I learned about product management from that….
Back in the day, I used to be a product manager covering hosted email solutions for a B2B ISP in the UK. We had launched a hosted email service that was doing ok and lots of customers were asking for an email archiving service. Many of those customers used our hosted email service but there was also a subset of customers that, while they hosted their own email, wanted help with the archiving side of things. We did our research and a high level business case was built. It costed out various solutions and my recommendations were made accordingly.
A few weeks later, I found out that the CEO had made a decision that was based on the relationship with an existing supplier for a solution that didn’t work with our hosted email service – I don’t even think my business case was read!
Although frustrating, these things happen and I had to make the best out of a bad situation.
So I spent lots of time educating the sales teams on the benefits of the product and tried to ensure that the customer experience with the new service was as good as it could be. As a result, the internal impression of the launch was actually very positive.
However, over time it was clear that this product was a lemon – it just wasn’t selling. After spending some time on visits, I was happy that the sales team were talking to the right customers, the product did want the customer wanted (and much more) but when the pricing discussion happened, the customer’s jaw typically fell through the floor.
So there was something very wrong with the pricing. We had simply taken the supplier pricing and added on a margin (like we did with many products at the time) and as a result the price was just too high. Customers said they could do it themselves for less and that the archiving pricing was even more than the hosted email service we offered even thought the perceived value was much less. It just didn’t add up. We then found out our supplier had a similar pricing strategy based on the pricing from their supplier. In theory it was great, everyone got their margin but the end result was that it was too expensive and didn’t sell.
Eventually our suppliers made some changes but the prices couldn’t really come close enough to what the market was willing to pay whilst still allowing the various suppliers to get a good margin.
All of this could have been avoided if the customer’s business case for buying archiving had been understood up front. Getting this right would have saved three companies huge amounts of money in product development, training, marketing and customer good faith.
Also, if I had gathered enough evidence outlining what customers wanted from their archiving service and the price they were willing to pay, the correct supplier decision might have been made, but without it it was my opinion vs the CEO’s and we all know which way that decision will go!
