Recipes for Product Packaging

Recipes for Product Packaging

  • “How can we maximize revenues while remaining price competitive?”
  • “Are we giving our sales force enough flexibility to address individual selling situations?”
  • “Does our packaging help us differentiate in the marketplace?”

Good product packaging can serve a number of important functions for enterprise software companies. It can:

  1. Signal the types of business problems your products can solve
  2. Highlight key differentiators across your solution set
  3. Create multiple points of entry to an account, for example where your solutions span different business functions and/ or economic buyers in an organization
  4. Create upsell opportunities after initial sale, for example where organizations typically start using your solutions to solve a distinct business problem and then mature and expand into new areas
  5. Enable price discrimination, that is, charging a higher price to buyers who are willing to pay it because they perceive the value to be higher

Finding the perfect packaging is somewhat akin to cooking porridge for Goldilocks. If you have too many packages, you might risk creating a customer perception that you “nickel and dime” them; too few can lead to money left on the table. Here are the tools I use to decide when the porridge is just right:

  1. Market/ customer segmentation: By organizational demographics, business pains, buyer job function, etc. What are the differences that determine what drives business value, how much value is generated, and why?
  2. Buyer analysis: What matters to buyers and what motivates them to buy? What are the political dynamics in their organization? What does the buying process look like?
  3. Buyer perceptions: What are the beliefs in the marketplace about you and your competitors? Are there perceptions about what you can and can’t do? Whether your pricing is low or high? What do buyers perceive to be your differentiators? (Note that in doing win/ loss analysis, I have gotten very different views on these issues from sales teams than I got directly from prospective customers.)
  4. Solution analysis: what sets of features and functions get evaluated at the same time? What typically gets implemented? Is there a common customer maturity model?
  5. Competitive analysis: What packages do your competitors offer and why? Does competitor selling behavior differ from what your competitors market?
  6. Industry analysis: How mature is your industry? How much experience does the market have with solutions that are similar to yours or comparable in many ways? In newer markets, offering many choices may not be a good thing in the eyes of customers.

Product packaging decisions require customer insights, good competitive intelligence, and focused effort from a cross-functional team of sales, marketing, and finance leaders. You might also need to identify some discriminating “porridge tasters” among your sales team, customers, or industry analysts. The time investment can be significant and emotions often run high, but the success translates into real improvements for your business.