Hey you entrepreneurs, start selling your new product idea as early as possible, according to a survey report published in the May 2013 issue of Harvard Business Review (HBR).
Authors Vincent Onyemah and Abdul Ali, associate professors at Babson College, and Martha Rivera Pasquera, a professor of marketing at IPADE Business School in Mexico City, surveyed 120 entrepreneurs to learn what these veterans of start-ups would have done differently sales-wise, in the early stages of their ventures.
Proposed Sales Model for Entrepreneurs
Based on the insights offered, the authors have proposed an “Entrepreneur-friendly Sales Model” that, with the right HBR subscription, you can see here. In case you can’t see it, the model contains two cycles, an “Idea Generation” cycle and a “Product Execution” cycle.
The HBR authors wrote about developing products, but my experience with developing new services has been the same. Make sure others agree with your concept before going too far!
Test Your Concept
The authors connect the cycles through concept testing with prospects, prototype development and testing with prospects, and conditional acceptance of prototypes by prospects.Conditional acceptances means prospects would be willing to buy a product based on the prototype at a particular price, if available by a particular date.
For entrepreneurs, concept testing and conditional acceptance hurdles mean weak ideas are rejected and those that have some merit but need improvement repeat the “Idea Generation” cycle. Once conditional acceptance occurs, the “Product Execution” cycle begins, with the familiar processes of lead generation, prospect qualification, negotiation, and similar sales cycle activities occurring. Entrepreneurs culminate the cycle with deal closure, product delivery, and customer follow-up.
However, there is more to the article than a nice diagram. The authors offer some clear suggestions based on the 120 entrepreneur interviews they conducted. Here, in condensed form are the ideas that pertain to selling.
Start selling as soon as possible. Don’t wait for your prototype to be completed!
The ideas presented in this article complement those I discussed in my last blog post on Lean Start-ups. Basically, waiting to begin selling your idea until your team completes a functional prototype will seriously delay your sales effort.
I’ve found that It is no different with services. Spend too much time on specifying the details of the service without some reality testing, and you will have wasted your time.
Pay attention to the feedback you receive from potential prospects!
The entrepreneurs surveyed are telling you that your early sales efforts are a critical opportunity to get feedback on your ideas before you commit the time and resources necessary to complete that prototype. You don’t want to find out you’ve built a brilliant solution for a problem no one acknowledges. True, whether for products or services.
Watch out when offering steep discounts to your first buyers!
Yes it is tempting to practically give away the product to get your first buyers, but you may be planting the seeds of trouble. If your product becomes associated with a low price, you may have difficulty in changing the pricing model and the mind-set of future buyers. Low prices are not the way to go.
Guess what? I’ve learned that low-balling a service has no better long term success than low-balling a product. If your buying public sees you as a low cost provider, you will find yourself in a hole from which escape is difficult! You can read more about low price as a critical factor for long-term business success here.
Pick Strategic Initial Buyers, Not Friends and Family!
Entrepreneurs who made initial sales to friends and family often got a false sense of confidence in their product. Naturally, those close to you will want to help you, but what have you learned about your new product offering? Most likely, nothing.
On the other hand, entrepreneurs who reported taking the time to find strategic buyers who could help them with useful product feedback, and who could offer referrals, had better results in the market, and fewer disappointments down the road.
I’ve had exactly the same experience selling services. No, I’ve not had any family members as clients, but selling to business colleagues may mean your service offerings will not see the scrutiny applied by complete strangers.
The Bottom Line
If you believe in the lean, iterative approach to new product or service development, then you will gain from capturing your ideas in written form, as PowerPoint presentations, in Webinars and in similar forms. You can present the essence of your concept to potential buyers for a fraction of the cost of even a simple prototype.
With feedback in hand, it is much simpler to change a written concept, or presentation deck than an actual prototype. Less inertia makes you and your concepts agile.
We are ready to work with you to develop the right technical content to support your execution of the “Entrepreneur-friendly Sales Model”. Remember the advice of the HBR authors and entrepreneurs. Contact us, and let’s get started!