The success or failure of product launch can mean the difference between taking your business to new heights or having to close the doors. Thankfully, it isn’t hard to get it right if you follow our 6-step process to a successful new product launch. We’ll start with the very basics, from the planning stages of the product, and move all the way up to the post-launch growth.
The Six Steps of a New Product Launch
At Vivid Labs, we have a 6-step process that we go through with all of our clients who come to us seeking to launch a new product. We are going to share that process with you right now. Ideally, you’ll have completed step one before you’ve invested much in the development of your product. If it’s too late for that, you absolutely should complete it before you begin to spend any money on advertising.
1. Value Proposition Assessment
Many products that people bring to us aren’t ready for launch. A product being completed and a product being commercially viable are two different things. As you are developing your product, you should always be asking yourself what your unique value proposition is. Why would somebody buy your product instead of the competition? We see this a lot. A new product will come out and take the market by storm. Then, dozens of clones pop up and go nowhere. Why? Because they didn’t add anything extra. There is no added value. Anyone who wants the product will buy the original.
Your product should always add value to what is already out there. Whatever it is that makes your product unique and separates it from the competition becomes our marketing angle. That’s what we can sell to consumers. If you don’t have that, your product isn’t ready for launch.
2. Monetization Strategy
Before you launch a product, you need a monetization strategy. We aren’t talking about just pricing here; you need to decide exactly how you are going to sell this product. We really like the concept of a value ladder. When you are starting out your business relationship with someone, they are more likely to give you a smaller amount of money than a larger one. If you sell them a starter product for a small sum, and give them the value they expect, they’ll then be primed to give you the larger amount for your flagship product. This starter product is often called a tripwire product, and it’s the first thing you try to sell them after you’ve pulled them in with your lead magnet.
3. Break Even Analysis
Now is when we start the real work. Doing a break even analysis lets us know how well your funnel must perform in order for you to break even on your ad spend. To do this, we’ll evaluate how much you need to spend to get a lead, make a tripwire sale, and then make the flagship sale. If there are more steps in the ladder between the tripwire and the flagship, they’ll be counted as well. Let’s take a look at how this might break down:
- You spend $1 per click on advertising. 50% of those clicks convert to leads. This means you’ve spent $2 per lead.
- Of the leads, 50% of them buy the tripwire product. That puts the cost of as spend for the tripwire at $4 per customer.
- After the tripwire, 50% go on to buy the flagship product. You’ve spent $8 to get a flagship customer.
If you are only charging $3 for the tripwire product, you’ve lost money. This is why it is important to maximize your conversion rate and minimize your cost per click. The differences can add up quickly as customers move through the sales funnel. Many small businesses, and some medium-sized one, dismiss the effectiveness of online advertising too quickly because they did not optimize their monetization and conversion metrics properly.
4. Ghost Launch
You may have noticed a bit of a conundrum here. We can’t price our products to ensure we break even until we know the conversion rates. This is where the fourth step comes in. A ghost launch is when you run an ad campaign for just a few days to see what your conversion numbers look like. After you have the numbers, you can plug them into the formula and determine what you must charge for your products in order to break even.
Keep in mind that a good marketer will be flexible with pricing even past this stage. Reevaluate your pricing frequently to ensure that it is bringing you as much profit as possible.
5. Product Launch: 3-Stage Advertising Campaign
Step 5 is actually 3-steps. Here is where we begin the actual product launch and the advertising campaign that accompanies it. The launch is broken down into stages, each one designed to optimize a different part of the sales funnel.
- Stage 1 — This stage is all about optimizing the conversion rate for the landing page. At this point, you might not even have the tripwire product available for sale. Your leads may just be sent to a thank-you page when they sign up. For 10-14 days, different landing page strategies will be A/B tested to find the optimal conversion rate. We can then update the formulas and get a newer, more accurate, break even point.
- Stage 2 — Now we are selling the tripwire product and trying to optimize the sales page for it. Getting the tripwire conversion rate as high as possible is very important. Not only does closing a tripwire sale make it easier to sell the flagship, but if a tripwire product sells at the breakeven point or higher, then the advertising has paid for itself and all advertising for any further stages is free. This stage can take around 30 days or so.
- Stage 3 — Here is where we are finally ready to optimize the conversion rate for the flagship product. Hopefully at this point, you’ve gotten your ad spend breaking even during the tripwire and you can afford to get really creative here without fear of losing money on the campaign. This flexibility is where the real power of the tripwire strategy comes in.
6. Scale It Up
During all of the last stage, we were still experimenting with how to get the best conversion rates. That is not a good time to be throwing as much money as possible at an ad-spend. Now, however, we are comfortable that our rates are optimized, and we can begin to scale up the process. With the ads now bringing in more money than they cost, that extra money is used to pay for increased ad buys. Here is what the spend amounts may look like for this entire process:
- Ghost launch — $30/day
- Stage 1 — $60/day
- Stage 2 — $90/day
- Stage 3 — Double the spend every 48 hours
The reason we wait every 48 hours is to reevaluate how the economics of the sales funnel is working out. Eventually, you’ll hit a saturation point with the targeting of the ads and will need to change things up and reduce the frequency of the spending increases until the economics align with that strategy again.
If all of this seems complicated, Vivid Labs would love to help guide your business through it. We invite you to contact us to schedule a consultation with one of our expert team members. They will be glad to discuss how we can help make your product launch a successful one.