The Sales Learning Curve

The HBS article outlines the life cycle of selling a new product and launching additional products of existing product lines.  The article also analyzes several cases and what those did wrong when selling a new product as well as what they could have done to avoid the problems that they encountered.  The first case discussed the sale strategy of the software company Scalix.  The company began selling their email software to large corporations, but the company over estimated the marketability of their new product. Scalix expanded its sales force too quickly, over reaching its budget.  The company had predicted that their product would be easy to sell with its low cost; however, the sales team were not selling to the right people and therefore were not making the profit and sales quotas they had anticipated. Due to their rapid sales expansion, the company lost money.  Veritas, another software company made the mistake of marketing a new product line that was not ready for sale.  This mistake can also cause a company to lose money and in the case of Veritas, abandon the product completely.  
These examples can be applied to future ventures, providing a number of lessons learned to start-up companies and new product launches.  The article continues to emphasize the need for businesses to determine the number of sales representatives necessary to maintain a products growth in the market based on the three phases of a a products life cycle.  It is necessary to start slow when selling the product and once it has achieved traction in the market, sales can begin to "ramp up."

------------------------------------------------------------------------------------------------------------------------------------------------------

• Aggressively marketing and selling unfinished products too quickly will result in the potential failure of the product.
• In the case of Veritas, the company has a large and well planted base for its other product lines; but with the introduction of a new product line, the company expanded too quickly which ended in failure
• Rapid sales expansion too early after the introduction of a new product or beginning a start up company.
• Expanding too quickly will drain a company of sales and marketing finances without the proper customer backing already in place.
• The time that a product can bring revenue decreases when there is already a market for a previous product in a line.
• With a set buyer in mind, they are more familiar with the product therefore an addition to an already established product line would sell faster than a new product

------------------------------------------------------------------------------------------------------------------------------------------------------

Buyer's Viewpoint

A buyer interested in a new product is not initially as familiar with the product as the company.  A company can make the mistake of rapidly expanding the sales of a new product because they are under the impression that a customer is more interested then they actually are, causing a company to over reach.  The buyer needs time to learn about a new product, compare it to competitors, and determine if the product is reliable.  This process takes time, which means that a company needs to sell the product under these time constraints. 

Seller's Viewpoint

From the sellers viewpoint the company needs to expand its sales based on the customers interest. Thus, it is in the sellers best interest to understand and research the possible customer.

Airwide International

Airwide International, while a highly competitive company in the industry of air conditioning, and refrigeration, was unable to maintain the presence they had cultivated for over 30 years. It was imperative that the company close the sales they had initiated, and maintain the customers they had been partners with for years. It is clear from the dialogue that there was improper change management and steady communication errors from upper management. The industry was changing faster than Airwide was able to keep up. With proper change management, Airwide could have seen the changing customer needs; however, due to Airwide's narrow-minded view of the industry as a whole, the company did not adapt to changing customer needs. Additionally, the sales force received limited communication from upper management, which led to overworked sales representatives and declines in sales and customer retention. The company took on a limited scope of the industry by trying to make up for their sales decline with more sales oriented staff, limiting the importance of changing customer needs.
------------------------------------------------------------------------------------------------------------------------------------------------

• Airwide's focus was far to narrow, rather than viewing the industry as a whole, the company made a push for immediate sales increases rather than customer needs.
• Improper management lead to the companies decline
• Sales driven motivation deterred higher management from focusing on customer current customer relations
• Flexible management and sales representatives need to adapt to the changing industry and customer needs
• The company needs to focus on beating the competition, but in order to achieve this they must meet customer needs better than the competition
• Breakdown in communication between upper management and lower sales representatives led to the inability to achieve changing customer needs
• By not relaying customer needs to sales representatives, the company fell behind in trying to maintain the customer needs
• Maintaining existing customers by meeting their changing needs can, at times, be more important than gathering new customers

------------------------------------------------------------------------------------------------------------------------------------------------

Buyer's Viewpoint
In the case of Airwide International, the buyer is interested in the best services, especially when these services can cost upwards of 5 million dollars. When Airwide fell behind in sales, gathering new customers became a priority (as seen be the increased incentives for the best sales representative), leaving existing customers behind. Their attention focused on finding a service that would meet their needs, leading to these companies leaving Airwide International. Airwide seemed to become more depersonalized, which can eventually lead to pushing customers away.

Seller's Viewpoint
From the sellers point of view, their instruction was to find the most customers interested in their services and close these deals as soon and as often as possible. Customer needs were not communicated, and the sales forces became detached from the customer. Continued incentives only pushed the situation further by making the sales force less personalized and more focused on short-term sales instead of maintaining long-term industry goals by focusing on changes in customer needs.