“An innovative product does not arise fully formed from a flawless development process. It emerges from the give-and-take between all departments involved in its creation – purchasing, manufacturing, operations, planning and the factory floor. The same is true for the sales strategy that will bring the product to market. It, too, is an iterative process, one that involves all the departments that face customers.”
The launch of a new product is an exciting time for any company, but also a confusing one. How should you market the new item? How many sales reps should you bring on to sell it? What type of buyer should you target? Many companies, tempted by the promise of quick profits, choose to table these questions and instead grow their sales team and start selling the new product as fast as possible.
Understandable as this approach is, most experts believe that it is actually likely to stunt sales growth in the long run. Why is this the case? The most widely accepted theory is that launching a new product requires patience — patience to identify the right buyer profile, patience to craft the right messaging, and perhaps most importantly, patience to use customer feedback to tweak, iterate and improve the product.
The Sales Learning Curve
This theory was most famously presented in a well-received 2006 article from the Harvard Business Review called “The Sales Learning Curve.” According to the article, authored by Mark Leslie and Charles A. Holloway, most companies fall prey to an all-too-common temptation to “immediately ramp up sales force capacity to acquire customers as quickly as possible” once they launch a new product.
Why doesn’t this approach work? The short answer is that this aggressive sales approach doesn’t leave time for companies to truly perfect their product. Maybe they priced their product too high. Maybe they failed to add an essential feature. Perhaps there was no market for their product at all.
Whatever the reason, a failure to account for the sales learning curve is sure to lead a company to “burn through cash and fail to meet revenue expectations.” The launch of a new product is rarely a cut-and-dry process, and most companies learn the hard way that a successful selling process requires a delicate balance of patience, adaptiveness and thoughtful data analysis.
Navigating the Curve
This, of course, raises a natural question: How can your company overcome the sales learning curve? This may seem like a complicated question, but it actually boils down to a fairly straightforward strategy: Your company must prioritize learning about the new product over short-term revenue — which means improving and adjusting your product (as well as your marketing and sales messaging) throughout the early part of the sales process.
The key to doing this is to resist the temptation to quickly ramp up sales of the new product, and to instead focus on fine-tuning it (and your company’s understanding of it) as more information about its strengths, weaknesses and product-market fit become apparent. Or, as the HBR article puts it, “As customers adopt and use the product, the organization [should modify] both the offering and the processes associated with making and selling it.”
Of course, this is easier said than done. How do you know why your product isn’t selling as well as you hoped? How do you know when to sit tight with the reps you have, and how do you know when to hire new ones to accelerate the selling process? Even more importantly, how can you be sure you have a market for your product at all? Read on for the five steps to help you navigate the sales learning curve.
1. Lead Generation
First and foremost, you need to be sure there is a market for your new product, which means ensuring that you have enough leads to sell to. Before launching any product, it is imperative that you can be sure that you are not simply throwing it into a vacuum. Do you have enough potential customers to justify launching the product and training your sales reps to sell it?
[image source_type=”attachment_id” source_value=”32032″ align=”center” title=”Lead Generation” alt=”Lead Generation” width=”500″ height=”265″ quality=”100″]
In the chart above, it is clear that the company is generating enough leads to justify starting to sell a new product.
But this isn’t enough — you also need to ensure that your pipeline is not only growing, but also growing quickly enough to replenish opportunities that are exiting the pipeline. The chart below makes it clear that this hypothetical company is adding enough net new opportunities to the pipeline to create a sustainable pipeline of opportunities for the new product.[image source_type=”attachment_id” source_value=”32033″ align=”center” title=”Sales Pipeline” alt=”Sales Pipeline” width=”500″ height=”276″ quality=”100″]
3. Lost Reasons
With the knowledge that you have enough leads and opportunities to start selling to, it is time to start analyzing your product’s initial reception. The knowledge you gain from this will help you move along the sales learning curve by helping you identify shortcomings in your product or potential problems with its product-market fit. The next chart shows the common reasons that potential customers are giving for deciding not to purchase your product.[image source_type=”attachment_id” source_value=”32037″ align=”center” title=”Lost Reasons” alt=”Lost Reasons” width=”500″ height=”256″ quality=”100″]
4. Sales Funnel
Once you identify the common reasons that you are losing opportunities, you can tweak your product (or overhaul it as the case may be) to improve the product-market fit. Are a large number of opportunities dropping out because your product is priced to high? Or because it doesn’t add anything to products from your competitors?
However, knowing why you are losing opportunities might not be enough to make it through the sales learning curve. It is also important to know when you are losing opportunities, as this information can help you identify weak areas in your sales funnel. In the example below, you can see that this company is losing a large number of opportunities at the “Present Solution” stage, which means that their product might not be adequately impressing interested opportunities.[image source_type=”attachment_id” source_value=”32038″ align=”center” title=”Sales Funnel” alt=”Sales Funnel” width=”500″ height=”344″ quality=”100″]
With this information, you can identify whether your product is truly ready for the market.
5. Iterative Process
The final component of making it through the sales learning curve unscathed is checking to see whether the adjustments you’ve made are having an effect on your conversion rates. Ideally, every adjustment you make to your product and messaging should have a tangible (and positive) effect on your conversion rates.
After every round of iterations and improvements, you should check to make sure your conversion rates are improving. As the HBR article states, only by using data to help you improve your product and your messaging will you be able to truly improve your product-market fit and give your new product the best chance to succeed in the marketplace.
“Many problems are discovered sequentially, revealing themselves only after some preceding issue has been discovered and addressed. Eventually, the company learns enough to reach a level of steady sales,” the article states.
If you want to reach that steady level of sales with your new product, you might have to abandon the long-standing temptation to ramp up sales as quickly as possible and instead use patience and data analysis to help you find the right sales process for your new product. Only then can you truly conquer the sales learning curve.[image source_type=”attachment_id” source_value=”21455″ align=”center” link=”https://appexchange.salesforce.com/listingDetail?listingId=a0N3000000B3hU1EAJ” width=”632″ height=”250″ quality=”100″] [contentblock id=18 img=html.png]