Posted by: pauditore | August 4, 2009

“Just Sell Baby” Startup Strategies for Increasing Sales& Business Model Innovation in the Millennium

There is a lot of talk about business model innovation these days and Henry Chesborough of Berkeley’s Haas School of Business has written some of the best books (Open Business Models, HBR 2006) addressing this area. Perhaps the best example of business model innovation in the last decade was General Electric. Their visionary leader Jack Welch accomplished this by creating a culture of innovators and entrepreneurs, not yes men. I once met Ed Pillsbury whose father had as he said “simply created a new way of grinding wheat.” Ed created an insurance empire and I asked him what was key to his success, and he simply said, I surrounded myself with people who thought like I did, everyone else was quickly history.” The best CEOs in the technology industry have always been their company’s best sales person, example Steve Jobs and Bill Gates. In the early 1990’s when it was more dangerous in Mexico City than it is today, I was amazed to see Bill Gates selling Windows. These gentlemen are great sales people, and in a small business everyone must be a sales person, including the receptionist, they are actually closer to the customer than you are.

Selling is a mantra, and not everyone can do it, there are those who are great at inside sales and those who are great at field sales. Sales are all about personal confidence, ability and often handling rejection, and I can tell you from experience that a lot of it is really about creating and managing personal relationships. For me sales were all about winning and destroying the competition, the relationships were also fun, but I used all the ammunition I could create during a sales call. Most importantly, however, I used my biological training and observed everything about the company and the environment. I also practiced an old communications proverb, “listen you learn talk you teach.” As we all know some sales people talk too much.

If you have ever started a small business during a recession (and I have) you know that you need to have a laser like focus on customer needs (pain) and you need to innovate your business model to out pace the competition. During the course of my career, I have often heard the song, “we don’t have any competition” there is always competition, known and the unknown that hasn’t arrived yet. One of the keys to business model innovation is “understanding customers needs for products and services both stated and unstated.” This goes right back to creating, managing and building relationships with your customers. During the 1980’s I started two small businesses, Cape Cod Biological Supply and New England Home Safety Consultants, and during the recession of 1989-1991 I co founded Zona Research in a bedroom in Fremont CA. Every week my goal is to provide MVP member small businesses with actionable and useful information, so let me share some of my insights and experience from these startups.

Key Strategies for Increasing Sales

• Know your customers and partners and understand your brand experience first.
• Leverage customer knowledge to innovate and create new products, but be careful, customers don’t know your business and its capabilities as well as you do and some advice can take you down a rat hole.
• Know the competition and identify their weaknesses, they will provide the path to innovation and new products to sell.
• Leverage competitive market research, even if you do it yourself, and identify competitive weakness to create product innovation, more products to sell means more sales.
• Do not create and deliver products to the market that don’t address customer pain and are well outside of your core competencies.
• When competing against larger competitors use what I call the illusion of largeness, this means that marketing and solid relationships are king.
• Ensure that if you offer a new product or service that you can deliver the level of service and/or product value that you can support.

In starting New Home Safety Consultants I addressed a major pain point for families, drinking water. The US Air Force had polluted the ground water with PCE on Cape Cod, so I educated my customers about reverse osmosis systems and their success in removing hydrocarbons and many other pollutants. The customers helped me innovate this business and before I knew it I was selling iron and chlorine removal systems, and in the end found myself doing radon testing for real estate agents. In a very short period of time home safety had evolved very significantly and so had my business model. I had a big competitor working against me in this market, called Culligan. I was able to out gun them by knowing and having a deep and trusting relationship with my customers. And in one case I closed my largest deal with Plymouth Savings Bank by drawing a water molecule on a white board and explaining how pollutants are attracted to its negative and positive sides. Oxygen is a bi-polar molecule. Soon after that I was innovating by hanging radon testing kits in basements and hiring contractors to do the abatement. How would I have ever known?

At Zona we had a laser like focus on an emerging niche technology market called X Windows, this is the windowing system that the Mac runs now. Research is always king in a recession because everyone is always data hungry and wants to know the future and good data analysis and vision leads to strategy. In the beginning, Zona was a two person boutique research house that lived from consulting gig to consulting gig, and a lot of them were one off primary market research surveys. Then we began innovating our business model based on the needs of our current and potential customers. We created three levels of service that were affordable to all sizes of companies; each level of service had higher levels of engagement and deliverables. Then we created a monthly newsletter, which was designed to cover key business events in the industry and it included new research every month. We purposely added a little known word from the OED in each edition, this got customers more involved as they called us up and challenged the word each month. We also looked closely at the competition and identified a key weakness, obsolescence of their information. In these pre Internet days, the large market research companies took months to get data out, so we created what we called the Flash Note. Flash notes were a one page summary of a significant industry event that was created within 24 hours of the event. This became a major differentiator as Zona grew to become one of the premier Internet market research companies, flash notes, in various forms are used by nearly every big market research company today. In summary, remember that when selling the easiest sale is to someone you have already sold something too.

The Personality of Fish: Shark Week

This week is shark week on the Discovery channel and after watching Jaws again for the 35th time, I watched pseudo scientists tow a deco seal behind a boat to get great whites to jump out of the water. As a scientist this seemed rather juvenile to me and the fact that Carcharodon carcharias, (Greek scientific name meaning the one with the grooved teeth) can jump out of the water is kind of so what! We still know very little about sharks and we harvest over 70 million of them every year from the ocean primarily for shark fin soup. There must be a lot of sharks in the ocean but because of lack of funding and poor science we really don’t know how many are out there.

Sharks and rays have no bone and/or skeleton, instead they rely on a cartilage infrastructure and muscles are attached to the skin instead of bones. This gives the shark tremendous agility as the muscles are attached to the skin and the lack of bones greatly reduces weight, enabling them to easily propel themselves out of the water. This also reduces the amount of energy required to swim. Sharks and rays have amazing, chemo, olfactory and electrical sensory apparatus primarily on the head and nose. This sensory network is called the Ampullae of Lorenzini and was discovered by Stephano Lorenzini in 1700.

There are few creatures in the ocean that can match a shark’s ability to find food, and in the 1980’s scientists in Woods Hole conducted experiments with flounders that proved sharks can identify electrical fields from great distances. They simulated the electrical field given off by a flounder on the bottom and sharks attacked the electrical node emitting the field. A wounded mammal also emits a higher level of electrical field than an unwounded and it is thought this is how sharks can find food from great distances. So don’t go swimming with an open wound! I hope you have enjoyed this week’s post and great selling in the millennium! Know your customers!

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