It’s a story that has played out time and time again. A company announces a new product. It is innovative, well positioned and competitively superior. Senior management has high expectations for the new product and has established big revenue targets. Unfortunately, winning market share with a new product is hard. In fact, according to a Forbes Magazine article in July 2011, evidence suggests that close to 80% of all products launched into the market will fail. Yet companies still invest a lot of money and personnel resources bringing new products to market with the hope that this time things will be different. Think about the last three significant products your company launched? Can you unequivocally say the product launch met or exceeded your expectations? If so, based upon what criteria? Most marketing teams have specific market share and revenue targets for their products and they rely on, and often expect the sales team to exceed those targets. Yet, according to a study published in Harvard Business Review, April 2011, only 3% of new products will achieve their revenue targets.
There are lots of reasons new products don’t make it. The product design could be poor, the marketing campaign could be weak, the timing could be off, or economic conditions could be unfavorable. Companies work hard to mitigate these risks by spending millions in R&D, customer surveys and marketing research. And yet even when millions are spent to make sure that the new product is the right product at the right time and place, companies simply make the assumption that a key element of success – selling the product – will simply take care of itself.
When most new products are launched to a sales force, there is a similar pattern that seems to be followed. New product training and marketing collateral are provided to the sales team, frequently in a large meeting setting with the appropriate fanfare. The meeting, including the training and collateral, is focused almost exclusively on product details, explaining how the product is different and better. Marketing teams work hard to prepare their presentations so that it generates excitement and gets the sales force motivated to take the new product into their territories. Marketing often makes the dangerous assumption that the sales team will know what to do with the information they have provided and that the sales reps are as excited about the new product as marketing is. In reality, this is a dangerous and often ‘product launch killing’ assumption. In many cases, sales reps may see the new product as a burden. Salespeople will have to invest time to learn the new product, they will be forced to sell to influencers they don’t have relationships with, and time will be taken away from selling the products they are successfully selling today.
Some companies have broken the code and have found ways to integrate marketing and sales functions. Not only do they provide their sales force with the basic information about the new product – they provide their sales force with a strategic and tactical roadmap explaining how to successfully sell it. In these situations, a sales force leaves the meeting with full command of key information such as: the industry trends driving the need for the product, what an ideal target prospect looks like, how key influencers will evaluate the product, how to create the need for the new product and how the new product compares to the competition. Without a roadmap to help sell the new product, salespeople are left to find their own way. The steepness of the learning curve and the time it takes for a salesperson to get it right can mean the difference between success and failure. In today’s world, a competitive edge doesn’t last long, and a new product has precious little time to gain traction. Every day counts.
We have discovered that marketing makes five critical assumptions about a sales force’s ability to win market share and grow revenues with a new product. The five assumptions are that salespeople:
- Understand the market shifts and how they impact the new product
- Know which prospects to target first
- Can identify the key influencers involved in purchasing the new product
- Know what decision criteria customers will use when making a decision to buy the new product
- Know the common objections they will face when selling the new product and how to effectively handle them
When Marketing avoids making these assumptions, and instead develops the sale forces knowledge and skills in these areas, chances of winning market share and growing revenues quickly with a new product increase dramatically.
Assumption #1 –Salespeople Understand the Industry Trends
Too often it is assumed that salespeople understand everything going on in their industry. Even more concerning, is the fact that sales and marketing leaders assume their sales team knows how to best address the trends that are taking place in their industry. Generally speaking, products meet needs, and millions of dollars are invested into market research and product development to ensure that when new products are developed they are well positioned and designed to meet the needs of its target customer base. Unfortunately, since salespeople have experience in the market and speak to customers every day, there is an assumption that sales people don’t need to be educated around the trends impacting their industry; so much of the data collected by marketing during product development efforts is rarely shared with the sales team.
If you ask five top salespeople to describe the major industry trends impacting their sales efforts you’ll be lucky if you find three answers that match. Even more alarming, if you ask those same top five salespeople to share with you what they must do differently in the field in order to capitalize or combat those trends, you’ll often find they don’t know. Instead of assuming salespeople fully understand what’s going on in their market, marketing should communicate those critical trends and, more importantly, help the sales team identify what must be done differently if the product is to be launched successfully.
Assumption #2 –Salespeople Know Which Prospects to Target First
With any new product launch, time is of the essence. Speed to market share matters and it’s important that salespeople hit the ground running. It’s no secret that top-performing salespeople use their time wisely and pursue high-potential opportunities. But high-potential opportunities for a new product may differ substantially from high-potential opportunities in the current account base. We’ve all seen it happen, a new product is launched and the first thing the salespeople do is run to their “friendly” customers, their “buddies” to talk about the new product. Even top-performing salespeople fall into the trap of assuming their “friendly” customers will be the first to buy the new product. With this approach, three or four months could pass before marketing realizes that the revenue targets they had hoped for aren’t being achieved – so much for that window of opportunity.
To avoid this, salespeople must be more adept at identifying which prospects need to be targeted first and must understand why those prospects are more attractive than simply calling on “buddies.” If you were to ask a salesperson to describe a good target prospect for a particular product, the most common responses will be measureable or quantitative criteria, such as the size of the business, amount of revenue, or number of locations, etc. Unfortunately, the quantitative components are only part of the equation and don’t provide a complete picture of whether a prospect is good or not. Qualitative criteria can be just as important. We’ve all been in situations where a prospect seemed like a good target because they were big enough or had the right number of locations, only to find out that they weren’t a good prospect for another reason. Qualitative criteria, such as being an early adopter of technology, or being an industry leader are subjective. In fact, a major challenge in determining whether a prospect meets a qualitative criterion is figuring ways to measure it.
The main point here is that it’s dangerous to assume that salespeople know which accounts are the best targets for a new product. Instead, marketing needs to help salespeople narrow their focus by identifying the quantitative and qualitative criteria shared by true high-potential prospects. Armed with this information, salespeople can hit the ground running and visit the best prospects right away.
Assumption #3 – Salespeople Know Who the Key Influencers Will Be
It is a salesperson’s job to be able to navigate an account and to identify key influencers. In existing accounts, salespeople could most certainly identify individuals or departments who have influenced their previous sales efforts. Are the same people going to be involved when the new product is launched? Will certain individuals become more or less influential with the decision on the new product? Although the answer may be different depending upon the product being launched, it is dangerous to assume that the answer is “yes,” or to assume that the salespeople already know the answer is “no.” Even top performers make the dangerous assumption that the key influencers who buy their existing products today will be the same key influencers who will be responsible for purchasing their new products. This is why we see so many sales people contact “buddies” right out of the gate with new products.
Too often sales people will spend too much time talking to the wrong person. A dangerous and often missed opportunity is not helping salespeople realize how the new product might impact various people inside the customer organization. For example, the new product might have better safety that would be appealing for the end-user. However, is your sales team aware that they should also be speaking to those who are dealing with the insurance claims or working in risk management. Salespeople are like everyone else, they tend to go where they are comfortable and speak with those individuals they are used to speaking with. But your new product may provide its greatest value to someone else; someone the salesperson doesn’t even know.
Successful launch programs not only identify the key influencers in the decision process for the new product, but they also go to the next level by identifying the value proposition of each influencer. Since the value of any product is specific to that individual’s position and role in the buying process, a salesperson would benefit by understanding the impact a new product can have on various individuals across an organization.
Assumption #4 – Sales People Know a Customer’s Decision Criteria
As previously mentioned, a typical product launch is filled with training and product collateral focused almost exclusively on product capabilities. Since competition is almost always a factor in any sales opportunity, the sales force must be prepared to address a competitive threat. When deciding between alternatives, customers use decision criteria, things such as ease of use, reliability of the product, quality of service, willingness to partner and of course price. Customers determine which criteria are important to them and compare the alternative solutions available to them.
If you ask any sales rep why they lost their last deal, a common answer is likely to be “price.” However, if you dig a little deeper and ask the question, “What were the top five decision criteria this customer used in making their decision?” you will find that many salespeople don’t know the answer. Salespeople often don’t know the answer to the question above because they assume that the prospect would use the same decision criteria that other customers use, or that the salesperson would use themselves. Individuals, even within the same company, often have a different way of ranking decision criteria. For example, price might be very important to purchasing, while ease of use is more important to an operator.
Salespeople must understand the decision criteria of its customer, how the customer ranks those criteria, and how the customer perceives the seller’s product when compared to the competition.
Assumption #5 – Sales People Know the Hurdles They’ll Face and How to Handle Them
Top salespeople are adept at handling objections, and even better at avoiding them altogether. This talent comes with time and experience. Once you’ve fallen into a trap a handful of times, you usually have a pretty good idea of how to avoid it or deal with the situation. Unfortunately, with a new product there are no cycles of learning until the salesperson has had an actual conversation with a customer, so when a salesperson falls into a trap or gets a customer objection, it will likely be for the first time. Top salespeople anticipate challenging situations and tricky objections, but it’s dangerous to assume that the sales person will anticipate correctly. Marketing can help a salesperson by preparing them with key resistance points the salespeople are likely to face when selling the new product. And better yet, marketing can provide answers for the sales people to use when faced with those challenges.
Assuming a salesperson has identified a good target prospect, and is talking to the right person about the right issues, it would be a shame to miss an opportunity because it was assumed that a salesperson could overcome a difficult objection or answer a tricky question.
Our Ignite Your Sales Strategy simulation can help your team develop high impact strategies that will accelerate their accounts through their pipeline by addressing each of the above assumptions.
Today, companies are launching more new products than ever. Most of these new products are targeted to produce significant revenue and some are “bet the company” entries to the market. Take a medical device new product launch for example. A product may take up to 10 years and an estimated $300-$500 million just to make it to market. This includes countless hours in R&D, clinical trials, human trials, and FDA approval. Yet time and again, the effort devoted to launching the new product to the sales force is often not commensurate with the substantial investment and the revenue expectations.
Winning market share with new products requires a new way of launching products to a sales force. It means avoiding the assumption that if a salesperson can sell one product, they can easily sell something else. Once a salesperson knows how to sell the product and who to sell the product to, the return can be great. If marketing doesn’t give a salesperson the insights they need to sell a new product, a great salesperson will figure it out – eventually. But if there’s a need to get a new product moving fast, eventually won’t be soon enough. Success requires doing something different. A good first step is stop assuming your sales people know what to do when a new product is launched and instead give them a roadmap for success.
Our Ignite Your Proficiency Capstone simulations can help improve the proficiency of your team’s ability to sell more strategically by creating stronger value when engaging their customers during new product launches, when facing new competitors, or when entering a new market.
Steve Gielda and Kevin Jones are principal partners with Ignite Selling. They have spent the past 15 years working with sales and marketing teams in Fortune 500 companies to improve the effectiveness of new product launches, developing sales strategy and sales coaching. They have had great pleasure in working with companies like; MasterCard, Time Warner, Boston Scientific, Kimberly Clark Corporation, Booz Allen, Smith&Nephew, Medtronic, Weight Watchers and others. To learn more about Ignite Selling, Inc. please visit www.igniteselling.com or call 703-266-7667.