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How to price your subscription product: insights and examples

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Why can’t we get accessibility right? Claire Bauden (SVP Global Product Design, Global Payments Inc.)

Oleg Pravdin is head of product at Lumber, a company building
workforce management tools for the construction industry.  With
over 25 years of experience, Oleg has built market-winning FinTech
and HR Technology products and teams for companies such as SVB, EY, Wells Fargo, and Yodlee.

Oleg Pravdin

<p>As a product manager, you have not been battle-tested until you have built and killed your first product. This is a hard lesson and a challenging experience for any product manager but is a rite of passage. Sunsetting a product you have painstakingly thought about, obsessed about, built with love and care, and then had to retire due to low adoption or other challenges is an experience that gets stored in a product manager’s memory forever and potentially influences many other professional decisions down the road. This happened to me relatively early in my product career.<img decoding="async" src="//wp-content/uploads/2024/01/f0f7b0c2-3f5b-4f16-96ed-e112e083c6dd_Untitled.jpg" /></p>
<h2>The birth of a loyalty and rewards dream</h2>
<p>When I was a young product manager, I left a FinTech startup for a very large financial services company seeking security, peace of mind, and a bit more polish and seasoning. One of my first projects was to evaluate the Loyalty and Rewards platforms in the marketplace, assess the needs of our customers, and build a product strategy with a business case and a go-to-market plan to launch a loyalty and rewards offering. The product did not have to be a home run but had to drive increased retention and incremental revenue in a highly commoditized industry of Merchant Payment Acceptance.</p>
<p>I was excited and went to work, reading all of the available <a href="https://www.mindtheproduct.com/pros-and-cons-of-market-research-tactics/">market research</a> on loyalty products, chatting up baristas and wait staff at San Francisco restaurants and coffee shops, and annoying my wife by asking questions at retail stores while we went shopping.</p>
<p>I kept asking questions like, “Would you prefer to offer % off or buy nine yogurt servings and get one free?” I had a great time conceptualizing the product on a clean sheet of paper and getting to decide its future. I ambitiously thought I could build a 4-5 step self-service solution that would be easy to set up and use for any merchant in retail and restaurant industries, giving the same functionality and power of data to local mom-and-pop stores to compete with large chains and franchises with large IT and marketing budgets. This was a labor of love.</p>
<p><span style="font-weight: bold;">Challenging the norm: A controversial tech partnership</span></p>
<p>I worked with a strong team to build a business case and recommended a loyalty and rewards tech partner to help execute the development effort. The recommendation was controversial since this went against the default process of merchandising an off-the-shelf product from one of our existing partners and slapping my company’s famous logo on it to be sold by an army of outside sales folks. I passionately conveyed stories about the struggles of typical independent merchants and how we are fighting the good fight on their behalf, and that only a real product development organization can execute on that vision. I am sure the leadership team was thinking… “This guy is enthusiastic but so naive.” Anyway, I digress.</p>
<h3>The unseen challenge: Sales dynamics at play</h3>
<p>I spent many days with the dev team building this solution, focusing on ease of use and simple and <a href="https://www.mindtheproduct.com/fear-or-the-fallacy-of-intuitive-ux/">intuitive user experience</a>. I kept demoing the product to our sales reps and executives to keep the excitement going. I flew around the country (that is what you did in the olden days before COVID and Zoom 🙂), spending hours in call centers, training the support teams on the product. I was preparing for an incredible success, which never came.</p>
<p>It turned out that the sales compensation on this solution was very low vs. payment processing or highly profitable payment terminal leases. Sales teams made 4x more per deal selling legacy products vs. this new loyalty SaaS.</p>
<p>Selling the “old stuff” did not require them to demo the product, explain how it works, or provide strategic guidance around how this program fits with their current marketing efforts. The product would not sell.</p>
<p><span style="font-style: italic;">I was crushed. </span></p>
<p>So much hard work convincing the management team to bet on this solution and finding the right tech partner that could build this vision. I felt guilty that I somehow missed the boat. In hindsight, I do wish somebody had educated me on the sales component as a strong part of bringing any product to market. I had lots of subsequent successful product launches at that company before and after, but never lived down this major disappointment.</p>
<h3>Valuable lessons: Beyond product development<img decoding="async" src="//wp-content/uploads/2024/01/1af234b2-732a-483d-a7dc-14771bba6c28_Untitled.jpg" /></h3>
<p>I learned a valuable lesson &#8211; building successful products and companies is very hard and requires thinking through all aspects of the 4Ps (product, price, placement, and promotion). It also requires a little bit of luck and magic.</p>
<p>Some lessons I took away from this major failure or lesson learned out of building version 1.0 of the product and having to retire it:</p>
<ul>
<li>Sales motion and go-to-market plan are key. Great products still need to be promoted and sold.</li>
<li>Even for large, successful brands, taking an approach of “we will build it, and they will come” will not work. Doing market validation is crucial before a single line of code is written.</li>
<li>Verifying your customers’ willingness to pay is highly challenging and an inexact science. We can all fall in love with our own ideas, and building an objective <a href="https://www.mindtheproduct.com/an-approach-to-a-data-driven-product-launch/">data-driven</a> story is important as part of the product ideation process.</li>
<li>Align sales goals to the new product offering conceptualized. Unless you have a product-led sales growth strategy, making sure the sales org is</li>
<li>1) fairly compensated and incentivized,</li>
<li>2) fully bought into the solution and why it will help the sales reps reach their sales quotas.</li>
<li>Once the product fails, after trying a few things, sunset it gracefully but quickly. Wishful thinking of adding one more feature or channel, one more sales or marketing tactic, a sales spiff will not work. If the data shows that the product is a dud, kill it and do a post-mortem on why it failed to avoid making similar mistakes again.</li>
</ul>
<p>Retiring a failed product that you have lovingly built is hard. That is why the product managers’ hair turns gray. However, this rite of passage provides incredible insight, motivation, and a healthy sense of paranoia that lasts a lifetime. Keep building amazing products, my friends, or kill your failed solution quickly so you can move on with your life and do something else that is amazing.</p>
<p>Meet other product people at ProductTank, <a href="https://www.mindtheproduct.com/producttank/">find your local meet up</a>.</p>
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Failing forward: Killing your first product

Oleg Pravdin

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