Do 95 percent of new products really fail?

You’ve probably heard it in a launch meeting. Someone says, half as a joke and half as a shield, that 95 percent of new products fail anyway. Everyone nods. It sounds hard-headed, it lowers the bar, and if the launch goes badly, well, it was always going to.

It’s worth checking, because a number like that quietly changes how a launch gets planned.

A number nobody can source

The figure turns up in pitch decks, launch plans and conference talks, often pinned on Clayton Christensen, the Harvard Business School professor who wrote The Innovator’s Dilemma. But there is no study behind it that anyone quoting it can point to.

My guess is that it travels because it sounds tough-minded, and because it makes any launch that survives look heroic. Neither is a good reason to plan around it.

What the research actually found

In a 2013 paper in the Journal of Product Innovation Management, Castellion and Markham call the belief that 80 percent or more of new products fail “a persistent myth”. Empirical studies since 1977, they write, have put the failure rate at 40 percent or less. If 80 percent is a myth, 95 percent is further still from the evidence.

That doesn’t make 40 percent the number for your category either. Each study counted failure in its own way, and the number moves with the definition. Which turns out to be the more useful point.

Three kinds of failure

Ask three people in the same company whether a launch failed, and you can get three different answers. Each is using a different meaning of “fail”, and each meaning gives a different number.

These can disagree about the same product. Picture a new serum that hits its launch target in the first month. By the target, it’s a success. But if the people who bought it don’t come back, by the third or fourth month it’s quietly failing, and nothing in the launch report said so. So the first thing to ask of any failure rate is simple: fail by what definition?

The failure that looks like success

The flop on day one is easy to spot. The product that sells well and then fades is much harder to see, because every early number looks good. The launch sold through, the first ratings are kind, and the team has already moved on to the next one.

A company that launches often can write this risk down plainly. When Honasa Consumer, the company behind Mamaearth, filed its IPO prospectus with SEBI, it listed among the risks of new launches that their sales “may not sustain initial levels of high sales volumes”. In FY2023 alone, it launched 252 new products, about five a week. It’s a frank description of a risk every launch carries, whatever the size of the brand.

My read: that fade is the failure worth worrying about, and it gets decided at home, after the novelty wears off, long before a sales report shows it. I’ve written about why in Why do products fail at the second purchase?

A better question before you launch

I’d retire “will it fail?” altogether. Before a launch it has no useful answer, because nobody in the room means the same failure.

The better question is narrower, and harder: will the people we want buy this again, once they’ve lived with it, at the price we’ve planned? Unlike “will it fail?”, that one has an answer you can get before you scale. Start by deciding which failure would hurt you most. For a young brand, my guess is it’s usually the lost buyers, because that’s the one that keeps the marketing budget running just to stand still. Then find out whether people who fit your buyer would buy it again after a couple of weeks of real use, and at what price. A product people are happy to rebuy at one price can lose them at another, and a launch plan is the cheapest place to find that out.

What this means for your brand

The 95 percent figure has no source, so don’t plan around it. Plan around the failure that does cost brands: a product that sells at launch and then isn’t bought again. Foydy tells you, before you scale, whether people who fit your buyer would buy it again after two weeks at home, at what price, and why.