Thomas Steenburgh, a marketing professor at the University of Virginia Darden School of Business, was inspired by his early career at Xerox to discover why firms with stellar sales and R&D departments still struggle to sell new innovations. The answer, he finds, is that too many companies expect shiny new products to sell themselves. Steenburgh explains how crafting new sales processes, incentives, and training can overcome the obstacles inherent in selling new products. He’s the coauthor, along with Michael Ahearne of the University of Houston’s Sales Excellence Institute, of the HBR article “How to Sell New Products.”
Download this podcast
TRANSCRIPT
CURT NICKISCH: Welcome to the HBR IdeaCast from Harvard Business Review. I’m Curt Nickisch.
In 1979 in California, a group of engineers and executives from Apple led by Steve Jobs visited a research and development lab run by Xerox, the company better known for its office copiers.
And it was there at Xerox PARC that Jobs saw some new computing innovations including the mouse.
STEVE JOBS: And it’s good that they showed us, because the technology crashed and burned at Xerox.
CURT NICKISCH: Jobs remembered that visit in a 1995 TV interview. He said Xerox was successful at innovating… but not at commercializing those innovations.
STEVE JOBS: The people at Xerox PARC used to call the people that ran Xerox “tonerheads.” Basically, they were copierheads who had no clue about what a computer could do. And so they just grabbed defeat from the greatest victory in the computer industry. Xerox could have owned the entire computer industry today. But anyway that’s all ancient history, it doesn’t really matter anymore.
CURT NICKISCH: But it does matter to today’s guest. Tom Steenburgh started his career at Xerox. And what he saw troubled him. He wanted to know where do sales teams and leaders go wrong when they fail to sell new products?
Today, Steenburgh is a professor at the University of Virginia Darden School of Business. And along with Michael Ahearne of the Bauer School of Business at the University of Houston, he wrote the HBR article “How to Sell New Products.” Tom, thanks for being here.
TOM STEENBURGH: Thanks for having me, Curt.
CURT NICKISCH: Before we get into the topic, I want to ask you about your career at Xerox. Do you feel like that was the case that they were just developing great stuff but just could not commercialize it?
TOM STEENBURGH: Yeah. The research and development part of the organization was world-class, and the sales organization was world-class. And the great irony is that they came up with so many amazing inventions. They got their hands on none of the money.
CURT NICKISCH: Is that something you saw yourself?
TOM STEENBURGH: Yeah. The one that was amazing for me to watch is that we had these workstations called the Star workstations that had a GUI interface. It’s the type of interface that we see on every computer today.
By the time I left, Xerox was actually phasing out even internally the Star workstations, whereas Windows had just taken off, and the Macs had taken off. So it was really remarkable to watch. The sales force was great at selling their existing products and they had no idea how to sell new products. And that really, it kind of spurred me to think about this problem.
CURT NICKISCH: I wonder what the salespeople would have said at the time because you know, I know a salesperson at a medical device company and I said to him once, “Oh, you know, your company’s coming up with really cool new technologies.” And he was like, “Yeah, if they would only develop something I can sell.”
And I don’t know the business and I don’t know where the hangups are. But your article sort of has the premise that companies do a good job of coming up with innovations, but it’s the commercializing part that’s hard and I just wonder if the salespeople at Xerox would have said the same thing.
TOM STEENBURGH: Yeah, that’s a great question. I think there are two problems. One is like I have a great product and it’s hard to sell; and the latter is, am I actually developing products that can be sold? With the latter problem, I actually think companies do a better job with that. So there’s all sorts of processes that go and get voice of the customer into product design. They do a decent job there. And for sure there are products that get developed that really aren’t sellable.
On the other hand, when it goes to thinking about support that the sales organization is given for selling new products, there’s virtually none. I mean, when I go and speak publicly, a common question that I’ll ask is: you know, how long does your product development team stay on after the product is launched and available for sale in the field?
The median answer that question is zero months, you know, they just don’t stay. They go and transition to something else. So the interesting observation for me is like if we think that creating innovations is hard and we’re willing to invest in trial and error, and we go through these stage gates or we go through different trial and error process to get the product right, then why aren’t we doing the same thing once selling starts? Like, why do we imagine that in a process where there’s going to be tons of change that somehow we won’t need the same trial and error to figure out how to sell the thing in the field?
CURT NICKISCH: What are the problems then? Like what, what are companies getting wrong?
TOM STEENBURGH: I think the basic problem is that they think that once they’ve created a good product, it’ll sell itself. And they just figure I can get it to the salespeople and they’ll figure it out. So it’s an interesting transition that sort of takes place. If you ask a salesperson, you know, do you want to have new products to sell? Most of them will say yes initially because they figured I can have a new conversation with a customer; it gives me something new to talk about. Maybe I’ve been struggling to break into an account, now I’ve got something to do.
So the initial reaction both from the R&D side and from the sales side is very positive. And what people don’t sort of take into account or don’t internalize is just how different the sales process has to be to actually sell the product.
CURT NICKISCH: So what is unique about the process of selling new products?
TOM STEENBURGH: If I could sort of sum it up in a word, it’s you’re asking the salesperson to become a change agent. And you know, so you’re helping the buying organization adopt this product and to adapt itself to a new way of doing business. And that’s not a role that the salesperson plays if you’re selling an existing product because it basically doesn’t upset any of the internal processes at the buying organization.
And so that’s a big change. You’re asking the salesperson to do things that they don’t normally do. It’s a much more intense sales process. I have to have, you know, 30, 40 percent more meetings with the buying organization. Most of those meetings have to be face-to-face. I have to anticipate changes in the power structure of the buying organization. And none of that needs to take place when I’m selling an existing product.
CURT NICKISCH: It’s a safe decision, right, to say that we bought the next version of whatever we had before. It’s a riskier decision for any purchaser to say let’s try this new thing, and then it’s on you if it doesn’t work out.
TOM STEENBURGH: That’s exactly right. And people, you know, buyers make buying decisions for two reasons. They have a problem that they want to solve at their company and then they have some professional objectives – you know, they want to grow in their careers that they want to do different things. And new products sort of challenged the emotional side of the buyer.
CURT NICKISCH: You mentioned one statistic there, but you have a few more in the article that I think were really striking. You said that selling new products requires 35 percent more time meeting with customers throughout the sales cycle than they do when they’re, you know, salespeople are selling established goods and services.
Thirty-two percent more time spent in face-to-face meetings, which, you know, depending on the location of your customers can be costly in time and money. And then also 30 percent more time meeting with customers’ cross-functional teams, which is complicated, right? That’s sort of understanding different stakeholders within the company that you’re selling to and that’s all kind of demanding when the commissions may be the same?
TOM STEENBURGH: That’s right. What you’re asking the salesperson to do is to give up something today in the hopes of being able to develop the relationship more deeply to gain tomorrow.
CURT NICKISCH: Yeah. Is there a case to be made for having a separate sales force just for new products?
TOM STEENBURGH: Yeah. That’s one approach and that can be a very effective approach. No matter how you look at it, you have to give salespeople time, in the beginning, to invest in learning how to sell the new product. If it’s the same salesperson, what that means maybe is offering a lower quota this year, and a higher quota next year to make that happen. And the challenge of having one person be responsible for new and existing products basically gets down to that tradeoff: can you make it easier for a person to underperform today so that in the future they reaped the rewards of much higher performance levels.
CURT NICKISCH: Yeah. Are there certain types of salespeople who are better at this?
TOM STEENBURGH: In our research, we try to answer that particular question of like who is most effective at selling new products and how do I create conditions so that person can thrive? And one of the things that we found was a lot of success – a salesperson’s success in selling new product – depended on their mindset.
So if I had a performance mindset where what I was worried about was failing and I was worried about missing my quota, what I would do is that early on I would under-invest in learning about the new product. And so my performance wouldn’t dip all that much in the early period. But when we looked at the returns later on for that type of person, they weren’t that high. You know, they might return to the previous level. They weren’t going to really skyrocket at the end. They wouldn’t get full advantage out of out of selling a new product.
But if I had somebody who had more of a learning or a growth mindset and they really dove into learning about the new product, what we found was early – like right after the product launched – they would invest a ton of time in setting up those meetings with a client and learning about differences about who might buy and who might not buy and figuring out the power structure at the client.
They spent a lot of time doing that. Their immediate performance would suffer, but then when we looked at their performance, in the long run, it more than paid off. Their performance, in the long run, was fantastic and that’s because they could take their learnings from one client and then repeat it at different locations.
And so from a managerial perspective, it’s really, you know, it gives you a lot of agita, because you’re saying, “Geez, what’s happening today? You know, my sales – I’ve just launched this new product I was expecting to get a bump in performance. I’m getting the opposite!”
And you just need to hold on and wait for the performance to come because it’s going to take some time and it’s very different than what you get if you’re just launching a product line extension, which you actually could see returns fairly quickly. You already know how to sell it.
CURT NICKISCH: Yeah. And if you’re a sales manager, you need to know that your boss knows that that’s happening too.
TOM STEENBURGH: Absolutely. Absolutely. It needs to come from the top of the organization that relief.
CURT NICKISCH: What other mistakes salespeople make when they’re trying to, you know, introduce a new product or sell a new product to their clients?
TOM STEENBURGH: Yeah. One of the big mistakes that, that we saw when we interviewed people in the field was that lower performing reps – lower performing salespeople – what they would do is they got so excited about the product that they would go and pitch product features and they would pitch it to everyone. And so they felt like it was almost like, “Wow, I’ve had nothing new to talk about with a client for a long time. So now I’m just gonna go and talk about this product and tell them how great it is, and I’m going toreally focus on the product.” I’m going to give tons of demos to anyone who will listen.
CURT NICKISCH: That’s probably fun for the clients.
TOM STEENBURGH: It’s great for the clients. One of the great quotes that we had out of a senior leader was basically “I’ll talk to anyone to find a new idea.” This woman said, “You know, I’m always looking for a new idea. I’d be happy to talk to anyone just to figure out what’s happening in the market. But when it comes to actually buying, I’m not a great target because it’s very rare that I’ll pull the trigger on a new product.” That early sort of experience feels great to everyone. It’s just, it doesn’t materialize.
CURT NICKISCH: Yeah. Yeah. And then you question whether or not you’re on the right track if you have all this early interest, which seems promising, and then converting those that interest into sales, when that lags, all of a sudden, then everybody gets scared, I imagine.
TOM STEENBURGH: Yeah. It’s like the rug gets pulled out from under their feet and they just feel like, “Wow, it seemed like I had tons of interest. It seemed like this would be really a huge hit and it’s not going anywhere”. And then they sour on the product.
CURT NICKISCH: But you’re saying that’s normal.
TOM STEENBURGH: That’s totally normal. I think that’s where the grit comes into to get things done and also being more selective in the types of clients that you choose upfront because there are many clients that just when push comes to shove, they’re not going to buy. They’re just using you to figure out how the market’s working and you want to figure that part out early.
If there’s, if there’s one thing that a salesperson has to jealously guard, it’s their time. So the best reps sort of take a different approach and are much more selective in the clients that they work with.
CURT NICKISCH: What other traits of successful salespeople in the new product space do you think are important to identify here?
TOM STEENBURGH: There’s a whole slew of traits that we found that were associated with success. Long-term perspective was one. We sort of talked a little bit earlier about the importance of that given the type of sales process that you have. Another is adaptability: willingness to change and show that you understand how the market is changing.
In general, I’d say the best reps focus really on the client side in understanding what the client’s challenges might be in buying the new product. Whereas the lower performing reps when it comes to selling new products focus almost exclusively on a product.
CURT NICKISCH: If the best reps are the ones that are really trying to understand the clients and how they’re going to use a new product. Isn’t that something that should have been done in the design process and in product development?
TOM STEENBURGH: Yeah, you’d expect that figuring out how to sell the product would be – you would start figuring out what that new sales process would be in the design process itself. Most companies don’t do that, although I would say that if you think of the role of a strategic account manager who sometimes plays a role in the design process and certainly plays a role in the sales process, getting them involved early is a key to making that happen.
One of the things that sort of surprised me from the research was how much the emotional side of the sale played a role in the sales process. You know, so having customer empathy – really what the best reps did when, when you looked at the types of things that they focused on, the contrast between low-performing reps and high-performing reps was really stark.
In that low-performing reps typically thought the biggest challenge to a sale was product knowledge. Whereas high-performing reps realized that the biggest barriers to sale was, will the customer have a buying process that they can assess what this product can do for them? Have I thought through the power dynamics, how the power dynamics are going to change at the client side once this product gets sold?
It had a lot more to do with the emotional side of the sales. Like, “Jeez, how is this going to upset the way that I’m doing business today?” And they spent time sort of like overcoming those later barriers to sale, much less time actually talking about the features and benefits of the product.
CURT NICKISCH: So how do you as a sales manager or senior leader at a company set up a culture and systems for those types of people because you may not even have the sales reps with the traits that you need to sell new products? So there’s a lot to change here – culture, incentive systems, how you structure compensation so that they do have the ability to invest the time in developing new product leads. So let’s talk through kind of the things you need to do, sort of from an organizational perspective to create the sales team that you need to do this?
TOM STEENBURGH: There are several things that the best companies do, and I think I’d say that the thing that ties all of it together is that it’s much more focused on education.
Some of the best companies, for instance, for the frontline managers would do competency assessments both at the managerial level and at the sales rep level. So they would try to understand: what are these reps good at? What are their weaknesses? Do they have market focus? Do they have product knowledge? Do they have a long-term perspective? Are they performance-oriented or are they learning- oriented? What’s their, what’s their mindset?
CURT NICKISCH: So first of all, it’s just getting a handle on who you’ve got?
TOM STEENBURGH: Yeah. Getting a baseline of skills and competencies within the salesforce and people might think that these things aren’t teachable, you know, some of these things are more traits and we’ve actually found that it’s the opposite. There’s a lot of things that you can do to help people progress – salespeople progress – in developing these sorts of skills.
There was a manager who worked in a digital marketplace that was changing really rapidly. And when he assessed the wraps, basically when you looked at the reps, they had plenty of product knowledge. They could figure out exactly what the product could do. They could figure out how it might help a customer. They were fine with that, but when you looked at the other aspects of the sale, like do they have enough market awareness? Maybe a little bit lower on that dimension.
Did they feel like they could present this offering to the client? They couldn’t come to grips with actually selling this product. Basically what it got down to is they felt like they’d feel stupid if they got to a client and the client knew more than they did. And in a rapidly changing market that’s going to happen. You know, like it’s gonna be the case that you don’t know everything.
So a lot of the interventions that this management team put in place didn’t have anything to do with the product knowledge itself. It had everything to do with raising market awareness and helping people feel comfortable presenting options to the client. As it turned out, the reps actually had enough knowledge to present the clients – that wasn’t where the weakness was. The weakness was that they couldn’t actually bring themselves to have the right discussions with the client because they didn’t want to look dumb.
And so one of the simple interventions that they put into place was to say, “let’s start a journal.” And you describe some of your challenges with selling this product. What are you worried about? And write down what you think your responsibility with the client is and what your responsibility with the client isn’t. And by making the problem smaller for the salesperson in that way, it actually gave them the courage to have those conversations with the client.
CURT NICKISCH: Yeah, that’s super interesting and it’s got to be, I can understand how that could be very hard because it’s a different kind of relationship where, in a fast moving space with new products and new technologies, you’re essentially saying to the client, “Let’s figure out this together.” And that’s a different thing than saying we have the perfect thing for you.
TOM STEENBURGH: That’s exactly right. And having the courage to have that conversation and the sort of, the guts to go out and have that conversation is tough. I would say that for me personally, that was one of the biggest sort of revelations of doing this research. It was something I didn’t necessarily expect to find, that really to sell new products there has to be as much attention to like the emotional health of the rep is there is to the knowledge side. It’s not really about communicating knowledge, a lot of it has to do with helping the reps come to grips with a rapidly changing market. And how that will make them feel.
CURT NICKISCH: It sounds like you need a sales force for your sales force.
TOM STEENBURGH: You need a therapist for your sales force. Yeah. [LAUGHTER]
CURT NICKISCH: I want to bring this conversation back to Xerox because now that you’ve researched this, and you have a better sense of where the disconnect is happening today, you probably see your experience at Xerox differently too. Like what should, what should Xerox have done?
TOM STEENBURGH: I think there’s a lot of approaches to the problem that Xerox could have taken. One would be setting up a new sales force whose sole focus would be selling on new products and then you wouldn’t have had the conflict of either selling copiers today to make money versus selling a new product that will pay off five years from now or three years from now.
Another would be giving the reps adequate training to go in and have the right conversations in the office. One of the facts that we hadn’t talked about at Xerox was a lot of the copier business was actually at too low of a level to have the buyer make a big investment in a new product. They were fine buying copiers, but they weren’t going to buy an office full of computer systems. So they needed to train people to talk to other people at the company and have those discussions about how the power difference is going to change.
CURT NICKISCH: And that’s the difficulty when you have a long run with successful products and that much momentum – it really takes a lot of work to sort of get out of rhythm and then figure out how to sell something new again?
TOM STEENBURGH: That’s right. And if I’m making money hand over fist, why would I go through that pain? There’s easier ways for me to make money. And the problem is that eventually the old technologies wear out and you wish that you had made the investments.
CURT NICKISCH: Tom, this has been great. Thanks for coming on the show.
TOM STEENBURGH: Yeah, it’s been a pleasure. I really appreciate you having me on.
CURT NICKISCH: That’s Thomas Steenburgh. He’s a professor at the University of Virginia Darden School of Business. And he co-wrote the article “How to Sell New Products.” It’s in the November-December 2018 issue of Harvard Business Review.
This episode was produced by Mary Dooe. We got technical help from Rob Eckhardt. Adam Buchholz is our audio product manager.
Thanks for listening to the HBR IdeaCast. I’m Curt Nickisch.
