Experiences And Learnings In Selling New Innovations To Companies
Editor's note: This post is a guest post by Ykä Marjanen, sharing his thoughts as an entrepreneur in selling new and innovative products early on in the startup life cycle. If you'd like to get your thoughts and experiences out to our community, contact us at editor@arcticstartup.com.
After 10 years of so called professional life I‘m ready to make honest analyses of my experiences in business, especially in the startup world. I’ve been working around innovative products and services my whole career, first as a researcher and the last five years in two startups as a co-founder, owner, manager, programmer and a salesman. I’m an engineer and not so fond of selling. But, when selling new innovations, I believe that the most convincing salesmen are the engineers. We just need to better understand the buyers and their reasons to buy, and also motivate ourselves to go out to meet them.
Selling innovative products and services is different than traditional sales. Either the technology, the market or the way of using the product is new and will most likely disrupt the user’s current behavior. Also in the case of a startup you rarely have an established user base or brand, thus there is an extra effort to even get to meet potential buyers. This requires strategic analysis and understanding of few key concepts, like the differences between the early markets and the main markets.
After several research projects at VTT I got frustrated on how cumbersome it was to conduct vibration measurements from vehicles in the field with the current measurement equipment. The equipment was too expensive, sensitive to weather and limited in several important ways (like the battery life). Also the analyses took a long time, because it was practically a completely manual process. At the same there was a growing need to measure more vehicles in field to better understand human comfort.
I founded Vibsolas with a fellow researcher and we left VTT to develop a new type of measurement equipment and analysis software. Our vision was that the measurements and analyses can be made hugely more efficient if the documentation is made electronically and automatically synchronized with the sensor data. So we created a complete system for handling this. We also created a new measurement device, which was completely autonomous and worked several weeks without an external power source. We didn’t even include a switch to turn it off to make it dead simple to use.
When we started selling the first version of the product, we went through practically all machine manufacturers in Finland and even some abroad. We were enthusiastic and thought we’ll rock their world. But we had a hard time of getting any sales. Lots of companies were interested, but rarely anything materialized. We did some consultation projects, but didn’t find a way to sell the basic product without customizing it to every customer.
We later realized that we’d made some classical mistakes. First of all, most people don’t buy “innovative” and “new” products, just the opposite. If you are disrupting their current way of doing work, then resistance is great, even though your product has real benefits. We should’ve analyzed to whom we are selling to and tuned our marketing message accordingly. For most people you need to convince that your product will disrupt their work process as little as possible (don’t try changing their whole world, just improve it enough).
Also we should have focused on a small enough niche market, instead of going after all manufacturers. We tried to sell it as a general measurement system, but it should’ve been sold as a specialized system for testing vehicle seat suspension related to human comfort in field. This way we would‘ve known our customer profile better and gained a leadership in one market. Because we didn’t select a niche market, we also had hard time of understanding how to change our message and the product to fit the market better.
One of the greatest revelations to me has been the Technology Adoption Life Cycle (Crossing the Chasm, Geoffrey Moore). The revelation for me was not that there is a gap between the early markets and the main markets, but that the people in the main markets are very conservative and you need loose that startup stigma and change your marketing message before they accept you. In practice this means that you need to convince them that there is a whole market with competitors. It is important that you have competitors.
Young startups should first focus on finding the innovators and visionaries who buy untested and unreferenced technologies. This way you can get some real income and momentum to raise capital for going after the big market. The hard part is that rarely the early markets are big enough and you have a pressure to show huge growth. However, when moving from the early market to the main market, you most will likely have low growth years. It is essential, that you acknowledge this in your plan. No company has been an overnight success and had a continuous linear growth (except few lucky ones).
In our case, we finally realized that the complete system was too big of a change and started selling our measurement device with simple software with only few features. We also focused on long term autonomous measurements, which was our killer feature anyway. Since then we have pivoted more radically to wireless motion sensors and now focused on bringing wireless motion based alarm systems to selected niche markets. How we have come to this point is a long story and not very clear one for me neither.
I definitely recommend reading the Crossing the Chasm and really think about the marketing message you are making and to whom you are making it to. If you sell to everyone, then you’ll get easily confused on how to improve your product and you’ll loose direction.
Please share your own experiences.
Ykä Marjanen
A Finnish entrepreneur passionate about early phases of startups and product innovation. Degrees from engineering and human sciences and experience in living and working in several countries. Currently working in two startups and also as a part-time research scientist and an entrepreneurial advocate. More info on my linkedin profile http://www.linkedin.com/in/ykamarjanen.
Interesting article Ykä, though I don't fully agree that the engineers are the best and most convincing salesmen.
Here's my general rule of thumb experience from selling startup products around the world; the assumption here is that you have got yourself a little bit of PR and name before;
* Selling in Finland; you are just some guys from Helsinki/Oulu/where-ever
To succeed; must have previous trusted relationship with the buyer, or must have endorsement/reference from a bigger company preferably from abroad, or must be lucky
* Selling in Europe; you are just a small startup from Finland
To succeed; must have a superior product and must work damn hard
* Selling in North-America; you are NOT from US
To succeed; must have local US based sales folks
* Selling in APAC and rest of the world; you are a famous company from Europe
To succeed; must have travel budget and must have a person on board speaking the local language.
So in general; the further away from home you are the easier (and much more fun) the sales is, assuming you have the resources and things otherwise in place.
For a technology company the attitude that you have to first win the home market before going abroad is a thing from ancient history. Be bold, go far.
Great article! I am a fan of the technology adaptation cycle too and also completely agree with the importance of focus.
I disagree a little bit with your notion that engineers would make the best salespeople. I think one can become an excellent salesperson with any background by focusing on the most important selling skills, which in my opinion are the ability to ask questions and to listen to the customer. Equally important is the ability to control one's own attitude to handle rejection and in being persistent enough. Firther on its also useful to master some basic wording for getting appointments and askig for the sale.
What I wanted to ask - is your thoughts on the claim that is often made anbout Finnish entrepreneurs. It's often said that they spend too long time in developing the product before meeting the customers and getting early feedback from them?
Kari
Thanks for the comments! This is exciting to have my thoughts out in the open for the first time.
I think engineers are good because they are enthusiastic about the technology and the product. They (we) are like children :) Salesmen and others are more jaded.
However, our schooling system tries to make engineers "boring" and technical and does not emphasize the creativity and selling ideas.
So engineers have the potential, but sadly do not have the tools to get their enthusiasm accross to non-engineering people.
I would like to change the way engineers are taught and make them take more art and speach classes than now.
The enthusiasm for the technology is clearly an asset for person in product development, but in sales it's not an advantage. Take any book about selling and you will see that the advice always is not to bore the prospect with the technical features of the product. Instead simply tell about those benefits of your product that relate to the prospect’s problems which you have identified by asking the questions. (Trust me - this is on every book ever written about sales.)
I understand Kari your point. I should have specified that when you are selling to early markets (innovators and visionaries) then engineers have much more common language to explain the potential and concept.
When selling to mature markets and majority then of course engineers make "bad" sellers as they focus on the product, not on the whole product.
However, in startups the selling is done mostly to innovators and visionaries and for that purpose it is too early to hire a seller, because you have not yet understood your market.
Ykä, check out the article and discussion at Hacker News; http://news.ycombinator.com/item?id=2921081
I agree with you that hiring a sales guy too early does not make sense, hence we the entrepreneurs have to be able to sell. But as the linked article and Kari spot on points out, selling is so much more about softer things than being product/problem area expert. This is especially the case with startups as they don't have the trusted brand yet.