How do you know if a product is a bleeder?

Product Bleeders in Your Portfolio

The first step in addressing product bleeders is identifying them. Here are some key metrics and tools you can use to spot these underperforming products. Understand that underperformance can be temporary. It can be a question of repositioning the product OR it can be a larger deviation from the market.

Key Metrics to Monitor:

• Sales Performance Over Time: Track the sales history of each product. Look for items with declining or consistently low sales.

• Profit Margins: Calculate the profit margin for each product. A low or negative margin is a red flag.

• Customer Feedback and Return Rates: High return rates or negative customer feedback can indicate a product that’s not meeting expectations.

• Production and Distribution Costs: Assess how much it costs to produce, market, and distribute each product. If these costs are high relative to the product’s sales, it may be a bleeder.

Tools and Techniques:

• Financial Reports: Use your income statements, balance sheets, and cash flow statements to get a clear picture of each product's performance.

• ABC Analysis: This method categorizes products based on their contribution to overall revenue, helping you identify the most and least valuable products.

• Pareto Principle (80/20 Rule): Often, 20% of your products generate 80% of your revenue. Identifying the other 80% can help you spot potential bleeders.

Strategies to Address Product Bleeders

Once you've identified the product bleeders in your portfolio, it's time to take action. Here are some strategies to consider:

1. Revamp the Product: Consider updating or improving the product based on customer feedback. This could involve changing the design, adding new features, or improving quality. Sometimes a small tweak can turn a bleeder into a profitable item.

2. Bundle or Discount: One way to move underperforming products is to bundle them with more popular items. Offering a discount on a bundle can make the bleeder more attractive to customers and help clear out inventory.

3. Phasing Out: If a product consistently underperforms despite your best efforts, it might be time to phase it out. This allows you to focus your resources on more profitable products.

4. Reevaluate Pricing: Sometimes, the issue with a product isn’t the product itself but the price. Conduct a market analysis to see if a price adjustment could make the product more competitive and profitable.

Real-World Examples of Addressing Product Bleeders

Example 1: The Boutique Clothing Line A boutique clothing retailer noticed that one of their seasonal collections wasn’t selling as expected. By analyzing customer feedback and sales data, they realized the pricing was too high for the market. After adjusting the prices and promoting a limited-time sale, they managed to clear out inventory and reduce their losses.

Example 2: The Tech Gadget A tech company found that one of its older gadget models was no longer selling well, leading to excess inventory and storage costs. Instead of phasing it out immediately, they bundled the gadget with a newer model at a discount. This strategy helped them move the old stock while boosting sales of the new model.

Tools and Resources to Help You Manage Product Bleeders

To manage product performance effectively, consider using the following tools:

• CRM Software: Tools like Salesforce can help you track customer feedback and identify trends in product performance.

• Inventory Management Systems: Software like TradeGecko or Unleashed can help you monitor stock levels and identify slow-moving products.

• Accounting Software: QuickBooks or Xero can provide detailed financial reports that highlight underperforming products.

For those who want to dive deeper into product management and financial analysis, consider reading books like “The Lean Product Playbook” by Dan Olsen or taking online courses in financial management for small businesses.

Take Control of Your Product Portfolio

Identifying and addressing product bleeders is crucial to maintaining a healthy and profitable business. By regularly reviewing your product portfolio, you can ensure that all your offerings are contributing positively to your bottom line. Don’t let product bleeders drain your resources—take action today to streamline your offerings and boost your profitability.

Question?