What is the catalysis sales approach?
Introducing the Catalysis Sales Approach
Many entrepreneurs proceed by looking at a hundred different opportunities and ideas for their product, with the belief that their success will come in numbers. But only the most experienced entrepreneurs know there is just no way to go after all of them. As David Packard of Hewlett-Packard stated, “Many companies die from indigestion of opportunities rather than starvation.”
There are five stages in the new task buying process:
There is much work involved in leading a customer through this process, so much more than one can imagine; it is especially complicated if combined with launching a new venture.
One of the greatest errors in new business venturing is not knowing this difficult work that lies ahead. Many entrepreneurs proceed by looking at a hundred different opportunities and ideas for their product, with the belief that their success will come in numbers. But only the most experienced entrepreneurs know there is just no way to go after all of them. As David Packard of Hewlett-Packard stated, “Many companies die from indigestion of opportunities rather than starvation.”
So the most important strategic decision facing any new venture is choosing only a handful of the right customers. The right customers can be found in lead users, which we first discussed in a previous post. Recall that lead users face needs that will be general in a marketplace, but face them months or years before the majority of that marketplace encounters them. In fact, they can serve as a quasi-forecasting service, providing critical data for your marketing research.
And lead users are positioned to benefit significantly by obtaining a solution to their particular problems and needs. Most importantly, lead users know other lead users, and they are most likely in a position to help you identify and contact other lead users either directly, or indirectly, based on your early work with the first group of lead users. They will communicate their experience (good and bad) with your products and venture to others. Recall from a previous post about the diffusion of innovations that late adopters look to the lead users for opinion leadership, which will encourage or discourage them from adopting your products and services.
The sales tactic we recommend is what we call the catalyst sales approach. This approach involves a crusader, like the CEO who is committed to the venture and has a personal stake in the outcome of the new product, someone who works as a catalyst to stimulate the early sales. Chemically speaking, a catalyst-crusader is one who modifies and increases the rate of a reaction with lead users, especially without being involved or consumed in the consequences.
The sales task is to catalyze, or to initiate and produce a fundamental change in the lead users, and then get out of the way. When Tom Siebel started his company in 1993, he focused on companies and prospects that fully understood the need for his software from the get-go. His sales tactics were profoundly simple, “We were looking for people who understood the need and wanted to use it. A core part of our strategy was not to evangelize—we wanted customers where the demand was very salient.”
The Critical Elements to Catalyze Sales
Remember, as you head out as a customer problem solver, not a sales agent, your goal is to get yourself up the Hillary Step, stimulate key sales, and get back down in one piece. So how do you find, as Siebel calls it, strikingly notable demand? First, recall from a previous post, it is imperative that you have in place an external integration between the new product development team and the lead users and early adopters. From this integration, your goal is to find and contact what Geoffrey Moore calls the right “technology enthusiast” or “visionary.”
In his book, The Secrets of Word-of-Mouth: How to Trigger Exponential Sales Through Runaway Word of Mouth, George Silverman goes one step further. Based on the Ayn Rand novel, he calls it The Law of the Fountainhead Influencer, boldly proclaiming, “Give me the right person to start and I’ll change the world.”
Dan Bricklin is a person who changed the world. In 1979, as a Harvard Business School student and former programmer at DEC, he and his friend and collaborator, Bob Frankston, created VisiCalc. It was the first spreadsheet software application for IBM PCs. It was a practical solution for anyone with a personal computer to do financial modeling and simulation previously available to only corporations with mainframe computers.
Bricklin recalls those early days, “I remember showing it to one accountant around here and he started shaking and said, `That’s what I do all week, I could do it in an hour.’ They would take their credit cards and shove them in your face. I meet these people now they come up to me and say, `I gotta tell you, you changed my life. You made accounting fun.’” What really catalyzed the sales in the early days was when the accountants shared their financial work with others in the office and with their clients. It was basically a sales demonstration of the unique capabilities of VisiCalc.
The catalysis sales approach is combining the right visionary with the right product, at the right time. The product can even still be in the prototype stage. Gamma testing, which we discussed in a previous post, lets you know early on what kind of reception your new product is likely to receive. The upside is that you may also find companies that want to buy. For example, Polycom, a manufacturer of speakers for conferencing tables, had an order for 600 Sound-stations as a result of their gamma testing at Intel, prior to having perfected their design.
As a fast follower to Amdahl selling 250 scaled-down mainframe computers that cost $3 million to $9 million in 1985, IBM began test-marketing their AS/400 minicomputer in 1987. By the minicomputer’s introduction date, IBM had potential buyers field-testing about 1,700 units. Some 25,000 of the AS/400s were sold within the first year, making it the most successful new product launch in IBM’s history. By 1992 more than 200,000 were placed in service around the world. And by 1999, IBM’s AS/400 became the world’s most popular multi-user, commercial business computer, with more than 700,000 systems installed in over 150 countries.
Measurable success from the catalysis sales approach is more than just “word of mouth,” where the chatter from early adopters about a new product drives new customers to try it. Success is about shortening the customer decision cycle time for new task buying. As Silverman points out, such “decision acceleration” will turn into your “secret weapon.” We leverage some more of Silverman’s points. The sales process should be independent, not needing additional nurturing from the sales crusader’s time.
For example, like we describe with VisiCalc, the sales process should be deeply integrated in the product itself. Each presentation of VisiCalc by an accountant, and each use of the Soundstation at Intel, was a sales presentation in itself. This is what ignites the catalysis sales—it originates from a single source, or from a relatively small number of sources, and it “grows exponentially,” or “sometimes explosively.”
Marketing and sales tactics comes from a process of chemical experimentation that includes a careful mix of people, product, pricing, sales, placement, market timing, sector awareness, and creating the right buzz. Sales channel relationships are complex, vary greatly from industry to industry, and this book is not intended to go into great detail on this topic. But it is important to understand the basic channel options and how to manage the channel partners in your value chain. We suggest Kenneth Rolnicki’s Managing Channels of Distribution: The Marketing Executive’s Complete Guide. He covers very well channel design, channel selection criteria, and channel management and communication, including managing channel conflict.