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“When you Build It, Will They Come?”
In the movie Field of Dreams, Ray Kinsella hears a voice urging him to build a baseball field – “If you build it, they will come”. Kinsella builds the baseball field and they do come!! Innovators, too, respond to an inner voice. They are confident once customers know about the product they have built, they will flock to buy it. They build a product inventory, hire a sales force, and—no Hollywood ending here—incur costs that can doom the venture.
One serial entrepreneur, Niels, successfully created and sold many an innovatively designed bicycle accessory. His “inner voice” told him the urban bicyclist needed a small, foldable bike to ride from the subway to work. He designed the bike, and showed the prototype at a trade show. The response was enthusiastic. Customers told him they were eager to buy. Niels invested in a thousand bikes, an extensive ad campaign and a national sales force. But, sales were slow to come. Shortly, others made bikes at lower prices and more in tune with customer needs. Today, years later, Niels still owns many of those bikes.
How can innovators better their chances that “they will come”? Mark Leslie, formerly the CEO of Veritas Corp., argues marketers of innovative products must identify the customer and develop a nuanced understanding of that customer’s needs. This calls for frequent communication between the market and the organization. The salesperson is essential to that exchange, as the product moves up what Leslie calls the Sales Learning Curve.
The Sales Learning Curve has three stages. Over time the sales yield (defined as the average annual sales revenue per salesperson) increases. During this Initiation Stage growth in the sales yield is slow as the salesperson gains a deeper understanding of the product and learns which market segments would derive the most value from it. The salesperson devises solutions for customers along with added incentives such as discounts. Towards the end of this stage the sales yield begins to equal the cost per sales person, and the company has acquired a critical mass of customers. Next, during the Transition Stage the learning continues and the product is continuously refined. The initial customers provide references for the product and the pace of sales increases. Finally, as the company moves into the Execution Stage, the sales force size can be increased in direct proportion to sales. When the company achieves sales traction it can primarily hire traditional salespeople, who are assigned territories, price books and marketing collaterals, and are tasked to meet sales quotas.
In the nineties, Pictometry was a struggling engineering company. They did not realize it but they were stuck in the Initiation Stage and needed a salesperson. Richard Kaplan, whose background is in sales, was brought in by investors. His first step was to understand the technology. Based on conversations with customers he suggested changes to the product design. Armed with a solution he called the Geographic Information Services (GIS) departments of several communities but surprisingly there was no interest. Finally, he persuaded one of the GIS department heads to tell him why. Pictometry’s product was in direct competition with the work of the GIS departments. Kaplan was targeting the wrong customer! He then began to target the end-users such as police, fire departments, and assessors. They provided further insights to make the product more valuable. Today Pictometry is hiring traditional salespeople as they expand into new markets.
Entrepreneurs have a keen appreciation for the importance of the salesperson. They look for salespeople with a talent for communicating with engineers and product designers as well as engaging the customer. Such salespeople also exhibit entrepreneurial traits exemplified by a willingness to take risks and rapidly create solutions to meet the needs of the consumer. In the early stage of taking an innovation to market their entrepreneurial talents are a key to success.
