Every Entrepreneur’s Biggest Mistake (And How To Avoid It!)
This post was originally featured on FastCompany.com. The original blog, written by Nick Nanton and JW Dicks can be found here: Every Entrepreneur's Biggest Mistake (And How To Avoid It!)
In 2006, Salemi Industries thought they had a surefire moneymaking product. It was something totally new that (a) had an obvious need and (b) could be sold worldwide. Anthony Ferranti, the man behind the innovative product, had noticed that with the widespread usage of cell phones in public areas, callers needed a private place to have their conversations--and to not disturb others in, say, a restaurant. So he decided to create a solution.
That solution was his invention of what he called “The Cell Zone”, a large plastic pod that he saw as the modern equivalent of the phone booth. You could step into The Cell Zone and have a perfectly private talk without being bothered and without bothering anyone else. The early signs were good--The Cell Zone proved to be a sensation at that year’s Restaurant Show, where eatery owners expressed enormous enthusiasm for the product.
Now guess how many Cell Zones the company ended up selling? You might have an idea since you’ve probably never heard of it or seen one. The company ended up selling less than 300, and losing close to $650,000 in the process. Turned out restaurants didn’t care for the price ($3,500) and they didn’t want to give up the square footage to accommodate the privacy pods.
The moral of this particular story? You can have what you think is an awesome product with the greatest potential in the world--and still fall flat on your face. And here’s why: because, before you put everything into perfecting whatever it is you want to offer, you never tried to actually sell it.
Recently, the Harvard Business Review published an article in which they surveyed 120 entrepreneurs from all around the world to ask them what their biggest mistake had been with a product or service launch. The number one answer of more than half of these business leaders? They didn’t try to sell it early enough. To quote one of those entrepreneurs, “Don’t make anything until you sell it. Get people really interested in buying it before you invest too much time and effort.”
The fact is that few things really “sell themselves”--especially if they’re new to the marketplace. According to Booz & Company, 66% of new products fail within two years, and, according to the Doblin Group, an astonishing 96% of all innovations fail to deliver any return on a company’s investment.
Here are a few tips on how to presell your launch, so you can know whether it’s worth moving forward, or whether you need to either change it up or drop it altogether:
Beware of the Bubble!
Another regret expressed by many of the entrepreneurs surveyed by the Harvard Business Review was that they let themselves be swayed by initial sales to friends and family. These kinds of people obviously want to support you and, if the investment isn’t too big, will happily buy your product. You can also end up depending too much on your staff or co-workers’ enthusiasm for something new you want to bring to market. Again, they want to believe in what you’re doing and often won’t give you a truthful impression of what’s waiting for you in the cold, unforgiving marketplace. So don’t rely on the opinions of those in your “bubble”--survey others who don’t really have a reason to prop up your new product with manufactured praise.
Co-Create With Your Potential Customers
Today, more than ever, buyers want to feel involved with what they purchase and use--and they want to know that the seller is listening to what they have to say. That’s why increasingly the concept of co-creation, involving consumers in the actual development of a product or service, is becoming a dominant business approach. Francis Gouillart, author of The Power of Co-Creation: Build It With Them to Boost Growth, Productivity, and Profits, says a great deal of today’s R&D is being done through social media. "Social media has liberated social forces...What used to be a fairly isolated political process has become a form of business," says Gouillart.
Try Out Your Sales “Story”
We’ve written frequently about the concept of StorySelling--and, as a matter of fact, we have a whole book on the subject coming out this summer. That’s why we believe it’s crucial to see if you have a powerful enough story to tell about your new product or service--one that will convert a prospect into a buyer. For example, we will frequently discuss with a few key clients a new service we’re thinking about providing, to make sure people like them would actually want to pay for the value it would bring to their business. And they are able to do the same thing, because we provide them with a platform to share new ideas through different channels of media--print, television, radio, blogs, and books--which enables them to gauge reaction and see what sparks excitement.
Of course, some products just aren’t destined to be successes--celery-flavored Jellois one that comes to mind! But if you take the time and put as much effort into your selling as you do into your product development, you’ll have the advantage of knowing whether your new offering can really take off from the launching pad!