By Akshar Bonu, Co-Founder and CEO of The Custom Movement, a marketplace for custom sneakers, apparel, and more by independent artists.
So you’ve done the first (and often hardest) step: you’ve built a product that makes a group of people extremely happy. But now, you’re thinking about launching new product offerings to grow your business further. It is a tricky challenge, however, because your new offerings may receive a tepid reaction from existing users. Worse yet, they could frustrate your existing users to the point that they leave your product altogether.
With this in mind, it is important to be thoughtful when conceiving new product offerings and deciding how to position them. After all, it would be a shame to undo all the hard work that went into building your current business. To help, here are three common mistakes you should be conscious of that businesses make when expanding their product offerings.
They don’t solve the problems of your existing users.
Ideally, new product offerings complement existing offerings and increase the value of your product to your current customers. If they don’t, it is almost as if you are building a new business from scratch without the benefit of your hard-earned user base. To know if a proposed offering does indeed solve the problems of current customers, you must have a thoughtful understanding of your users. What are their pain points currently unmet by existing product offerings? What is their intent when they use your product?
For example, imagine you run an e-commerce site that sells keto protein bars. An obvious new product offering that is unlikely to work is fried potato chips, as existing users are likely health conscious. But even health-orientated products are not a guaranteed slam dunk. Imagine launching a line of gym equipment: True, this would appeal to health-conscious consumers, but how many of your existing users are in fact in need of gym equipment? Without talking to your users and understanding their pain points, this new product offering may very well be unsuccessful. The pain point you know for certain is that existing users are looking for healthy keto food items and launching new product offerings in that vein is likely to yield the best results.
They confuse your current product’s value proposition.
Another mistake businesses make when launching new products is that they confuse the value proposition of their current product with current users. While the new offering may not be at direct odds with the current value proposition, it can still be harmful by appearing unrelated to existing consumers. While at first it may not be obvious why an unrelated offering can be negative, it has the insidious effect of diluting what made the product special, making the product resonate less with existing customers.
Take, for example, a marketplace that sells exclusively handmade goods. True, you can find handmade goods on other e-commerce sites and marketplaces, but by enforcing the constraint that the marketplace only permits the sale of handmade goods, you create mindshare in a consumer’s mind as the go-to place for handmade goods. By opening a new category—such as the resale of secondhand goods—you may invariably lose this powerful brand that you have developed. While you could say that the resale of secondhand goods supports sustainability in the same way handmade goods do and is compatible with the handmade ethos, your customers may disagree and feel your marketplace has lost its handmade magic.
They de-prioritize what is working.
Launching a new product offering requires a lot of effort. Not only does it take quite a bit of time to develop a new offering, but it will take even more to iterate on the offering until it works well. That is assuming, of course, the new offering has legs to begin with. All in all, there can be a great human capital and monetary cost to launching a new product offering. All the while, you have an existing product that is working that needs to be supported and improved.
This loss of focus and spreading thin of resources can be deadly to a business with limited bandwidth to begin with. As such, it is paramount that businesses be judicious when deciding if they have the resources to successfully launch a new product offering whilst not neglecting their existing business. One way to mitigate this risk is to break down new product offerings into smaller tests and experiments. For example, instead of launching an entirely new line of protein bars, start with a wait list to validate demand. Then, release it in small batches to get feedback and iterate before scaling up the supply chain. This allows a new offering to be launched in a minimally viable way without risking de-prioritizing what is already working.
Almost all great businesses expanded their product offerings, so it comes as no surprise that almost all business owners think of doing so. However, with this urge comes real risks that can lead to wasted resources or, worse yet, irreversibly damaging a successful existing product. It comes as no surprise then that business owners should be thoughtful in launching new product offerings. By considering the three common mistakes outlined here, you can learn from the mistakes of those before you.