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Who thought Amazon would ever be more than a bookseller? And who thought Facebook would make the leap from social media to virtual reality? We can point out countless examples of companies who have successfully diversified and rolled out a product in addition to the one that they originally offered. By doing this yourself, you can create more revenue streams for your company and ensure growth for years to come.
But there’s another side to that coin. You wouldn’t want to overextend your business by offering a new product before you were ready. So, how can you tell if you should start offering a new product?
Originally, my company ButterflyMX started with its flagship product, the smart video intercom. But these days, our suite of access control hardware includes keypads, key lockers, elevator controls and more. How did I know that it was time to branch out? Here are the five questions my team and I ask ourselves before we decide to diversify our product line:
Related: Developing a New Product? Here’s How to Make It a Hit Success
1. How can I solve the problems my customers are having?
As always, the first thing you should have in mind is the customer experience. As your initial product gains success and market share, you undoubtedly receive a lot of feedback as consumers gain precious real-world experience with it. Now it’s your job to decide whether that feedback is actionable enough to start offering a new product.
That’s how we branched out from just selling video intercoms to offering an entire access control platform. We recognized that an intercom at the front entrance is only one aspect of property access management and that the rest of a building also needs secure, convenient access control.
So, we got to work. And now, products like our keypads are staples in ButterflyMX buildings across the country.
2. What are my competitors doing?
Are your competitors offering new products and expanding into new markets? This might be a sign that you need to adapt to the times or risk being left behind.
Sometimes, your competitors’ inaction can be as loud as their actions. If you’re doing especially well compared to them, you might be able to interpret their inaction as a sign of stagnation — and by branching out, you’ll leave them in the dust.
3. Will my new product complement my existing product?
Making sure our company’s new products work well with our existing video intercom system is one of our biggest priorities. Your new product should complement your existing product while addressing new problems that your consumers might face.
Take Block (formerly Square) for an example. Originally a company that made portable credit card readers for small businesses, they wanted to address other problems their customers might face.
They asked themselves: What else does a small business need to succeed? And after doing their research, they branched out. Block started to offer products like payment kiosks and accounting software, all of which can be used seamlessly with their original card reader.
Related: Diversifying Your Business: Broadening Your Product Portfolio
4. Can my supply chains stand up to the test of a new product?
No matter what industry you’re in, recent global events have made it difficult and expensive to get our hands on new parts — not to mention the delays. You might especially be feeling these hurdles if you’re in tech, like me. When you have to get processing chips and other parts shipped from factories across the world, you know that supply chain management is the true test of anyone running a business in today’s day and age.
If you need to explore options like hiring a new supplier or shipping company, you should iron these out before rushing into offering a new product that you’re not sure you can reliably provide.
5. Is my team ready to start selling a new product?
Diversifying your product line isn’t just about product development. The rollout process is just as important, and that means giving your marketing, sales, customer success and finance departments ample time to prepare.
Your teams should be busy at work drumming up interest, preparing to support and manage them and ironing out the payment details for your new product. Promotion and awareness are obviously a big component of any new product launch, so you may want to consider signing your company up for appearances at industry conferences and trade shows or directing employees to create more digital content as part of an online marketing strategy. Releasing a new product means that everyone needs to kick it up a notch.
As in all aspects of your business, you shouldn’t rush into offering a new product head-first. There are a few questions you should ask yourself to make sure that your company is ready to act.
Related: Your First Product Is a Success. Is It Time to Roll Out a Second?
Essentially, it boils down to this: You need to kick the tires on your own company and see if you’re ready to expand — and you need to make sure there’s demand for any new product you might create. You can do this by considering your own supply chains, readying your internal teams and analyzing your competitors.
And as always, you should be focused on solving the problems your customers are having and ensuring that your company is ready to step in and offer a solution.
This article is from Entrepreneur.com
