How to Launch a New Product Successfully, Part 1: Defining Benchmarks

Written by Christina Vail | Feb 25, 2021 4:22:59 PM

Contributors: Andrew Pearl (Profitero), John Phillips (Profitero), James Thomspon (Buy Box), Sarah LaVallee (Channel Bakers), John Ghiorso (Orca Pacific)

There can be a lot of gray areas when it comes to defining the success of a new product launch online. Because each retailer, each category and each brand is different, there are no universal “silver bullet” benchmarks to track progress. However, you can set your own benchmarks based on this recommended set of early-indicator KPIs.

(Note: We recommend these KPIs are used in conjunction with standard marketing KPIs, like trial and repeat rate)

[When setting benchmarks] so much of what you’re trying to do is anticipate demand for the new product. -Christina Vail, Profitero

Recommended benchmarks for new product launches

Question to ask	Launch KPIs	Why you should track it
Is this product winning with customers?	Sales velocity	Similar to brick & mortar, this is the overall best holistic indicator of success, early on.
	Organic time to page one placement for top category keywords (Top category keywords = those that represent 80% of searches)	Will tell you how strong the product is competing in the category. Many retailer algorithms favor products that are being purchased at high-velocity rates, so the faster your product climbs in organic search results, the more likely it is winning against competitors. This is also a great indicator of your ability to achieve marketing efficiency since a high organic rank could mean spending less on paid advertising for sales.
If not, why not?	Page traffic	Will tell you if you need to increase advertising spending or increase efforts to get the product in front of consumers.
	Product page conversion rate	Will tell you if there are potential issues with your product content and/or pricing that are preventing purchase.
	Praise to complaint ratio (Can be measured using star rating and negative vs positive reviews)	Will tell you about product issues that may be creating barriers to adoption or repeat purchases.
Will this product sustain and stand the test of time?	Retailer profit/margin	Given the high costs of fulfilling and shipping products online, new items need to be profitable for the retailer. Even if a product has high sales velocity, it faces the risk of becoming delisted if it is unprofitable.

How to set benchmarks

Once you determine the metrics you want to use, here are some tips for setting reasonable, approximate benchmarks to track against:

Classify your product. First, determine if the product launch is a big bet, like a brand new item, or small scale, like a new flavor or price pack architecture of an existing item, then set benchmarks accordingly, for a like to like comparison.
Use your own portfolio and previous launches to set realistic goals. Based on your segments, look at the top products that represent 80% of your current sales and see what their performance was like in the first 60 days, 3 months, 6 months, etc. Additionally, by using your own data, you will have complete visibility and be able to focus on continuous improvement.
Use competitor benchmarks, if you can get them. Similar to above, identify the top competitor items that represent 80% sales in the category, see what their performance was like in the first 60 days, 3 months, 6 months, etc. In doing so, you may find that you're actually not investing enough to win in the category.
Don’t benchmark against brick & mortar sales. Unlike brick & mortar, products launched online don’t start with 100% awareness on the shelf. They have to build enough sales history for retailer algorithms to recognize them. Eventually, the product should move up higher on page 1 of search results, where most purchases happen.

The truth is, if a brand wants to measure [success] properly, they need [to look at] metrics up and down the sales funnel. -James Thompson, Buy Box

Sample first-year launch scorecard

(Note: Modify per your requirements)

Sales velocity	30 days	60 days	90 days	6 months	1 year
New Item SKU
Benchmark
Praise to complaint ratio	Number of 4 - 5 star ratings (Column 1)	Number of ratings < or = 3 (Column 2)	Praise to complaint ratio (Column 1:Column 2)
New Item SKU
Benchmark
Time to page one (TTP1)	30 days	60 days	90 days	6 months	1 year
New Item SKU
Benchmark
Traffic (# of page views)	30 days	60 days	90 days	6 months	1 year
New Item SKU
Benchmark
Conversion rate	30 days	60 days	90 days	6 months	1 year
New Item SKU
Benchmark
Profitability (Retail margin)	30 days	60 days	90 days	6 months	1 year
New Item SKU
Benchmark

To learn how to set your product up for success, stay tuned for the second part of this series.

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