Sell it first and then you build it. I can't tell you how many times that has saved a small fortune at young companies. Worse than the loss of money can be the loss of time and the generation of distraction. New products and services cost money, time and focus. You need to make sure through quick, cheap validation that you're on the right track.
I've been working on the product management and technical development side of things for well over a decade. I've had to play the middle to the sales, product development, accounting and marketing sides of things. That sure does put you squarely in the middle of it all. A big challenge is when short term focus is the brainchild of new products and services.
Ultimately everyone starts looking to quarterly numbers. How are we doing this quarter? Are we going to hit our sales projections this quarter? In general I've found most of the sales and marketing creativity starts to drive to "goosing the quarter". This is short term thinking and short term pushes. There is nothing wrong with this and in some industries it's a constant to create sales promotions with end of quarter and end of year in mind.
But be careful when short term thinking gets applied to the products and services you offer. Many times the same people cooking up the ideas on how to goose sales and revenues in the short term ultimately start turning the conversation to product offerings.
Sales cycles are frustrating to sales people particularly if your sales cycle (normal average time from sales introduction to selling a product) is more than a few days or a few weeks long. Ultimately, the conversation starts turning from short term promotions to "you know what we need is...". That conversation then turns to what are the product changes, new products and new services that are necessary to increase sales. Necessity is the mother of invention but it tends to make for half baked offerings when it's all short term focus. In today's business environment it can be the difference between long term success and long term failure. But "long term" is the key phrase here.
It is almost always conceptually easier to build/implement something new than to actually do it. Let alone actually sell it. That is why I like quick validation experiments that cost little money and little time to validate short term thinking that is trying to be applied to long term strategy.
I was working at a venture backed start up in San Francisco in the dom com boom days and we had a lot of product lines. Sales and marketing came up to my product team and said hey we need a new POS (point of sale) offering for the lowest price target we can sell to. They had it "all figured out" because they talked to the technology group and they could piece together a single terminal system for cheap. I liked the idea but we were all skeptical because the bottom of the market didn't have a lot of money and they were a terrible credit risk. We also had a lot of other prospective products to work on.
I asked for everyone to hold off for three weeks while we validated the market. I have to tell you three weeks is not a lot of time to validate the market. There was no time, let alone budget to hire a marketing research company. So we did the research ourselves. We defined the product, features and price by working with the technology group and sales. We had marketing create some sell sheets. We worked up a telesales script and we choice a couple hundred companies in mid-tier markets (i.e. Austin and Portland, Or.). As a side note mid-tier markets are the bread and butter of marketing research firms. If you're looking for feedback on a national (US) product they start in mid-tier markets, not the largest markets. We divided up the call list and within two weeks we spoke to over 50 of our target clients to sell a product that didn't exist.
The results? It was a flop. It ends up that the low end of market that doesn't have a POS really felt they didn't need one. A good old fashioned smart cash drawer and paper did the trick. They liked the features we offered, they thought the price we offered was low and they had no concerns with working with us as a company. They just simply didn't feel they needed the product, regardless of price and all the rest.
We documented up the research results and presented the facts. Everyone agreed we dodged a bullet and off we went back on our original product plan. It was a beautiful thing and well worth the effort. Indeed it took us three weeks off task but the alternative would have been around 6 work months of effort from a half dozen people in product management and product development, over $100,000 in software development costs and tons of lost time for sales.
I strongly encourage anyone with the "great" new business or new product to take the time to do the following:
- Define the product by price, benefits and features.
- Create any sort of model such as CAD (computer aided design) drawings, artist renderings, software mockups or 3D models. Create something so people have a definite idea of what "it" looks like.
- Create a sell sheet. This is a document you'd hand over to a prospective buyer in which the product is present as a complete marketing/sales piece so it includes name, model number, benefits, features and price.
- Define who you're customers are. Get an actual list together.
- Sell the product like it already exists.
- You'll learn a ton.
- You'll have great conversations.
- Best case you'll get beta clients or preorders.
- Worst case (in my book this is also a best case) you'll abandon the project and move on to a better product or endeavor.