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Sales White Paper: Winning The Product Launch
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Winning the Product Launch WHITE
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Paper! Copyright ©TheTAS Group. All rights reserved. 1 BACKGROUND OF STUDY Purpose of the Study We undertook this research project to identify and understand the gaps in alignment among executives, marketing and sales during new product launches. Study methodology The research team conducted 75 in-depth telephone interviews with product managers, sales managers and salespeople, and executives who have been directly involved in a recent strategic product launch. The researchers first interviewed senior executives and explored organizational integration, strategic objectives, tactics and results of recent launches. At the end of the interview, the executive cited two specific launches to analyze Winning the Product Launch INTRODUCTION An Investigation of Product Launch Activities Involving Both Marketing and Sales The pressure to successfully launch new products is intense. Marketing and sales are expected to launch more products, more often, while dealing with shrinking product life cycles and multiple sales channels. And more is at stake – companies are increasing their investment in both product development and product launches.What can you do to ensure a successful product launch? We researched the factors that contributed to the success and failure of 22 product launches, focusing on the interaction between sales and marketing departments. In the course of this paper, we will discuss how the launch process, objectives and measures, sales participation, knowledge transfer tools, and follow-up and feedback affect the product launch outcomes. As with any of ourWhite Papers, there will be a big variance in the seniority and experience of the readership. ThisWhite Paper aims to provide something for the complete range of requirements, but if you want to dig deeper or move wider, we urge you to get in touch with us individually. You can do this via email to: info@thetasgroup.com. – one successful and the other unsuccessful. For each launch, the executive named a product marketer and a sales manager or senior-level salesperson to discuss the launch. Twenty-two major product launches were analyzed in depth: eleven successful and eleven unsuccessful. Participating companies Participating companies in this study included 3Com, Amerinet, Clarify Software, Early Cloud, IBM Global Services, Hewlett-Packard, Infonet, Infinium Software, Mentor Graphics, Mitchell International, Phillips Semiconductor, Ross Systems, StorageTek, and others who requested anonymity.
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Paper! Copyright ©TheTAS Group. All rights reserved. 2 KnowledgeTransfer • Successful launches use more methods and a wider variety of methods to transfer knowledge • Successful launches were more likely to use“road shows”– live presentations to sales offices • Marketing and sales reported higher satisfaction with knowledge transfer methods in successful launches • Successful launches used knowledge transfer tools closer to the launch date • In successful launches, sales received information pertinent to a sales campaign, such as product positioning, target markets, and competitive information, in addition to product descriptions • 74 percent of sales did not receive all the tools they needed and requested customer testimonials, competitive analysis, and pricing information most often • Sales spends 11% of its time learning about the new products Marketing Follow-Up with Sales after KnowledgeTransfer • In successful launches, more than 90 percent of marketers and sales managers said sales offered verbal feedback on the effectiveness of knowledge transfer • Successful launches had a high percentage of follow- up after the product was announced The Product Launch Process • Both sales and marketers blamed failed launches on unstructured launch processes and poor communication between sales and marketing • In successful launches, sales was more knowledgeable about the steps in the product launch process • Successful product launch processes are more likely to follow-up after knowledge transfer, but best practices were communicated in only 50 percent of the launches studied • Current launch processes involved sales less during the product launch process, which was a factor in unsuccessful product launches Conclusion A more comprehensive, structured product launch process – rigorously followed – will eliminate many of the barriers to early market penetration. EXECUTIVE SUMMARY The Product Launch Challenge • The organizations in this study invested substantially in product launches, averaging seven major launches per year (ranging from 2 to 25 launches per year) and spending an average of $3.25 million to develop a product and $714,000 to launch it • 78 percent of the executives rated their method of launching new products“neutral,”“ineffective,”or“very ineffective” • Of the 68 percent of executives who said their organization used a structured product launch, most said the process was not used consistently • Increasing company-wide buy-in was critical for new product launches • Increasing communication and coordination between marketing and sales was also key to product launch success Objectives and Measures for Product Launches • Overall, sales and marketing were aligned on product launch objectives and the measures of success – for instance, revenue, market share, and recognition • Sales viewed value propositions and beta test sites as more important than marketing did • Executives listed accurate value propositions as critical for successful launches and inaccurate value propositions as the number one barrier to success Sales Involvement in Product Launches • Sales consistently rated its involvement in product launches lower than marketers or executives rated sales involvement • In successful product launches, marketing and sales were more equal when rating sales involvement and also rated sales involvement higher than in unsuccessful launches • Successful launches showed greater alignment and greater sales participation in four key areas: gaining input from the customer, obtaining advice on positioning, determining how to provide information to the sales organization, and obtaining advice on how to train the sales force
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Paper! Copyright ©TheTAS Group. All rights reserved. 3 Lack of Communications and Coordination between Sales and Marketing during Product Launches Sales and marketing have different but necessary roles and objectives during a product launch. Marketing is generally focused on market share over time while sales is focused on selling today. Participants felt increasing communication and coordination between sales and marketing during a product launch was a key factor for launch success. Although marketing takes the lead in product launches, marketing must integrate sales into the product launch process and provide them with specific deliverables so that the sales force can close opportunities rapidly and penetrate the market early in the product’s life cycle. Overcoming the Challenges of Product Launches Although sales and marketing have little influence over the first two challenges – product life cycles and expected ROI, a great deal can be done to overcome the last two challenges – product launch processes and communication and coordination between sales and marketing.The remainder of this paper will explore key findings from our interviews with executive, sales, and marketing personnel involved in both successful and unsuccessful product launches.We offer some insight into: • Why product launches succeed or fail • The need for structured product launch processes that work • The areas where sales and marketing have the greatest alignment gaps • When and how to involve the sales organization in the product launch process • Success factors and barriers surrounding sales involvement in product launches THE PRODUCT LAUNCH CHALLENGE Several trends in the marketplace and within organizations make it both difficult and critical for companies to successfully launch their products: Shrinking Product Life Cycles Product cycles used to last years, which gave marketing and sales departments a comparatively long time to gain market presence.Today, typical product cycles of 18 months or much less make it essential to gain market share quickly. The Multichannel Environment Companies can no longer limit their sales activities to only one or two channels. In addition to the traditional direct sales and distributor channels, they must coordinate product launch and selling activities across Internet and alliance channels as well. Large Investments in Products and Product Launches Organizations invest tremendous amounts to bring new products to market and must achieve an adequate return on their investment.The organizations studied in this research project averaged seven major product launches per year, spending an average of $3.25 million to develop each product and an additional $714,000 to launch it. Poor Product Launch Processes Few reliable processes have been developed to ensure a successful product launch. In fact, many companies in this study used processes, but the process did not affect the success of the launch. And, although every study participant understood the importance of new product launches, they recognized that their method needed improvement. A significant majority (78 percent) of the executives rated their method of launching new products“neutral,”“ineffective,”or “very ineffective.”Not one executive rated their methodology as“very effective.” Even when companies have a product launch process, they don’t use it consistently.While 68 percent of the executives stated that their company had a structured product launch process, most felt that the process was used inconsistently. And, when companies do measure product launches, they measure only outcomes, not the effectiveness of the process. Without reliable data concerning the process, companies can’t replicate and improve on previous successes.
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Paper! Copyright ©TheTAS Group. All rights reserved. 4 OBJECTIVES AND MEASURES What you hope to achieve in a product launch and how you measure it will determine the process you use and who you involve. In general, both sales and marketing understood and agreed on the primary objectives (revenue and market share) and the means to measure them (early closed sales). However, the research uncovered two areas that may serve as early indicators of future problems: • Executives and sales managers listed value propositions as an objective, but not one marketer listed this as an objective • Marketers rated beta test sites as significantly less important for measuring success than either the sales managers or the executives Value Propositions as an Objective Product Launch Objectives Marketing Sales Revenue 33% 41% Market share 29% 23% Coordination 25% 18% New market 25% 18% Recognition 25% 23% Customer satisfaction 21% 9% Timeline 21% 14% Competitive advantage 17% 23% Competitive necessity 13% 18% Profitability 8% 5% Goals 0% 5% Value proposition 0% 14% From the executive’s perspective, defining the right value proposition is critical to an effective product launch. Executives listed accurate value propositions as the number one best practice for successful launches and inaccurate value propositions as the number one barrier to success. When describing failed launches, executives used statements such as“the positioning statements were not centered on our customer’s needs”and“we failed to figure out how that product fit into our client base’s business.” In rating the importance of product launch objectives, the largest difference in sales and marketing responses was in how they rated value proposition as an objective. Why Product Launches Succeed or Fail Executive Responses Key Characteristics of Successful Product Launches Key Barriers for Successful Product Launches Accurate value proposition 58% Inaccurate value proposition 58% Marketplace acceptance 53% Wrong product 37% Structured process in place 47% No process in place 16% Communication between sales and marketing 26% Poor communication between sales & marketing 11% Enough lead time 16% Poor product marketing staff 11% Enough budget 16% Not enough lead time 11% Effective sales tools 11% Poor sales tools 5% High quality product marketing staff 11% Not enough budget 5%
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Paper! Copyright ©TheTAS Group. All rights reserved. 5 BetaTest Sites as Measure of Launch Success Respondents were in general agreement on most measures (early closed sales, press coverage, leads, etc.), but there was a marked gap in how executives, sales, and marketing rated successful beta tests as measures of launch success. Both executives and sales believe that beta test sites provide important sales tools such as proof statements and testimonials, which help them pursue another measure of launch success – early sales. Measuring the Success of Product Launches E M SExecutives Marketing Sales E M S Early closed sales Improved company image Increased awareness Number of sales leads generated Successful beta test sites 0 1 2 3 4 5 E M S E M S E M S E M S VERYIMPORTANT NOTIMPORTANT SALES INVOLVEMENT INTHE PRODUCT LAUNCH The research shows a significant gap in how executives, marketing and sales respondents perceive the level of sales involvement in product launches. Executives and marketing perceive that sales is much more involved than sales perceives itself involved.This was true in all but one phase of the product launch – final packaging. Both sales and marketing rated sales involvement in successful launches higher than in unsuccessful launches. While alignment gaps still existed between sales and marketing in successful launches, they were less severe than in the unsuccessful launches. Interestingly, in both successful and unsuccessful launches alignment gaps persisted in two areas: • Market Intelligence • Launch Plan Execution Misalignment on these two phases of the product launch are particularly troubling, as sales force involvement in these two areas is critical to the success or failure of a product launch. Since the sales organization is closely involved with the needs of the customers, sales involvement in gathering market intelligence would help marketing define the right value proposition – which the executives rate as a key characteristic of successful product launch. How Sales is Used During Product Launches There were four key areas that showed significant gaps in how marketing and sales described sales input in the product launch: • Gaining input from the customer • Obtaining advice on positioning • Determining how to provide information to the sales organization • Obtaining advice on how to train the sales force Use of Sales During the Product Launch Successful Unsuccessful Mktg Sales Mktg Sales Gain input from major customers 92% 73% 50% 45% Obtain advice on positioning 50% 64% 33% 18% Determine how to provide info to sales organization 58% 46% 58% 27% Obtain information on how to train sales force 58% 46% 33% 18% Successful launches reported greater sales involvement in the product launch process. In successful launches, product marketers relied more on the sales organization to: • Collect customers’input • Advise on positioning • Advise on sales force training
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Paper! Copyright ©TheTAS Group. All rights reserved. 6 KNOWLEDGETRANSFER The study asked two questions regarding how marketing prepares sales to be market-ready: • Which methods did product marketing use to transfer knowledge? • What information did marketing provide to sales? Methods Used for KnowledgeTransfer When transferring knowledge to sales, both the method and the timing of the method affects product launch success. Gaps between sales’perception of knowledge transfer and marketing’s perception of knowledge transfer were statistically significant between successful and unsuccessful launches. Successful launches use more methods and a wider variety of methods to transfer knowledge. A possible conclusion as to why this works better is that individual salespeople learn better with certain media. For instance, some people learn better visually, others learn better aurally. The most common methods used to get the sales force ready to sell the new product included: • Product announcements • Product presentations • Sales brochures • Sales kickoff meeting • Formal classroom training Of all the methods marketing used for knowledge transfer, live‘road shows’– presentations to each sales organization – stand out as a significant factor in the successful product launch. Road shows may be more effective because they are personal contacts with the sales force and offer an opportunity to ask questions, creating a more personalized learning environment.With smaller, geographically dispersed sales teams, the next best alternative would be‘virtual’, or web-based road shows. Satisfaction with the SelectedTool Satisfaction with the knowledge transfer tool was a key factor in successful launches—participants in successful launches reported greater satisfaction with all the knowledge transfer methods used. Satisfaction may be a factor of both the type of tool used and how well it is executed. For instance, although webcasts/video conferences were used less than 20 percent of the time, salespeople in successful launches gave webcasts/video conferences their highest satisfaction rating while salespeople in unsuccessful launches rated them among the lowest. Done right, Internet and on-demand knowledge transfer methods are often considered among the most successful. These results would indicate that marketing needs to thoroughly consider how it selects, deploys, and funds knowledge transfer tools. Using the RightTool at the RightTime Research revealed a difference in how successful and unsuccessful launches timed their knowledge transfer tools. The type of method should dictate the timing of its use or release.Three findings were particularly significant: • In successful launches, marketing held road shows more than one month earlier than in unsuccessful launches • In successful launches, marketing provided multimedia/video files closer to the launch date (typically one week) than in unsuccessful launches. Many unsuccessful launches provided multimedia/ video files as much as three months before the launch date Type of Information Provided to Sales During Knowledge Transfer In addition to the transfer method, the type of information marketing prepares for sales influences the success or failure of product launches. In successful launches, sales received information essential to a sales campaign, such as: • Product positioning • Target markets • Competitive information
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Paper! Copyright ©TheTAS Group. All rights reserved. 7 But even in successful launches, 74 percent of salespeople felt they did not receive all the necessary tools to do their job. In sales respondents’comments, the top three tools requested by sales were: • Customer testimonials • Competitive analysis • Pricing information The types of information that sales received in successful launches and the types of information sales most often requested may be symptoms of the gaps in how executives, marketing, and sales perceive the need for value propositions. Interestingly, the data on information type indicates a clear gap between what marketing is providing sales and what sales believes it needs during both successful and unsuccessful product launches. However, the research also shows that certain types of information are more critical than others – in successful launches sales and marketing were more aligned on information for target markets, competitive positioning, and competitive tactics. Types of Information Provided Information Received Successful Unsuccessful Mktg Sales Mktg Sales Product functionality 100% 82% 91% 100% Product demonstration 83% 36% 75% 36% Product positioning 100% 64% 83% 55% How to present product 100% 64% 8% 64% Target markets 92% 73% 8% 45% Target accounts and contacts to purse 64% 20% 67% 30% Customer’s financial or business impact 58% 36% 50% 27% Competitive positioning and comparisons 83% 73% 67% 36% Competitive tactics 67% 64% 50% 36% Prospect qualification 50% 36% 75% 18% Did Sales Provide Feedback? Successful Unsuccessful Mktg Sales Mktg Sales Percentage of respondents who said sales provided feedback to marketing 92% 91% 58% 91% Following up after the KnowledgeTransfer Whether or not marketing follows up and collects feedback from sales concerning the knowledge transfer has a dramatic affect on product launch success. Successful launches show marketing and sales almost perfectly aligned on their perception that sales provided feedback and marketing measured the effectiveness of knowledge transfer. Marketing follow-up and sales feedback create a loop, allowing marketing to gain an understanding of what sales needs and quickly respond to those needs. Even though the input was verbal, this data clearly shows how important it is for marketing to involve sales even in later stages of product launch and continue supporting sales after the product announcement.
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Paper! Copyright ©TheTAS Group. All rights reserved. 8 With a better understanding of the launch process, sales may have a greater understanding of how they can contribute to its success, and be more proactive in communicating with marketing. With an improved launch process that involves sales more, marketing can ensure that sales receives the necessary sales tools on time and that the tools are‘out-of-the-box’effective. THE PRODUCT LAUNCH PROCESS When asked why launches failed, both sales and marketing agreed: no structured process or inconsistent use of the process. Poor communication, possibly connected to the lack of a structured process, was also cited as a top reason. When asked why launches succeeded, sales overwhelmingly felt that success hinged on a structured process and communication.When asked why launches fail, marketing cited a lack of process or methodology. Most understood that their company had a methodology for launching new products, but in unsuccessful launches sales did not know the steps involved. CONCLUSION Our study results show that the product launch processes in use by companies need to improve considerably. They lack structure, are not effective, are used inconsistently, and don’t involve sales enough. A more comprehensive, structured process – rigorously followed – will eliminate many of the barriers to early market penetration. An Effective Product Launch Plan Must: • Outline responsibilities across departmental and divisional boundaries • Compel individuals to understand that the launch is a priority • Outline the launch objectives and the measurements for success • Include a detailed document that specifies: -- All tasks -- Individuals responsible for those tasks -- Time for the completion of those tasks -- Interdependencies of those tasks • Track the status of the tasks and provide feedback to the launch team and product manager responsible for the overall launch • Provide a secure vehicle for sharing content with designated individuals who need the information • Have a known process in place to receive and act upon input from the sales organization • Seek input in a formal process from sales We’d be delighted to discuss your specific needs further, and explore how Dealmaker can drive sustained sales performance improvement in your organization. If you wish to find out more, please contact us at info@thetasgroup.com. Can sales cite the specific steps of the launch process Successful Unsuccessful 40% 14%
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ABOUTTHETAS GROUP TheTAS Group
helps progressive sales organizations increase their sales velocity resulting in higher win rates, bigger deals, shorter sales cycles, and more qualified deals in the pipeline. Our unique value is deep methodology embedded within intelligent Dealmaker software, 100% native in Salesforce. Smart coaching, delivered just-in-time, improves sales performance and accelerates sales results.We have changed the paradigm of improving sales effectiveness from traditional sales training to delivering sales methodology and insights when and where the sales person is working a sales opportunity. For more information visit www.thetasgroup.com Copyright ©TheTAS Group. All rights reserved.This briefing is for customer use only and no usage rights are conveyed. Nothing herein may be reproduced in any form without written permission ofTheTAS Group.
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