success. While they started with the short haul A300, today they have a full product family of aircraft from the A320 to the super jumbo A38o to meet the full range of their customers’ needs.
In the technology world, this might be the easiest option: Offer a “Lite” lower-cost version of your product to get the smaller customers, along with a normal “Enterprise” level offering for everyone else.
b) You can offer complementary products to build out a “one-stop shop” for your customers: General Motors had a “Step Up” product strategy. The goal was to use Chevrolet to bring young buyers just starting out into the GM Family. They had numerous brands (GMC, Chevrolet, Buick, Pontiac, Oldsmobile, Cadillac) that would serve their young buyers as they matured, got married, had families, and grew in affluence.
GM also offered more than scale, they offered different types of products (Car, SUV, Truck) to keep their customers in the family.
This is the harder more long-term option. Given the product lifecycles in the technology world are short, it will take significant financial resources to keep multiple product lines fresh and competitive.
So, What is the “Best” Option?
The convenient answer is, “It depends.” What is certain is that it is crucial to maintain a comparative advantage: What does your company do best? And what customer segment can it serve best? That should be the core of your product planning.
Once you’ve established yourself in a specific segment and product class you can then take steps to branch out. What are your customers asking for help on? What core competencies can you leverage in your organization to address those needs?
The next question is: How do you best address those needs? On approach is to seek partnerships and white label their product, or you can develop your own solutions.
Each organization has to weigh these questions and develop a product strategy that makes sense specifically for them. It could be that either one of the options that I laid out above might work, or a combination of the two.
What questions do you have about creating a product family for your customers?