Delivering product innovation in a customer-first, disruptive world

Over half of the Fortune 500 companies from 2000 no longer exist. Furthermore, it is predicted that 90% of today’s Fortune 500 companies will be acquired, merged, or bankrupt by 2050. Would it be surprising to learn that these decreasing company lifespans correlate directly with increasing rates of technological innovation?

As business leaders, we’ve all heard the mantra: innovate or die. But in today’s cost-conscious world, we need to prioritize innovation that delivers the highest ROI while reducing risks that could impede success. That’s why investments in current and future product development need to begin and end with the people who vote with their wallets: the customers.

ENGAGING CUSTOMERS FOR LIFE

We’re in the midst of a customer-first revolution. According to a recent Salesforce survey, nearly 9 out of 10 buyers say the experience a company offers is just as necessary as the product or service itself. Such an insight suggests that companies need to start thinking about the whole product as including interaction with customers on multiple levels, even long after that product is sold.

Whether you’re a consumer goods, high-tech, electronics, or medical device company, a whole-product focus that begins with customer experience is the way to achieve customer loyalty in a world where brand allegiance is rare. This approach revolutionizes customer engagement and creates new revenue opportunities for innovative product companies.

Traeger, Inc. is an excellent example of how embracing deeper customer engagement can achieve rocket-ship revenue growth. In 1987, Traeger quickly established itself as one of the best grills on the market. But its growth further exploded when it embraced a whole-product strategy. Today, Traeger’s business model includes the sale of smart grills designed to cook the perfect meal, consumable revenue from pellets that ensure the grill is cooking correctly, content revenue from videos and local events that deliver ongoing engagement, and full meals from Traeger Provisions that generate profits and increase customer engagement. Traeger has been rewarded handsomely for its ability to engage customers in so many different ways, doubling its revenue over a three-year period.

Shifting focus to the whole product has completely turned around how product development and commercialization product teams work. Developing products used to be a serial process that began with suppliers and ended with customers. Today, the best product companies start with customer requirements and then determine what suppliers are needed to fulfill demand.

This re-focus has significant implications for hiring and structuring teams as well. Ten years ago, product companies focused on lifecycle costs; now, profit margins and average revenue per user are the primary focus for subscription-based models and omnichannel strategies. The desire to drive customer engagement that is deeper and longer is turning product managers into general managers. Some are evolving with the times and learning new skills; others are not, forcing product companies to hire outside traditional talent pools to find the right people.

This evolution is necessary because customer engagement is vital to subscription revenue, customer loyalty, and other future revenue streams. Additionally, the lucrative nature of subscription revenue is driving product companies to embrace this model at a breakneck pace.

Today, a lost sale no longer means lost revenue for the quarter. It means lost revenue for years to come. Product companies know this and are witnessing an historic rush to lock in long-term subscribers before competitors get a chance. That’s why the smartest investment in digital innovation that will drive ROI is called Product Value Management (PVM)—and it’s the future.

PVM’S WHOLE-PRODUCT STRATEGY FOR INCREASED REVENUE

PVM responds directly to current market conditions by focusing on three key areas: defining the whole product then evolving it over the course of its lifetime, connecting markets with compelling products and experiences, and creating product operations to help product and market teams optimize for successful economic outcomes. This is core to bridging the gap between product and commercial teams to ensure revenue growth is always front and center with product strategy.

Leading with a customer-first product strategy requires speed, data visibility, and collaboration between the whole office. When companies can implement customer feedback and adapt quickly to changing market conditions, products can be launched faster than ever.

This closed-loop process drives success in a customer-first world where a direct connection between products and customers is essential. This is achieved when:

• Commercial and product teams collaborate hand-in-hand
• Complete data visibility and company-wide business processes allow teams to work faster and smarter
• Quality, regulation, and sustainability are fully woven into the fabric of products from concept to customer
• Product strategy understands that revenue growth, higher margins, and increased market share are the true measures of product success
• Technology solutions are built for constant market disruption and remote work

A customer-focused strategy on whole products, product lifetime value, and recurring revenue streams is the foundation for creating profitable products—now, and in the future.

Ray Hein, co-founder and CEO at Propel Software