Let’s say you’ve decided to launch a new product. The reason for this doesn’t really matter; most likely, you just looked at your competitors, who in turn looked at customers, who occasionally asked for “something similar, but with pearl buttons.”
We understand that your company is already producing its main product. This is the product that is key to your business and forms the “backbone” of your business model. 80% of your customers purchase this very main product from you. If you are a farmer, they buy wheat from you along with everything else (straw, bran). If you are a car dealer, they buy cars from you and everything else (floor mats, fire extinguishers). If you sell newspapers, you can also display pens in your shop window, and if you manufacture medium-haul airplanes, you might see some demand for crop dusters as well.
The most important thing is that no matter what new product you introduce, it will always be considered worse compared to the existing range. And if it turns out to be better, then we’re already talking about a change in the “backbone.”
(*) Let’s assume that the costs of developing and implementing a new product, according to your calculations, are justified, and you have decided to proceed with it and inform the sales team.
What will happen? Sales will drop. I can tell you that for sure. But why?
Here we have three factors at play.
- Sellers will spend some time learning about the new product instead of selling.
- Enthusiastic salespeople will rush to pitch customers the new product, fully convinced that this long-awaited item is exactly what everyone needs, only to face rejections and objections. It will only be after these initial setbacks that they will calm down and return to their previous selling approach—identifying customer needs.
- Salespeople will spend less time selling the main product, which not only sells more but is also likely the most profitable for you. Otherwise, it wouldn’t have been implemented before the others.
Is it even necessary to introduce a new product? It’s hard to say, really. However, among the factors that should encourage an expansion of the product range, we can identify the following:
- A new client is already a good thing. It’s much easier to maintain a relationship with them and ask for referrals than with someone who hasn’t made a purchase.
- “Magic of Variety.” Even if you want to buy a “Berezka” television, you would go to an electronics supermarket, not to a store called “We Love Berezka.” (Let’s imagine, for a moment, that there is no internet 🙂)
- Well, if the requirements of point (*) are met, then we simply want to earn more while incurring almost the same fixed costs.
So, what needs to be done when introducing a new product?
- Organize a training session for salespeople that goes beyond just a “Wow, that’s cool” approach. It should include a detailed description of the target customer, situations that signal a need, specific niche properties of the product, statistics on competitors’ sales volumes, and so on. The goal is for salespeople to not only know the product but to sell it with enthusiasm and professionalism.
- It’s clear that we need to provide sellers with all sorts of marketing materials for customers—leaflets, brochures, catalogs, posters for the sales floor, and so on. Moreover, all this fluff should be ready in advance, not a month after the product launch. A spoon is only good at lunch.
- To quell the skepticism (which is quite reasonable) of seasoned sellers, it’s best to introduce the product to them a bit earlier than to others, possibly even during the development stage. This way, they can provide their input on the product and later support you during the presentation to the rest.
- Achieve quick small wins. It’s important to show the sales team that the product is selling and meeting expected volumes. It might even be worth organizing contests to promote the new product. These contests shouldn’t be overly motivating (keeping in mind the decline in sales); rather, they should serve as an informational prompt for the sales team about the current state of sales for this product.
- Well, to get through that temporary drop in sales, which will happen anyway, despite all my advice 🙂