Why New Products Fail
When it comes to new product introductions, you can either share the responsibility - or share the blame.
This article was originally featured as the cover story in Sales and Marketing Management magazine.
"It's our sales force, John," complained Chris Morgan, product manager for the 5540. "They've really dropped the ball on us. All our research showed that if we came out with a product with the capabilities of the 5540, the marketplace would jump on it. Well, we did ... and now, quite frankly, I question whether the sales force knows how to sell it."
Unfortunately, this same scenario - or one very much like it - is being played out with increasing regularity these days at both large and small companies in virtually every sector of American business. To most managers, the question is an all-too-familiar one: Why does a high-quality product that's priced right and introduced to the market at an opportune time end up as a failure?
All too often, it seems, the simplest conclusion is that the sales force is inadequate. On the other hand, there are two sides to every story. Let's return for a moment to our fictional scenario and take a look at how the sales organization perceives the 5540.
"I don't know who in the world ever thought the 5540 was our ticket to the big time," grumbled senior sales rep Pat Johnson. "I'm approaching my best prospects. I'm telling them all about the 5540 and what it can do for them. But when I tell them how much it costs, they say, 'Whoa - our problems aren't that bad.' They're not willing to spend that much money. Marketing screwed up again."Can Chris and Pat both be talking about the same product? And if so, why are their perceptions so different? How could this well-researched, high-quality product - one that has seemingly been priced according to its value - be involved in such a struggle for acceptance in the marketplace?
These kinds of questions crop up over and over with new product rollouts. In most cases, they can be addressed and answered simply by examining the process of how a new product is introduced to the sales force.
DOING YOUR LEVEL BEST
They don't want to pull their sales and management people out of the field for meetings or training. They shrink from the cost of additional tools or materials to assist in the selling process. Or they're overly optimistic about the ability of their salespeople to quickly grasp a new selling strategy. In short, they just don't realize that selling a new product may require an entirely different process from selling an existing one.
Prior to launching a new product, a company needs to analyze the relationship between the product and the customer. This relationship will in turn determine the level of the difficulty of the sale. Generally, most buyer/seller relationships fall into one of four categories:
LET'S GET REAL
Level 2 Example: Existing Customer/New Product
Then the company introduced a new system with integrated facsimile capabilities. Although the new system enabled information to be instantly faxed, the buyer - usually a records manager - wasn't evaluated on providing superior service. His job was to keep costs down.
In selling this new product, sales reps needed to do three things: 1) They had to be able to link the turnaround time to critical business issues - delays in making important decisions, meeting internal and external customer needs, and creating a competitive edge; 2) The financial ramifications of these issues needed to be quantified; and 3) New people needed to be involved in the decision-making process - people who valued the benefits of the new system.
Unfortunately, that's not what happened. Because the company had sold to the same market for years, sales management saw little reason for extensive additional training. Instead, reps were given a day of product training, viewed a demonstration, and were sent into the field where they sold to the same old people in the same old way.
As a result, reps had minimal success - except when the head of the records department saw the system as a way to enhance his or her career by furthering corporate objectives.
Level 3 Example: New Customer/Existing Product
The consulting firm's services were transferable to virtually any organization wanting to implement a quality improvement program. Market research showed that hospitals were a potent source of new business.
On the downside, hospitals constituted a challenging environment for a new product push. Decision makers in this industry expected vendors to understand the current issues facing hospitals, to know the industry trends, and to speak the language. They wanted consulting firms to have a firm grasp on process flow and the likely bottlenecks that would impede quality in a hospital environment. Furthermore, the only references holding any credence came from other hospitals.
To sell to this new market, sales reps needed to understand how a hospital is organized, how departments work together, what problems typically arise, what kinds of improvements are generally sought, and even who the hospital defines as "the customer" (usually it's the physician, not the patient).
In addition, until the firm acquired references from other hospitals, sales reps needed to show how successes in manufacturing would transfer to the hospital environment. They needed to clearly articulate their strengths in solving quality problems. They needed to determine new ways to justify the substantial human and financial investments hospitals would need to make. Finally, they needed to figure out how to compete against a plethora of smaller quality consulting firms about which they knew next to nothing.
Unfortunately, the consulting firm's new product launch addressed few of these issues. Because of the reps' lack of knowledge about the hospital marketplace, the sales process never got off the ground. The result: The firm is looking for a new, easier-to-penetrate niche.
Level 4 Example: New Customer/New Product
But the computer industry never stands still, and new technology in networking and file sharing became available. The company decided to introduce a new UNIX system that linked workstations and enabled file sharing. The system also offered email (which was radically new at the time), database management, key word search, and a host of other features.
Meanwhile, the company's customer base was changing. The Information Technology (IT) group was calling most of the shots now on computer purchases throughout the organization. Sales reps had few, if any, contacts in this group.
In addition to knowing everything about the new product - how it worked, what it could (and couldn't) do, how to demonstrate it, and how it connected with other computer products - sales people needed to know the new IT customer and their key concerns. They needed to know how to get appointments with senior IT people, how they evaluated computer systems, and how upper management influenced the purchasing decision.
To its credit, the company realized salespeople needed intensive training on the new product. They developed a comprehensive program to bring reps up to speed on the system's capabilities and its competitors.
However, they left out key information on the customer, their needs, and the sales process. One frustrated sales rep kept asking, "What problems does it solve? Why would someone buy it? How do they buy it? The answer was a familiar one: "As a salesperson, that's your job to figure out."
This, in a nutshell, was the weak link in the roll-out of this new product - and the ultimate cause for its poor showing in the marketplace.
THE HOLE THING
Training, if there is any, involves giving reps all the critical data they need to speak intelligently about the new product with customers. If the product is particularly complex, reps are also trained on how to use, demonstrate, configure and order it. For the most part, however, almost all training is product-focused, with a heavy emphasis on features and benefits.
The problem with this approach is that it prepares the sales rep to pitch the new product. Why is this a problem? Pitching means the sales rep does the majority of the talking on sales calls. Yet research into successful selling shows the most effective sales reps are those who ask the best questions and seek to understand the customer's needs. They talk only when they're confident they can share information on how their product can have an impact on the prospect's business.
When sales reps talk on-and-on about the new product, they're digging themselves a hole. Invariably, the customer asks about the price or if the product has specific capabilities. In essence, the customer takes control of the selling process and sales reps find themselves trying to squelch objections and get back to problem solving.
At this point it's usually too late. The customer has already decided the price is too high or that features are inadequate. Needs haven't been identified. The prospect is lost.
This happens every time the sales rep focuses on the product instead of customer's needs. New product launches that hype features and benefits prepare the sales rep to do just that, ultimately leading to failure.
What happens when companies fail to recognize that selling new products differs substantially from selling existing products? Here are several likely outcomes:
ONE STEP BEYOND
If this hand-off is done correctly, the organization can capitalize on its "window of opportunity," keep the competition at bay, increase its profitability and ROI, and achieve its projected sales results.
The most critical element in ensuring an effective hand-off is the collaboration of the marketing, sales, and training departments. The participation of all three groups in introducing a new product is crucial to its success. Given this, it's paramount that grudges and infighting from previous introductions and conflicts be put aside.
The goal of the new product launch team is to determine exactly what the sales organization needs in order to bring the product to its customers in a way that generates the desired results.
Initially, these teams should specifically identify what the salesperson must know in order to sell the new product. This includes research, compiling, and delivering all the requisite product knowledge and training, as well as addressing the following questions:
1.Design tools for the sales rep that highlight the customer's current situation, potential needs, the sales process, and appropriate strategies and tactics to use on the sales call.THE HIGH COST OF FAILURE
Companies that fail to prepare their sales forces with the knowledge and skills needed to sell their new products are forever destined to struggle for marketplace acceptance. By setting themselves up to fail on their new product launches, it's unlikely they'll achieve projected sales results.
On the other hand, companies that arm their sales forces with the critical knowledge and skills needed to sell a new product will be able to capitalize on their "window of opportunity," maximize their sales results and achieve the success they deserve - and have earned.
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