Why the Product Catalog is Actually About the Customer

By Stephen Terry, Navint Director of Subscription and Recurring Monetization Services

Rethink the Catalog: What is it for?

The incumbent way of thinking about the catalog is for marketing to worry about customer engagement; then we will just make a list of our products and the catalog is done. The product catalog is perceived and managed as a commodity function. It is focused on product, and just needs to be good enough. The SKU, or “stock keeping unit,” is the incumbent way of connecting our systems together to process items. Businesses sold the SKU, delivered the SKU, and charged for the SKU.

This all made sense in a unit-based and inventory-based world, but as we transition to more frequent digital customer engagement strategies, with a range of products, offer designs, monetization methods, and recurring revenue targets, we find that the needs and the purpose of the product catalog has changed. It is no longer about listing products that you stock and ship, but instead it is about customer engagement. The catalog is no longer a commodity, but is now a key differentiator in the quest to optimize ARR.

The Problem: How do we know there is a catalog problem?

As recurring revenue businesses grow, the incumbent approach to managing the catalog with a SKU mindset results in lack of flexibility to package, price, bundle, and discount products and services. It causes operational friction in sales, product management, delivery, and finance—not to mention confusion for the customer.

  • Teams struggle to deploy important bundles, offers, and campaigns.
  • Customers ask why they cannot buy services in a way that suits them.
  • New ideas are squashed by the inability to deliver.
  • Business leaders ask why there are 4,000 SKUs to sell 15 products.
  • Headcount mushrooms across sales, service, and billing functions.
  • Customer self-service strategies are frustrating and unattainable.
  • Customers receive either the wrong price, wrong product, or wrong invoice.

The biggest danger of all is business leaders becoming conditioned to all the constraints—rigidity becomes a habit. We find business leaders with a vision for customer engagement becoming increasingly frustrated by their inability to drive intended customer acquisitions and subsequent conversion events. They are frustrated by internal obstacles that prevent the right offers and packages being presented at the right time for customers to adopt more, buy more, and stay engaged for longer. At the same time, we find operations and lead-to-cash systems working to serve an increasingly dynamic customer engagement journey using the same old SKU methods that worked in the past. SKU explosion occurs, internal data structures become twisted, and analytics become tiresome.

The Way Forward: Catalog for the Continuous Customer

If we go back to the basics, our goal is for customers to continuously engage, buy, consume, and stay with us without churning. What we really need is to engage with customers as they grow with us and expand their adoption of our services by offering them the right options to buy new recurring arrangements at the right time. In basic recurring revenue terms, we need our processes and systems to enable the first time buying experience, and then provide upgrades, add-ons, and renewals with a superior customer experience and without internal operational friction.

The sequence of acquisition, upgrade, and add-on events makes-up the customer’s pathway through your services. Getting it right has massive pay-offs in ARR performance. Getting it right is directly dependent on the how we design and enable the product catalog. If we think of ourselves as simply selling SKUs in a shopping cart to be purchased as independent items, we are misunderstanding the essence of a recurring revenue business. Our catalog will fail, and our customers will notice.

For the catalog to be effective we need to think differently. We need to think about the most likely, and most intended, adoption pathways through our suite of products and services and the conversion events that we want to enable. Only then can catalog design functions know what they are tasked to achieve and have a good shot at success. The digital product catalog is about the customer engagement, not stock-keeping.

If you’d like to chat about rethinking your product catalog, shoot me an email at sterry@navint.com.

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