In today’s marketplace, innovation is typically a huge selling point for new products. But in business-to-business dealings, it can often be a hurdle, and one that very few companies have addressed properly, according to Dr. Michael Ahearne, professor and C.T. Bauer Chair in Marketing at the University of Houston.
“Companies like Dell, Xerox and IBM produce sophisticated solutions, which they can only get to market through their sales force,” said Dr. Ahearne, who visited Stevens Institute of Technology earlier this month as part of the School of Business’ Heath Lecture Series. “In adopting new products, the buyer has to consider how their business dealings may be disrupted or impacted. But, aside from a slide deck that talks about product features and benefits, the sales team is given very little information about how to sell this innovation to the marketplace.”
In a series of studies funded by 3M Corporation and conducted together with Dr. Thomas Steenburgh from the University of Virginia’s Darden School of Business, Dr. Ahearne found the most successful companies do more to bridge the divide between the product development process and sales. By keeping the R&D team around for a year or two after the initial product launch, companies can smooth the commercialization process and address issues that might arise when getting a product to market.
The study also looked at individual salespeople, who need to have what Dr. Ahearne calls a “learning mindset” in order to adapt to the challenges of selling innovative products. He found the best salespeople spend more time up front identifying viable prospects and persistently targeting those customers. There’s a dip in initial sales, but it pays off in the long run as they use those experiences to develop new strategies.
But other salespeople will revert to selling existing products rather than weather that initial slump, often because they are incentivized to meet short-term quotas. Companies can use assessments and other metrics to determine their best new-product salespeople and prioritize innovation, which Dr. Ahearne said will reap greater returns.
“You have a very short time frame to sell a new product before competitors put out a copycat or reinvent it,” he said. “The window to capitalize on innovation is shrinking, so companies need to be very effective at how they sell that product to get traction in the marketplace.”
Using data to improve pitches
Dr. Ahearne’s interest in data-driven sales strategies stems from his time working at Eli Lilly in the 1990s, when pharmaceutical companies were first getting access to data that showed them what medications doctors were prescribing.
“Pharmaceuticals came into really big data before almost all other industries,” he said. “I was working on a lot of projects that used big data to solve sales-related problems, like determining the size of the sales force and pinpointing which customers to target.”
Before that, he was in another industry undergoing its own data revolution: professional baseball. Dr. Ahearne pitched in the minor leagues for the Montreal Expos organization right out of high school in the 1980s, shortly after the term “sabermetrics” was coined and predictive analytics were starting to gain traction in the sport.
Both of these fields showcase data’s importance in helping teams succeed — whether the goal is reaching sales targets or the playoffs. Managers can use data to make smarter choices, which Dr. Ahearne believes is the best way to stand out in today’s workplace.
“The people who differentiate themselves and move up are the ones who are able to make decisions amid uncertainty,” he said. “Anyone can make a decision when they have complete information. But if there are unknowns and you can compile the data to figure out what to do, that’s what will set you apart.”