Charlie asked, “Would you talk to me about my company’s new
product process?”
“Sure,” I replied, “Is there some reason you’re asking?
We’ve known each other quite awhile and you’ve never been concerned before.
What is going on?”
“Fletch,” he answered, “I’m seeing a fall off in sales and
I’m not sure why but I figure I have to start product development now and I’m
not going to be able to afford any mistakes.”
“So this is not a casual inquiry, I said. “You’re telling me
this is not a seasonal thing or reaction to a competitive entry in the market.
It is a long term trend shift.”
Charlie smiled sheepishly and volunteered, “I figured if I
bought you lunch you might let me pick you brain a little.”
“Okay, lunch is on you. Do you know your new product inflection point?”
I could tell from his puzzled expression that he didn’t have
clue so I drew the diagram on a napkin.
I explained, “New product tracking starts well before you
begin recording sales. Generally, there is time and money spent in product
development plus the cost of preparing to go to market which can include actual
manufacturing and shipping and setting up distribution channels no to mention
promotional marketing expenses.”
Pointing at the rough drawing he asked, “But why does the
sales curve turn down?”
“Look, I told him, “when you start to sell a product or
service the curve is not a straight line. Sales don’t increase forever. At some
point they are going to decline. That’s why if is important to track them month
to month. Similar products and services in similar markets will have similar
curves.
Before your sales or your market share flattens you should
be looking to replace or add a product or service. If you really get
sophisticated your analyses will include seasonal, year to year data and will
be targeted on predicting the deflection point—the point where you introduce
the new product to take over the heavy lifting while the old product continues
to bring in revenue.”
He brightened when I went on, “There are some products that
seem to go on forever.”
Then he frowned as I continued, “But sooner or later
the volume will drop off. Having another product in the pipeline that will give
your sales an ascending curve replaces the lost revenue from the first. You need
to plan for it.
Tracking your sales, knowing the seasonality of your product or
service, looking at the trends and analyzing conversion ratios accurately will
help you find your inflection point.
Jerry Fletcher www.JerryFletcher.com
stopped counting successful product intros a 207. He believes knowing when to
introduce is just as important.
Your group can have a conversation with a Networking Ninja. Jerry Speaks internationally on Networking, Email Marketing
and Trust-based Marketing on and off-line www.NetworkingNInja.com