Long Tail Product Strategy
Does 20% of the customers always generate 80% of the profit?
It is conventional wisdom that a small part of the customers generates the lion part of the profit. But, is this a fact? Or, is it a result of how we used to run the business, and how we have designed the products?
Today new opportunities have opened up in a digitalized world. We can develop products with low direct running costs. Automation allows us to serve customers without inducing additional costs. The design of products can support a so-called Long Tail product strategy.
Giulia Greppi has done it. She has introduced new products into the b2b environment where 20% of customer-generated more than 100% of the profit. The challenges were enormous in primarily two areas:
• Understanding and choosing the new Target Customers
• Positioning the new products in the existing portfolio
One of the key lessons is that many customers in the "long tail strategy" are underserved. Competition is limited, and we can develop products that will be loved.
Relevant tools are:
#26 Revenue Stream Creation - Compete with your price logic, not the price level
#24 Target Market Model - Defining where to invest in Marketing and Sales
#16 Business Model Canvas - How to use the Business Model Canvas for your Product
#12 Problem Design - The core of Design Thinking methodology
#9 Value Proposition Design - To help you put down the words on your Value delivery
#7 A/B Testing - Smart concept testing made easy
#5 Customer Journey Design - Making your product BUYABLE
#4 Opportunity Scoring - Prioritization tool for Outcome driven Innovation
#2 Personas - Strategic tool to define your target audience used in operations