By Neil Rackham, Chairman, Huthwaite, Inc.
Expectations in a sales force are usually high for new products, but all to often a salesperson is too concentrated on "bells and whistles" instead of
how the new product solves a customer's problems.
It’s an all too familiar story. A significant new product is about to be introduced.
It’s technologically innovative, it meets a clear market need and, best of all, it
leapfrogs the competition. During the final development stages, top management
becomes increasingly convinced that this could be the make-or-break product that
comes along once in a generation. The whole company is geared for the launch.
Feedback from test placements is phenomenal; initial reviews in the trade press are
little short of ecstatic. With all the customary hoopla and hyperbole, the product
is introduced to the sales force.
During the next few weeks, everyone holds their
breath waiting for reaction from customers. Salespeople report great initial
enthusiasm from the marketplace and, with a sigh of relief, management begins to
wonder whether the early sales projections that seemed so ambitious before the
launch should now be revised upwards.
Then a curious thing happens. Customer enthusiasm evaporates.
The expected
sales don’t materialize. Excuses give way to panic and the dark rumors begin.
Maybe it isn’t such a fine product after all; marketing hasn’t positioned it properly
or the sales force is incompetent. There are plenty of candidates to take the blame
but the fact is that nobody has a clue why a product with such great promise
seems to be struggling for its life. What is going wrong?
The product itself often becomes the first target for retribution. But the fact is that
some of the best products of our time have gone through exactly this rocky start.
Take three examples of fine innovative products whose initial sales were so slow
that corporate executives were convinced they had a major disaster on their hands:
 Xerox 9200: This was the first, and probably the most revolutionary, plain
paper, high volume copier duplicator. In addition to producing copies twice
as fast as its nearest competitor, it offered a dazzling array of bells and whistles
such as limitless sorting. Extensive focus group studies had indicated a
strong market need for such a product. Early indications from the initial launch
showed high customer interest and the launch team had every reason to feel
they had a winner on their hands.
I recall visiting the initial launch in Dallas
where euphoria was everywhere. Salespeople were bubbling with enthusiasm
and groups of customers attending product demonstrations were full of praise.
Trade press reviews calling the 9200 “the biggest breakthrough since
Xerography itself” were pinned on every wall. Expectations were high,
confidence was even higher. Three months later, it was a different story
indeed.
The expected orders weren’t coming. Salespeople I talked to were
subdued and seemed equally divided between blaming marketing for
positioning the product to compete with offset printers and blaming the product
for complexity and unnecessarily expensive features.
Honeywell TDC 2000: The TDC 2000 was a major advance in distributed
process control automation. It allowed unprecedented flexibility in the design
and running of industrial processes just at a time when new methods and
market demands were forcing industrial plants to become much more flexible.
Its technology was good and its timing seemed perfect.
Again, initial
enthusiasm was high from customers and companies alike. And again, sales
were agonizingly slow to materialize.
Kodak Blood Analyzer: When Kodak used its color chemistry expertise to
enter the medical market with a new technology for blood analysis, it appeared
to have come up with a winner. But the all-too-familiar story repeated itself.
The high initial enthusiasm from all parties rapidly gave way to disappointing
early sales and general despondency.
These are not isolated examples, although they are a little unusual in that each had
a happy ending and made a miraculous recovery from near death in the marketplace
just at the point where their creators were ready to give them a decent burial.
Others have been less lucky. Disappointing initial sales is an epidemic, and
sometimes fatal, childhood disease in the life of many new products and services.
There are a lot of deserving innovative products that don’t survive into
adolescence.
Some Possible Explanations
Why should promising products from highly respected companies fail despite
clear evidence of market need, strong marketing support, and real enthusiasm and
energy from salespeople? It’s a question that has puzzled generations of product
managers whose meteoric rise to corporate fame has been temporarily blocked by
slow sales of their latest offerings. There’s no shortage of opinions to account for
slow sales but very little hard data to explain the cause. Two of the most commonly
held hypotheses are:
Customer Resistance to Change
Most customers, so the argument goes, are intrinsically conservative and resist
innovation. Apart from the few early adopters, whose enthusiasm for new products
knows no bounds, the broad mass of customers sees innovation as risky and finds
new unproven products less attractive than tried and tested alternatives.
Consequently, any innovative product, particularly if it has a high technological
component, will meet resistance and will sell slowly until it is perceived as safe by
potential customers. How plausible is this explanation in the three examples we’ve
quoted? Frankly, it just doesn’t ring true.
I was associated with each of these
product introductions and my research team investigated elements of all three
launches. We talked with more than two hundred potential customers and we
watched their discussions with salespeople. Few of the initial prospects for these
products behaved like cautious customers timid in the face of innovation. On the
contrary, the majority were welcoming of the innovative aspects of the products.
Even more telling, their behavior was opposite that of classic resistant customers.
A resistant buyer usually begins with a high level of skepticism and becomes
progressively more accepting with repeated exposure to the product. That’s not
what was happening here. During initial exposure to the products, the majority of
these customers expressed enthusiasm and acceptance. As the sales discussions
progressed, however, this enthusiasm began to fade. It was the apparent initial
acceptance of innovation that gave the product creators such hope for success
and, when customer enthusiasm evaporated, made the sales results all the more
disappointing. It became clear to us that we needed to look elsewhere for an
explanation of what was wrong.
Sales Conservatism
A second, equally plausible argument suggests that salespeople are resistant to
change and are unwilling to sell innovative products that lie outside their comfort
zone. Had that been the case here, we would have predicted that:
1. A significant proportion of salespeople would be unenthusiastic about these
new products;
2. Those who had greater enthusiasm for the products would have better sales
results than those whose enthusiasm was lower.
Neither of these predictions proved correct. Strangely enough, there was a slight
negative correlation between salespeople’s enthusiasm and sales results. That’s
a surprising enough finding to deserve repeating. We found that the salespeople
with the best results showed less enthusiasm for the new products than those
whose results were mediocre. Our first thought was that we had loaded our data
backwards. Given the commonly held view that belief in the product is essential
for effective sales — especially for a new product that doesn’t have a track record
to create its own belief from customers — we were taken aback. While at first we
had no way to explain this strange finding, one thing was for sure; it didn’t seem
that the poor sales could be blamed on salespeople’s resistance to new products.
An Alternative Explanation
From watching salespeople with their customers, we became convinced that there
was another explanation for slow sales. We had developed a set of observation
tools for measuring the behavior of salespeople during calls. Using these behavior
analysis tools, we found that salespeople behaved in a fundamentally different,
and less effective, way when selling new products. First, let’s give an example of
how behavior analysis observation worked in practice.
Trained researchers
watched actual calls and recorded how often the buyer or seller used certain
behaviors. These observations were correlated with the outcome of the call to
build a profile of how successful calls differed from those that failed. Researchers
found that a strong positive correlation existed between the number of questions
asked in sales calls and whether the calls succeeded. Product features, on the
other hand, were negatively correlated with success—during failed calls,
salespeople described more than twice as many features as they did during calls
that succeeded. A full account of the methodology and the findings from studies
of 116 behaviors in 35,000 sales calls can be found in the book SPIN® Selling [1].
Compositing the data from these three product launches, we counted the number
of questions asked by salespeople during those calls where they were selling the
new products compared with the number of questions they asked customers during
calls when selling existing products. Questions are highly correlated with sales
success, so calls with more questions would be statistically more likely to succeed.
We had expected to find that the base rate of asking questions during the sale of
the new products would be higher just because of the nature of the sale. Each of
these products was complex and required a higher than usual number of questions
to understand the sophisticated customer problems that each product was designed
to solve. We were surprised to find that the number of questions asked when
selling the new products was almost 40% lower than the number asked with existing
products (see Figure 1):
The average call length when selling the new products was slightly longer than for
existing products, so if salespeople were not spending their time asking questions,
what were they doing to occupy the call time? We found that they were spending
the time talking about product capabilities (see Figure 2):
These results, which have since been replicated in studies of several other product launches, point to a fundamental problem in selling innovative products. The more
innovative the product, (and the richer it is in bells and whistles), the more likely salespeople
will sell it through features rather than through questions.
In other words, a powerful new product is likely to make salespeople product-centered
instead of customer-centered. There’s overwhelming evidence (Rackham, 1987 [1]; Rackham, 1988 [2]; Rackham and Wilson, 1990 [3] ) that sales calls having a high number of product features
and a low number of questions are likely to be unsuccessful. What’s more, the negative impact of giving product capabilities becomes greater as the selling cycle progresses. So, product capabilities
can have a positive initial impact on the customer early in the sales cycle, but this rapidly falls off as the cycle continues (see Figure 3).
During the first meeting with the customer, there is a positive
correlation between the number of times salespeople describe product advantages and whether or not the customer agrees to a future meeting. The relationship is no longer positive by the second call on the
customer. By the third call, the relationship has become negative, so that the more salespeople “pitch the product,” the less likely the customer will be to
take actions that move the sale forward. The relationship between product advantages and successful call outcome continues to be negative in the fourth and subsequent calls.
All three product launches in this case started with high customer enthusiasm that
rapidly evaporated. This would be consistent with the increasingly negative
impact of a product-centered approach wherein salespeople continue to “pitch the
product.” At least in the case of the three products quoted here, this provides a
plausible initial explanation for the slow growth in sales.
Anecdotal Evidence
There’s another way to test the hypothesis that sales growth of new products is
impeded by a product-centered approach. If it’s true that salespeople who are
product-focused are more likely to fail, then we would predict that successful
salespeople would care less about their products and more about their customers.
In turn, this would cause them to be less excited over the new products.
As we
saw earlier, we found that the salespeople with the best results showed less
enthusiasm for the new products than those whose results were poor. This would
be consistent with the hypothesis that product-focused enthusiasm damages
early sales. Like many others who have experienced the launch of innovative
products, we have a wealth of anecdotes to support this view. The most successful
Xerox salesperson in the 9200 launch described the product as “only a big copier,”
while his less effective colleagues were using terms like “breakthrough” and
“quantum leap.” Clearly he wasn’t going to let the product come between himself
and the needs of his customers. One of Honeywell’s most effective salespeople
told us, “The TDC 2000 is a great product, but all that technology doesn’t mean a
thing unless it helps my customers run their processes better.” Again, the
salesperson didn’t allow the new product to interfere with a customer focus.
Similarly, at an American Express product launch we attended in Acapulco, there
was a tremendous excitement among the sales force about a hot new product that
was being introduced. Everyone was talking about the product except for a couple
of the most experienced and successful salespeople. One of them told us, “It’s just
another product. When the fuss dies down I’ll figure out which customers need
it.” — yet another example of how highly successful people never let new products
distract them from the needs of customers. Unfortunately, most organizations
have few salespeople with such fortitude.
The majority of people selling are all too
easily seduced by innovative products and they willingly fall into the “pitch the
product” trap that almost killed the three fine products we researched.
Good News and Bad News
There is a crumb of comfort. Even product-obsessed salespeople become less
enthusiastic when sales don’t materialize and, ultimately, they will regain interest
in customers. There’s a pattern here. Many product managers have described
how their launch went through a four-step process that sounds something like
this:
- We launched a great new product; press, customers and salespeople were all
enthusiastic.
- We expected great initial sales but they didn’t happen.
- We became disillusioned and began to lose faith in the product.
- Inexplicably, just when we’d started to give up, sales began to improve.
We’ve heard this so many times that it has become for us a generic description of
the launch steps for any innovative product. When sales don’t happen, the sales
force loses their enthusiasm; all the new bells and whistles lose their luster, the
product becomes just another product and attention swings back to customers.
Salespeople stop talking and start asking. For the first time they develop customer
needs for the product and sales consequently begin to climb. Management can’t
understand why the product should start to succeed at a point where the sales
force is losing enthusiasm. Our evidence suggests that success comes because
the sales force is losing enthusiasm.
In post-mortem sessions, people talk about the long learning curve for selling
new products as though this painfully slow start is inevitable. As David
Montanaro of NEC told us, “The secret is to have deep enough pockets to ride
out the learning curve until your sales force finally gets up to speed. It usually
takes longer than you think.” For smaller companies, who may be betting their
future on a single innovative product, the luxury of waiting for the sales force to
learn isn’t a realistic option. Even for larger and richer companies, especially
those in fast moving and competitive markets, precious competitive lead time
can be frittered away while the sales force comes to terms with how to sell the
product. There has to be a better way. The good news is that neither the product focus, nor the long learning curve that results from it is inevitable. It’s relatively
easy to bring about a dramatic acceleration in sales force learning and to achieve much faster early sales results.
The remedy lies in a better understanding of the cause. Why should sales forces, heavily trained to sell through questions, suddenly
abandon their training and inundate customers with product details? The reason is simple: salespeople communicate product capabilities and details to customers because that’s exactly how the product has been communicated to them. Figure 4 illustrates the
typical process used by most organizations for communicating a new product to their sales force and, through them, to their customers.
We Have Seen the Enemy and He is Us
Most product launch events, with their associated collateral materials, focus
exclusively on product capabilities. They explain how this product is different and
better; they lovingly dwell on each new bell and whistle. The launch is designed
to sound exciting. Some very smart people put long hours into preparing a great
product pitch. So it’s small wonder that the sales force is impressed and behaves
in exactly the same way when they go out to talk with customers. How the product
was communicated to them serves as their model when they communicate with
their customers.
The trouble is that customers have only a transitory interest in
product capabilities. Unless the product solves a problem, or unless it meets a
need, then there’s no basis for a sale. It takes skillful selling, based on questioning
to uncover problems, develop needs and link those needs to the new product. As
we’ve seen from the way questions decrease and features increase when selling
new products, salespeople often fail to develop adequate needs and the sales
cycle flounders.
Product managers have only themselves to blame. The enemy, unfortunately, is
us. I recall working with a major telecommunications company helping develop
better questioning skills in their salespeople. The fundamental message we gave
salespeople—not at all unlike the message taught to most successful business-to-business
sales forces—was to sell through questions. “Don’t focus on product
capabilities,” we urged them. “Research shows that if you do, you’ll lose sales.”
The following month, the company launched an innovative new product at its
national sales meeting. I cringed in the audience as capability after capability was
described and the launch manager gave just the kind of product pitch that we had
been training her salespeople to avoid. We weren’t surprised when initial sales
were slower than expected.
A Better Mousetrap
There’s a simple acid test of the proposition that the way products are launched is
to blame for slow initial sales. If this is true, then by altering the way products are
introduced to the sales force, we should be able to positively influence early sales.
We had an opportunity to put this to a practical test. When the early results from
Kodak’s pilot region Blood Analyzer launch looked unpromising, we were invited
to experiment with a different way of introducing the product. We took a group of
12 randomly chosen salespeople from the Mid-Atlantic Region who had not been
exposed to the new product. We designed for them an alternative product launch
that was very different from the capabilities-based launch that was used with the
rest of the organization. Essentially, our launch consisted of the following steps:
- We told salespeople how the product solved different problems for various
types of customers, such as doctors, clinicians, medical technicians and
administrators. However, we did not describe the product’s bells and whistles,
warning that these product capabilities could easily get in the way of effective
selling. To dramatize our point, we covered the demonstration analyzer with a
tarpaulin so that the salespeople couldn’t see it.
- We took each customer type and looked in detail at the work problems they
were facing and how the new product could help solve or reduce each of
these problems.
- We asked salespeople to identify which of their existing or potential customers
had these problems that the product was designed to solve.
- Salespeople then listed the questions they could ask to discover whether
these problems existed and how severely the problems were affecting that
customer.
- Each salesperson then chose a customer whose problems were particularly
severe and practiced role-playing a call on that customer. They were coached to sell using questions that developed problems and needs, avoiding discussion
of the product’s capabilities.
- Finally, each salesperson planned three customer calls for selling the new product. Each call plan was based on the questions that the salesperson intended
to ask.
We hoped that by introducing the Blood Analyzer in this way, salespeople would be more effective in the early stages of the new product sales cycle.
We tracked their progress for a year, comparing their performance with a control group chosen from the
sales force who had gone through the standard “bells and whistles” product introduction. We found that the dollar sales volume generated by our new-style launch group was 54%
higher than the control group. This was convincing enough evidence for us to create a template for introducing new products to a sales force (see Figure 5).
Several companies have used this template to help them introduce innovative
products to their sales forces. Canon used it to launch the CLC 300 color copier as
an alternative to the usual capabilities-based introduction. Microsoft introduced
Office to their sales force at a National Sales Meeting using a version of this
template. During the meeting, everyone, including Bill Gates, planned sales calls
to uncover corporate problems that the Office suite of products could solve. By
the end of the meeting salespeople had planned and practiced more than 1,000
sales calls. Unfortunately, lack of control groups in each case made it impossible
to measure the impact of this new method. Nobody wanted to be left out of the
main launch just to provide us with validation.
Although we can’t show definitive
results from these two examples, we believe there is a good case to be made that
launching products using this method constitutes a proverbially better mousetrap.
It communicates the product in a way that helps sell it and speeds the learning
curve along in the process. As one of the Kodak people told us, “This is the first
time I’ve come away from a product introduction with a clear idea of how I’m going
to sell it.”
References
- Rackham, Neil. SPIN® Selling. (New York : McGraw-Hill, 1987).
- Rackham, Neil. Major Account Sales Strategy. (New York : McGraw-Hill, 1988).
- Rackham, Neil and Wilson, John, “Sales Training in the 90’s”, Journal of the
American Society for Training and Development 44(2):48-52 (August 1990).
Neil Rackham is chairman of Huthwaite, Inc., an international research and consulting company. His academic background is in
experimental psychology. While a research fellow at Sheffield University, England, he developed a range of behavior analysis techniques which has allowed precise statistical measurement of complex
interactive skills such as negotiating and selling. He has worked in over 30 countries and with more than 20 of the Fortune 100 companies. Rackham, whose works have been translated into 13 languages, is
the author of more than 50 research and technical papers. His books include SPIN® Selling and Managing Major Sales and his most recent , Getting Partnering Right. He has been a board member of several
international consulting and research organizations and is adviser on training to several large multinationals.
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