sku proliferation: how it happens, and what to do about it
imagine this: you have a young, hot tech company. you have a decent number of software engineers building a product you think is really going to take off. you are a good leader, maybe you lead the sales org, and you listen to your customers about what they want. there aren’t too many competing voices in the building yet so lots of feature requests get bumped up toward the top of the product roadmap. your product is developing in a way that pleases your best and most loyal customers, and your retention rate is sky high. everyone is happy! what could go wrong?
the truthful answer is…a lot. but specifically for this post, let’s talk about sku proliferation. just like a number of other pricing-related challenges, you won’t discover it’s an issue until it hits you in the face. all the product variations you create to make your customers happy need their own sku. you may even feel compelled to expand on these variations, creating the need for more engineering resources, marketing spend and customer support.
there is a breaking point for your skus; i’ve experienced it both at startups and public companies. it causes confusion across teams, from deal desk all the way to your front line sellers. what do your sales reps sell and to whom? how long does it take them to get through your list of skus so they put together the right pricing proposal for prospects? if they get it wrong, deal desk is mad, legal is mad and your sales cycle elongates.
that is just one example of what can go wrong without keeping an eye on your burgeoning number of skus. here are a few tips to keep in mind as you start to watch your product offerings grow:
hold regular alignment sessions on core product offerings (sales, product and marketing all need to be involved). identify redundancies and eliminate skus that are out of date.
measure sku performance to inform regular audits. this is easier said than done, but if you can build rigor around product level data early on, you’re lightyears ahead of the game.
listen to your sellers, because they probably engage with the price list more than anyone else in your organization. if they’re confused about your product offerings, it may be that your sku list is starting to become problematic.
good luck, and don’t let the sku-pocalypse happen to you!
