Launch A New Product Or Service Without Losing All Your Money
Launch A New Product Or Service Without Losing All Your Money
Here’s the truth: predicting the success of a product or service launch based on opinion (no matter how informed) is a fortune-telling exercise, not a reliable green light.
I’ve seen a lot of successful and unsuccessful launches throughout my career, so I get asked about my opinion on whether a new product or service will tank or not.
When someone asks me this question, I always say: it sounds good but, you’re not going to know until you sell it.
Good and bad launch knowledge isn’t helpful in determining success because:
Consumer preferences are now shifting rapidly (think of pre-covid and during-covid shifts as a great example) so what didn’t work a few years / months ago may thrive now with better execution or marketing.
The sales channels to reach audiences have improved remarkably over the past few years thanks to tech, so a lot of online businesses have a stronger advantage now than they did years ago.
With the increased access that ecommerce has warranted, businesses can succeed simply by dominating small niches.
Despite this reality, you can avoid a product or service launch that tanks by taking the right pre-cursory steps.
Doesn’t it sound nice to know how something will do before throwing all your chips in? Here are a few ways you can reduce the risk of sinking time and money into an unsuccessful product or service launch —
Don’t mistake yeses for purchases
I’m not a huge fan of customer surveys when it comes to understanding who will buy something or not. These surveys are great to receive a tally on market pain points, but it doesn’t necessarily mean that someone will whip out their credit card to buy from you. A lot of other things have to go right like your pricing, competitive edge, and more.
I’ve historically seen a small majority of the people who initially gave me a verbal yes actually follow through and buy the product. So that means at best, you cannot count on the majority of the verbal yeses you receive (I haven’t been proven wrong on this when speaking to other entrepreneurs — it’s a common experience).
Furthermore, there’s another bias that kicks in when you ask someone whether they’d buy your product or not. Most people will say what you want to hear to please you, especially if they’re your friend or family. Many of them will just buy from you because they want to support you, not because they fit your target market profile.
If you were relying on this information to gather your first round of customers, here’s how you can move forward without it.
Find a temporary sales floor
The best way to prove the financial viability of your product or service is to sell it. Deciding to invest money into a full launch based on the results of surveys and hypotheticals isn’t a wise decision. Basing that decision instead, off the data and results of a baby-sized launch is measurably less risky.
I love using Instagram as a temporary or initial sales floor before launching something in full. You can also use email marketing, Facebook, and other platforms where you have high engagement.
When using a temporary sales floor like Instagram, you basically take the product or service you’re selling and pre-sell the heck out of it (more on that in the next section).
If you currently don’t have an audience to sell things to, I recommend that you buffer in a few months (the longer the better) to give yourself time to build an audience and build a relationship with them before trying to sell them anything.
Once you have a warmed up audience, you should spend a few weeks nurturing them, teaching them about the new product or service you’re selling, and selling them on the purchase. Give an attractive discount or offer (bonuses, free with purchase offers, etc.) to sweeten the deal.
Once you’ve executed this baby launch, you can rely on real, useful data to decide whether to fully launch the product or service, or table it because it didn’t provide the results you’re looking for.
Presell
When it comes to selling your products and services in a baby launch, the goal is to reduce your risk for the long-term, even if it means that you have to pay an initial surcharge to experience and learn about the depth of that risk.
If you’re selling a course, consulting, service packages, etc. you should presell spots before completing the work for said service — for service providers this will be easy, for course creators you can stagger your work to accomplish this. What I recommend doing is completing 50% of the content for the course you’re selling and only finishing the remaining 50% of the content if you sell enough units. This way you’re getting paid to complete your course.
If you’re selling a product, create a small run of product to run a baby launch. If a small run would cut into your profits, I recommend taking the hit because it will prevent you from holding 100s if not 1,000s in inventory that you’ll never sell if the product isn’t a product-market fit.
If you are in a more difficult position and have minimum order quantities (MOQs) to meet, I strongly recommend that you look for an alternative avenue that’ll allow you to run a small quantity to sell to a smaller audience first.
I know that it’s pretty difficult to run small quantities when you’re selling products and are in an industry with MOQs in the 100s or 1,000s, but hear me out.
Whether it’s by working with a different supplier for the 1st baby run, or taking profit cuts — an introduction of a new product to market should always be treated like an experiment, and most experiments aren’t moneymakers, they’re an investment / sunk cost.
Don’t go all in on buying sizable inventory for a product if you don’t know people want to buy it — because then you end up being the fool that bought all that inventory, only for it to gather dust in a storage room.
Don’t get pressured into hitting an MOQ for a new product, especially if you’re a new business. Remember that your supplier is equally a businessperson trying to sell you a product, and it’s their job to sell as much to you as possible — don’t be the sucker that buys extraneous inventory because you believed that you had no other options.
How will you find the product that’s going to make your business profitable if you’re being bogged down by the inventory that has proven to not be profitable? You won’t, or you’ll do it on a much more delayed timeline. Choose the right steps to test and experiment with your product launch rather than being tied down to a commitment you don’t have enough data yet to make.
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