October 31, 2011

The Life Spiral: New Items

By now, you feel depressed.

You spent a full month reading about all of the ways that your business may be in decline.  Heck, you probably asked somebody to run a few queries for you, and you realized that your business has a few attributes associated with the death spiral.

So this week, we're going to talk about some of the things that successful businesses do.  Do some of these things, and you may be climbing the "Life Spiral" in no time.

Topic = New Items

New items are the life blood of any company.

Successful companies view new items like a baseball team views a farm system.  In baseball, you have maybe two hundred players performing at different levels in a farm system.  The players who exhibit the best performance move up, from Rookie Ball to Class A to AA to AAA.  Eventually, if the player is really, really talented, the player makes it to the Major League team.

New items act in a similar manner.  I frequently do work where a business will introduce 200 new items ... and five years later, only 10 of the items are what I would call "Grade A" items, items that are responsible for a disproportionate share of total company net sales.

If you want to put your company on a path toward the "Life Spiral" (i.e. unfettered sales and profit success), focus on measuring the success of new items.  Are new customers using search to find these items?  Do certain new products outperform best products in email campaigns?

Companies experiencing success have new items that follow one of two trajectories.

  1. The business experiences new product success at greater rates over time (hard to do).
  2. The business generated new products at a faster rate, allowing more new items to become best sellers.
You can look back to 2008, and see how businesses responded to new merchandise initiatives.  Many companies cut back on customer acquisition when the economy collapsed.  Many companies also cut back on product development.

Products developed in 2008 - 2009 are the ones that are paying the bills today.

And products developed in 2011 - 2012 will be the ones that pay the bills in 2014 - 2015.

A laser-like focus on new products is critical to the long-term success of a business.  If you are a CEO, create an initiative to increase new item development by 15% in 2012.  If you are a marketer, find every example in your catalog marketing efforts, email marketing, search marketing, retargeting, mobile, social and e-commerce activities where new items are successful.  There is a formula for success, here, waiting to be discovered.  If you are an analyst, generate reporting that helps every employee in your company understand the critical importance of new items in the long-term health of your business.

New items are as important as new customers in the "Life Spiral" ... invest time and energy today, and your business may well ascend the "Life Spiral" in a few years!

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