The Secrets to a Successful Product Launch
Avoid costly business decisions for your laboratory
By Bob Cohen, CDT
With the rate of prosthetic material introductions growing exponentially, laboratory owners are challenged with having to make many potentially costly business decisions. For starters, owners and managers need to work through a new learning curve and determine if a given product is actually better than what the laboratories are currently producing. Will the new material be accepted? Can you sell it to customers and prospects? Before making a decision, find the answers to a few questions: Is this new product necessarily better for your customers and their patients? Can you produce and sell the product more profitably? Will it help you grow your business? For starters, if you answer yes to two of these questions, it’s worth some initial investment of time and revenue. Even better, if the answer to all three is yes, you’re probably onto something quite good.
Look Before You Leap
Breaking down the tasks of a new product launch into a logical sequence of events can save you both time and money. Simply jumping in can lead to frustration and financial loss. Also keep in mind that many materials introductions do flop. There’s no guarantee you have found the next high-profit, high-demand product. Watchful waiting of a new product evaluation and launch process may be less painful than basing the decision to invest in a new product on gut feeling and suggestions from corporate salespeople.
Progressive laboratories should have or establish a beta advisory board of dentists to test products you provide to them for free. Look for high-quality dentists, both existing and possibly future customers. Keep this group small—five is a good number. Then, try to get the board together twice a year to discuss new products, protocols, and materials. Using Internet conferencing may be a way to do this. Through these meetings, you will also acquire a wealth of new knowledge by becoming better informed on best preparation design, cement solutions, esthetics, and more.
Do Your Homework
Prior to taking on any new product, determine the cost of entry into the market. To do so, a good sales representative will be happy to provide you with the costs of everything you will need to get started. Make sure you understand ramping up will generally require additional purchases as many companies now create starter kits that contain the bare minimum of materials. Add $2000 to $3000 for technical problems, lost materials, production of some free product for your beta advisory group, and not-in-the-plan expenses. Obviously, if the new product requires new or different costly technologies, try another path. In either case, you should go through an ROI analysis. Determine how long it will take to break even and how many units you need to produce a profit. If you can’t see a clear path for the ROI, either outsource the product until the volume of work indicates profitability or forget about it. Typically, you should see a path to profitability in 2 to 4 months, provided manufacturing and sales go as planned. However, if the new product requires an extensive investment in equipment, a favorable ROI may take longer to happen. If this is the case, make sure you have planned for an adequate profit margin while outsourcing.
When you have completed the ROI analysis, bring the product to your advisory board. Do your homework so you feel confident discussing the advantages, specs, clinical handling, manufacturing workflow, and indications for any new products. Then use the group as beta testers for the product. Plan on producing 2 to 3 units for each member for free. You should also provide a second restoration (at full price) for the same unit in a material that the dentist would likely have prescribed. This is your “A B” beta test, and they will have the opportunity to gather a real comparative analysis of the new product as compared with their regularly prescribed product. Obtaining clinical opinions on esthetics, ease of use, fit, and patient acceptance is critical because if most of the group likes the product, so will other dentists.
Collect data on each unit you provide by adding a simple survey with each beta case. Have the dentist or assistant complete the questionnaire, and return it to you. You may be able to use the pooled results for marketing efforts.
Once you have completed a positive beta test with a product, you might find it easier to get a few more dentists to try the product. Try managing the sale of a new product while discussing another case with a customer. At this point, keep the ramp-up slow. It's common to manufacture a few units with a new product and have instant success. However, once in full production, problems arise.
Build sales to 6 to 10 customers for a few weeks. Produce 50 to 100 units with this small group. Make sure the bugs are worked out prior to full launch. When you determine a product is right for you and your customers, launching it comes with new challenges in the form of marketing, sales, and education. Everyone who talks with clients should discuss the new product with every account. Work on the conversion ratio until you have reached your initial sales plan goal. Growth will likely require more marketing, sales, and education.
Bob Cohen, CDT, is the President of CAP and Advanced Dental Technologies, both in Stoneham, Massachusetts.