Crisis Drives Innovation: Businesses Release More Products than Last Year
By Scott Wallask
Slack creates branded sneakers with footwear company Cole Haan.
Pet insurance provider Petplan partners with The Dodo, a media brand that focuses on animals, to offer coverage via a new app.
The Westin Hotel in Boston houses students from Northeastern University as part of COVID-19 precautions.
In 2020, businesses have broadened partnership ideas and grabbed onto sparks of innovation that may not have been needed before the pandemic. In a larger sense, industries continue to push forward with offer expansion through product releases and additional features, and some of these launches will surprise us.
“With COVID-19, B2B companies have a unique opportunity to innovate because customer needs are evolving so rapidly and moving in such unexpected directions,” management consulting firm McKinsey & Company wrote in July 2020. “Such efforts may involve creating new products, modifying or upgrading offerings to satisfy market demand, or refreshing the value proposition.”
Offer expansion centers on the introduction of new features, technology integrations, and services to a product line. While these additions may appeal to new buyers, their larger target is existing customers from which to generate further revenue.
Innovation proves important during COVID-19
Strong, creative offer expansion is on display in 2020. Through September, companies have released more new products in 2020 than in either 2019 or 2018, according to research by ZoomInfo. Small businesses and enterprises have been especially successful at aspects of product launches.
When digging into why small and large businesses are releasing so many more products in 2020 than in 2019 or 2018, there are two main reasons: survival and opportunity.
Small businesses are innovating in whatever ways they can to survive the downturn in the economy, while large companies are seeing ripe opportunity to use their war chest of funds to sell new products to existing customers and test out new lines of business. Market volatility and increased innovation appear to drive additional funding to the space.
“Experience shows that companies win by investing in innovation in times of crisis,” McKinsey & Company said.
From an investment perspective, funding drives product launches, and we’re seeing more early-stage funding this year than last. Looking at the period of 150 days before and after receiving funding, a company is 20% more likely to announce a product launch after obtaining the investment, according to an analysis of ZoomInfo data.
Product launches centered around cross-selling
As mentioned earlier, 2020 has seen a flurry of new product launches, particularly during the early months of the pandemic in the U.S.
Tying in with these launches, there are also indications that businesses have more interest in cross-selling to customers — an indicator of offer expansion activity.
“Driving revenue by retaining existing customers is the name of the customer success game,” according to HubSpot. “And strategies that can drive even more revenue — like cross-selling and upselling — have huge ROI.”
“Strategies that can drive even more revenue — like cross-selling and upselling — have huge ROI.”— HubSpot
Henry Schuck, CEO of ZoomInfo, views product expansion as akin to problem solving. In other words, what other business challenges can a product solve for a customer beyond the original problem?
“Making that leap is really important,” Schuck said during a recent podcast with ChurnZero.
Leaders and stragglers in product launches by industry
Certain industries fare better than others, indicating either an easier product cycle to amend or a more pressing need for offer expansion.
The most innovative industries use processes that they have adjusted in reaction to economic and public health upheavals, and they are good at finding product expansion opportunities. Manufacturing, for example, is leaning into upsells and cross-sells as part of go-to-market efforts.
“Manufacturers are increasingly starting to offer more aftermarket services, the broad category that includes the sale and delivery of maintenance, spare parts, and other value-added services,” said Deloitte.
On the other hand, trailing industries have products that are not easily changed because the development cycle is complicated or long.
Take mining companies: They can adjust pricing based on demand, but uses of minerals and precious metals are well established.
Conclusion: Offer expansion needs speed and flexibility
Innovation seems healthy in 2020 despite the difficulties, as product releases are up significantly from the prior year.
In the current environment, companies will be most successful at offer expansion if they recognize new product uses and then quickly update or launch those services. Customer loyalty may also receive a bump when companies are quick to focus on buyer needs.
Simply put, in tough times, innovative, fast-moving companies — particularly small firms and enterprises — increase their chances for wins.
Scott Wallask is a longtime content writer; seeking stories flowing from data with a dash of skepticism; Northeastern grad
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