Basic Benchmarks to Prevent Product Failure: 2 Case Studies

 

waterbottlesPredicting product success can be nearly impossible. Just ask the five major venture capital firms that turned Brian Chesky and his roommates away back in 2008. Granted, their product and plan were a little unusual: A new mobile application where homeowners could rent either their couches, guestrooms or entire homes to complete strangers while they were on vacation. It may have seemed a bit far-fetched back in 2008, but the application has blossomed into the multi-billion dollar business we now know as Airbnb.

While this anecdote might highlight Airbnb’s resounding success, it also highlights the imperfect science of predicting product success. The fact that some of the top venture capital professionals in the world were unable to foresee Airbnb’s rise to global prominence should come as no surprise. Whether you’re developing the next Airbnb or just your next type of air freshener, product predictions can be difficult and can often leave us clinging to a product or service that was doomed from the start.

When You’re Expecting

Expectations are key in any product launch. Even before the blueprints are sent to an R&D department or the specs are sent to the developers, it’s important we set specific expectations surrounding the new product’s success or failure. Much the same way we outline a product’s marketing and branding initiatives, we must outline benchmarks that will indicate its overall value to the company. To do so, most business owners look to basic, time-specific metrics such as:

  • Total product sales (when compared to similarly marketed and developed products)
  • Gross and net profits
  • Future product orders
  • Percentage of reorders
  • Overall customer satisfaction scores (unique at most companies)

Like all aspects of product development, these metrics must be clearly defined, discussed and calculated long before the product hits shelves. Once the metrics have been defined, the team in charge must consider all of the following:

  • How will we capture these metrics after the product launch?
  • What metrics will be considered success? What will mark failure?
  • At which point would we consider pouring extra resources in for a product that’s succeeding?
  • At which point would we consider ceasing production for a product that’s failing?

This approach is rather simplistic, and it would need to be supplemented with in-depth analysis of metrics such as market trends or fluctuating production costs. However, when applied to even the most complex situation, this approach could help save a myriad of companies from failed product launches throughout the years. For example:

HP’s TouchPad

Introduced in 2011, the TouchPad was Hewlett Packard’s answer to Apple’s iPad, which had recently launched its second generation model and was threatening to run away with the tablet market. The TouchPad was actually quite highly anticipated, as it offered greatly improved video capabilities and higher processing speeds than those of its major competitors.

However, after pouring hundreds of millions of dollars into research, development and major press before the launch, the TouchPad release went relatively unknown to the majority of the public. James Kendrick, a tech columnist for Mobile News, explained the scene at a Best Buy near his home just days after the launch:

“[I] expected to see at least a few people looking at the TouchPad. This was wishful thinking on my part as neither HP nor retailers had promoted the launch much. When I asked to see [a TouchPad] the Best Buy representative told me they hadn’t put them out yet, even though that day was the big launch day.”

This was one among a long list of problems that plagued the product shortly after its launch. The TouchPad’s operating system was quite inefficient, it wasn’t compatible with Android apps at the time, and, for some unknown reason, the product bore a striking resemblance to the iPad. Even though it would cost HP more than $885 million in assets and the company would incur an additional $700 million-plus in costs to discontinue its new operating system, the company wisely decided to pull the plug on the product.

Just months after the launch, all metrics pointed to failure: Sales had flat-lined, customer satisfaction sat at all-time lows, and though they spent millions in marketing, the product was still relatively unknown to the public.

Coors Rocky Mountain Sparkling Water

For decades, Coors has marketed its beer as being “cold brewed with pure rocky mountain spring water.” So, in an attempt to capture new customers and streams of revenue, the brewing giant decided to start bottling this rocky mountain spring water. The water was designed and marketed much the same as the company’s other alcoholic products, bearing the same logo and branding, and the company spent large sums improving its existing production and shipping operations at factories across the country,

However, although the existing infrastructure made the product fiscally viable, the branding failed. Customers were confused and even scared at first thinking the water contained some level of alcohol. People tended to shy away from the product citing its logo and its resemblance to Coors beer. Couple this with the accusations from competitors that the water was far from “spring quality” and, in fact, was simply purified tap water re-bottled, and it’s easy to understand why the product didn’t sell.

Coors maintained production for more than two years, however, and didn’t revoke the trademarks on the product for nearly five more after distribution ended. With a more analytical production plan, the company could have realized their product’s failure and begun saving themselves some cash much more quickly.

Learning Lessons

Hindsight is always 20/20. I’m sure HP and Coors would have preferred to never launch these products at all, saving themselves some money and embarrassment. However, as no product launch is ever perfect, it’s crucial we have a concrete understanding of what will define success and at what point these benchmarks should be achieved. If we have a system in place to determine these, we’re ahead of a good portion of the rest of the pack, and we’re set up for success—or, at the very least, to mitigate our failures.

Al Eidson is the owner of Eidson & Partners, a business and marketing strategy consultancy, and a founder of SparkLabKC, an early-stage startup accelerator program in Kansas City. He’s an expert in taking products to market and has launched more than 220 new products and ventures through his career. He’s also proud of killing off a great many problematic products before they hit the market. His vision involves meaningful and lasting products through innovation. 

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