2018 1016.2 launching new to the world products...finding growth: #1 challenge for the c-suite...
TRANSCRIPT
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Sales Force Productivity Conference ● 15-17 October 2018 ● Ritz-Carlton Atlanta ● © 2018 The Sales Management Association. All rights reserved.
LAUNCHING NEW TO THE WORLD PRODUCTS
Presented by :
TOM STEENBURGH
University of Virginia Darden School of Business
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2Sales Force Productivity Conference© Copyright 2018 The Sales Management Association. All rights reserved.
OUR PRESENTER
TOM STEENBURGHRichard S. Reynolds Professor of Business AdministrationUniversity of Virginia Darden School of Business
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How to Sell New Products
Thomas SteenburghRichard S. Reynolds ProfessorSenior Associate Dean for Faculty DevelopmentDarden School of Business
Mike Ahearne C.T. Bauer ProfessorAcademic Director, Sales Excellence InstituteUniversity of Houston
Focus on Learning, Not Performance
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Finding Growth: #1 Challenge for the C-Suite
§ C-suite executives state that finding new sources of growth is their biggest strategic challenge
Source: McKinsey
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The value of organic growth
0%
2%
4%
6%
8%
10%
12%
14%
Bottom-third Middle-third Top-third
Revenue Growth of S&P 500 Firms
Least Organic Most Organic
Source: McKinsey
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$447
$501
$538
$508
$560
$614
$638
$647
$680
$680
$702
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
GLOBAL INNOVATION R&D SPEND IN BILLION DOLLARS
Growing R&D Spend
{57%
Source: PricewaterhouseCoopers
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Better at managing costs, than selling new products
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Better at ideation, than commercialization
Commercialization Gap
Source: Booz & Company
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Right Salespeople
Right Organization and Culture
Right Sales Processes
The best companies work differently
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Question: Does your company have a different sales process for new products?
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Buying Process: Research Benchmark§ Sample Description
Industries:TechnologyAutomotiveEnergyFinancial ServicesHealthcarePharma/Life Sciences
500+ Salespeople & Customers Across Industries
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Sales Inquiry
Need Recognition
Evaluation
Solution
Decision
New Product Buying Process
Researched addressed the following areas:
• Biggest barriers for each buying stage• Buying center members involved• Communication intensity by salesperson• Mode of communication
• In-person • Virtual
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Sales Inquiry
Need Recognition
Evaluation
Solution
Decision • 35% more time than existing products
• 32% more face-to-face meetings
• 30% more time with cross-functional teams
New products demand more time
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Sales Inquiry
Need Recognition
Evaluation
Solution
Decision
Early on, buyers focus on product knowledge
Buyers worry about:
• Does the salesperson have more information than I do?
• Is the salesperson not revealing something important about the product?
• Do I understand the product?
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“I will always listen if someone brings me a new
idea. I want to make sure we are staying current
with the best of what is being done in our industry.”
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Sales Inquiry
Need Recognition
Evaluation
Solution
Decision
Later, a big shift occurs as the buying unit expands
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Sales Inquiry
Need Recognition
Evaluation
Solution
Decision
Buyers worry about:
• How will the way I do business be disrupted?
• How do I resolve the open-ended nature of this situation?
• What will happen to me?
Buyers now focus on the disruption to the status quo
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Sales Inquiry
Need Recognition
Evaluation
Solution
Decision
Buyers now focus on the disruption to the status quo
Buyers worry about:
• What will happen to me?
• Will I regret my decision to buy?
• Can I accurately predict switching costs?
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A seemingly robust sales pipeline is clogged…
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“Salespeople will never turn down the opportunity to sell a new product. They view them as another arrow in their quiver and immediately see them as a key to their success. But whether they put sustained effort into selling it is another matter.”
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Question: How do stars behave when selling new products?
Laggards Core Performers
StarsLaggards
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Questions asked per call
TOO FEW QUESTIONS
Product features & advantages
TOO MUCH ABOUT THE PRODUCT
Source: Neil Rackham, “Why Bad Things Happen to Good Products”
Average salespeople focus on the product
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People: Research Benchmark§ Sample Description
Industry Composition %Healthcare 33%Manufacturing 28%Technology 22%Financial Services 6%Retail 6%CPG 3%Other (Energy, HR) 2%
Composition %North America 59%Europe 20%South America 11%Asia 10%
• Over 7,000 sales managers and 80,000 of their salespeople.
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Stars are more focused and spend more time
Spend 4.5 more hours a weekselling new productsRuthlessly screen prospects
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Stars see different barriers
StarsOthers
Lack of Evaluation Criteria
Switching Costs
Need to Maintain Status Quo
Lack of Descriptive Product Knowledge
Mixed Information about the Product
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Stars have different traits and characteristics
• Product Knowledge – an understanding of the product
• Market Knowledge – an understanding of market trends and competitive dynamics
• Learning mindset – a desire to improve their abilities and master difficult tasks
• Customer focus – a predisposition to meet customer needs above and beyond what is required
• Adaptability – an ability to adjust processes and styles quickly according to feedback
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Importance of a learning mindset
Time
Y0
Baseline
Performance mindset
New Product Sales
Performance Learning Mindset
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Salesperson Competencies: Self vs. Buyer
0%
10%
20%
30%
40%
50%
60%
70%
80%
Product Knowledge Adaptibility
Percent Rated Competent
Self Buyers
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Question: How well does your organization and culture support selling new products?
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Organization: Research Benchmark§ Sample Description
Sample:
675 C-Suite Executives
CEO, CFO, CMO, CSO
Respondent demographics:
~ Ages from 27-70 years
old
~ Avg. of 8 Years of Top
Management Experience
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Challenge to new product sales:Short-term focus to meet earnings targetsIn a study of 400 C-suite executives, 8 out of 10 said he or she would give up long-term value in order to smooth earnings
Source: Graham et al.
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Strategic Accounts provide long-term focus
Senior leaders are half as likely to request short-term actions in strategic accounts to manage earnings than in other accounts
Long-term growth potential is the top criterion companies use to select strategic accounts
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Collaboration between senior leaders break down key barriers to adoption
“The involvement of the board shows our commitment to customer centricity; it builds trust
between the board and the customer’s top executives and provides the board a more direct view of what customers want. This program gives the SAMs
further strength via our top management inside and outside the organization.”
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Effective networks help surface problems and spot new opportunities
“Once a business unit told me that the customer was not interested in energy storage technologies. They had asked the wrong people. I put them in contact with the customer’s R&D center, where I knew that a team of eight people worked on storage innovation, and that team was indeed interested in cooperating with us.”
© Siemens AG 2016 All rights reserved.Page 22 Hajo Rapp / CD SO
CustomerSupplier
A good Key Account Manager acts as architect of a customer specific structure generating value for people
CustomerSupplier
CustomerSupplier
From chaos ...
... and bottlenecks...
... to structure
KAM Team Supplier
Team Customer
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Middle managers can either create or remove obstacles for a product’s success.
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Audit of Effective Sales Behaviors
Identifying critical behaviors leading to new product sales
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New Product Training Needed•Manager Buy-in to Strategy • Opening Conversation: Customer Benefits and Applications• Follow-up Conversations: Barriers Across Buying Process• Buying Center Navigation: Key Members of the Buying Center at each Stage of the Buying Process• Communication Effectiveness: Mode and Frequency at each Stage of the Buying Process
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“Our salespeople could assess the customer’s needs and offer appropriate solutions. But the disruption in the digital market was so overwhelming that they did not feel clear about what they were supposed to do. They were
stuck in place until we could get them over this hurdle. To help them cope, we asked them to reflect on what their role was and was not. We found that it was helpful for them to write down their thoughts in a journal.
We needed them to recognize that they did not have to be an expert in all things.”
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Incentivizing long-term focus
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Behavior-based controls (Automotive)
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Shifting the Performance Curve:Training & Incentives
Laggards Core Performers
Stars
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Conclusion
Right Salespeople
Right Organization and Culture
Right Sales Processes
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Thank YouThomas Steenburgh, PhD Richard S. Reynolds Professor of Business AdministrationSenior Associate Dean for Faculty Development and Residential MBA ProgramDarden School of BusinessUniversity of Virginia
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Q & A PLEASE BE SURE TO SPEAK INTO THE MICROPHONE. WE’RE RECORDING!
© Copyright 2018 The Sales Management Association. All rights reserved.44
TOM STEENBURGH
Professor and Senior Associate Dean
University of Virginia Darden School of Business
[email protected]://linkedin.com/in/thomas-steenburgh-740026b