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Product proliferation is often a function of improving customer service and experience. \u00a0A customer says they love product A and would buy millions of them — if only you could change the color from black to green.<\/p>\nProduct proliferation is often a function of improving customer service and experience. \u00a0A customer says they love product A and would buy millions of them — if only you could change the color from black to green.<\/p>\n
From that point on, it’s a slippery slope to where if one customer can make a special request, then another makes a special request. \u00a0The next thing you know, you’re managing an ever increasing number of SKUs (Stock Keeping Units) and the amount of paperwork and quality system management has gone up exponentially.<\/p>\n
What you may NOT notice is that product proliferation creates a quiet profitability leak . \u00a0Over time, that customer that said they would buy millions of units, only ends up buying a couple hundred thousand. \u00a0And in a couple of years, the number of units starts decreasing and before you know it, your profit margin is as thin as a human hair. \u00a0Even worse, you may not even notice how many products you have that fall into this category. \u00a0All you see is a steadily shrinking margin.<\/p>\n
In the past, companies had two choices; discontinue the products that don’t meet margin levels and risk losing customers or keep unprofitable products and risk losing their business to bleeding profits. \u00a0This often found the sales and marketing folks in conflict with manufacturing or finance departments.<\/p>\n
But there is a way to to reach a compromise between these two sides — you can actually get your customers to choose which products they want to keep and which products they want to ditch.<\/p>\n