>> Stuttgart 04.04.2016
The fact that 90% of new products fail is a well-known fact. The main problem is that companies tend to focus too much on the development of their products and not on the reason why they are developing their products. Little time is given to really carry out market analysis, address the product USPs, develop detailed sales and marketing strategies and give thought to sustainable success models it is easy to get lost in the excitement of developing our products and services and dreaming about the big life when customers will just burst through our doors and create millions in revenue.
Reading it like this, it is obvious that such thinking is superfluous and wishful thinking, yet it is amazing how many companies do not think their sales process through from day one. Let us state here what we understand when we talk about sales. Sales is not just the process after the product or service has been created, it starts at the product concept phase. Why do we develop products? It sounds like a simple question, however as ludicrous as the question sounds, when starting up a business it is important to think about this question first.
We like to look at sales similar to the building industry, especially in the area of prestigious projects such as rejuvenation projects. Towns and communities will create invitations to tender and possible architects and contracting companies get to work creating their concepts and offers.
Alone the tender process is similar to testing the market need, however on a far higher creative level.
The concept phase is exciting, no one knows what the competition are offering, the architects are forced to think about what the community really needs, how to make the projects sustainable, energy efficient and how the projects will benefit the community for years to come. Price is often secondary if the USPs offered by the concept is exceptional.
Thoughts are made as to how to attract a great different number of users, retailers, businesses, private usage etc.
From the outset of the decision made by communities as to which project they will choose, the sales process starts. It is in the community’s interest to renting or selling off the space before the facility has even been built. The customers are part of the building process; often potential customers have the flexibility to choose which materials should be used in their space, flooring, bathrooms, connectivity etc. and how they intend on using the space.
Once the facility has been built, it does not stop there. Communities offer service and after sales management on the facilities. In addition to this prestigious facilities develop with time, this could be in the sense of expansion or change management within the facility to incorporate new types of business or even increased infrastructure for improved travel and logistics.
If we would approach our sales in a similar way, the statistic that 90% of all new products would fail would significantly decrease.
How do we sum this up into a couple of simple steps? Let us start at the concept phase. Let us reverse engineer the way we look at our products. Imagine the consumer base wrote an RFQ or gave us a tender to develop a new product. There are few requirements, the product or service will be granted to those of merit. What would your USPs be? How will you try to expand your consumer base?
How much say do your customers have in the flexibility of the final project? What about your project is environmentally sustainable? How will your product develop in the next 5-10 years? What Quality are you offering? How do you bind your customers to your project?
It is important in the concept phase to take off the helmet as product / service supplier and imagine you were the customer. Do not be scared to be creative even if the ideas seem overdone or crazy. The great thing about ideas is that unlike salt in food, you cannot have too many. It is possible to scale down. Like Architects, think about how your product will empower the customers you have. Perhaps even ask the question whether your product or a parallel product or service should be the money earner.
A number of years ago, I remember being in a meeting where a consulting company told us about a case study they had with a small company who were already selling drivers logbooks into industry with their main USP that the books cost 50 dollar cents less than the competition. In addition to this the company also offered special logistic software for smaller companies. The small software was indeed very interesting for smaller companies, it was mobile, easy to integrate and easy to build up. The pricing strategy was also cleverly established and avoided small companies having to invest in expensive hardware. The company was trying to sell the log books cheaper than the competition. The company took part in an innovation process and asked which product was really helping their customer’s more? Which product really not only lead to sustainable business, but which product would help their customer in 10-15 years. The answer of course was easy; the software. The company came to their own conclusion that the log books should be given free of charge to the customers who bought the software. To cut the long story short, the company was able to sell their software not only to existing customers and smaller enterprises, they were also able to win mid-sized companies and sell their log books to larger customers who did not need the software but were interested in saving cash in their administration.
In the next few weeks, we will write more about innovation management and methods of creativity and processes which will enable you to take a step back from focusing purely on your product and seeing your development and sales process from your customer’s viewpoint.
We look to hearing about your stories!