Friday, February 6, 2015

Lesson #197: R&D and Sales Must Be Tied at the Hip (Break Down Silos Part 2)

Posted By: George Deeb - 2/06/2015

Share

& Comment

Back in Lesson #194, we talked about how your operations and sales departments must be tied to the hip, sharing learnings both ways for maximum efficiency.  That was the first part of breaking down silos between internal departments.  The same should be said about the relationship between R&D (e.g., new product development) and sales, as the second part of breaking down internal silos.

HOW SALES FEEDS R&D

Too often, entrepreneurs get started building out their product before knowing if there is actual demand for that product.  And, by the time they realize the product is not selling, it is too late to pivot into a new direction before they run out of capital.

If the business had done the proper market research around their product before they launched (as we learned to do back in Lesson #118), by speaking with prospective customers to learn if your product solves a major pain point for them that they would be willing to buy (effectively pre-selling the idea before you even began writing one line of code), they would have saved a lot of unnecessary heartache by building a winning product offering of the gate.

Once you are up and running, your salespeople are the "eyes and ears" of your R&D department.  They have the tight relationships with the clients.  They know what new features the clients are asking for.  They know what clients are saying about competitors' strengths.  And, so on.  Your company needs a defined process on getting the right questions into the hands of your sales team, for them to feed intelligence back into the R&D department, to help prioritize their new product development efforts into winning solutions.

HOW R&D FEEDS SALES

Well, obvious enough, without a product there is nothing to sell.  And, the better the product, the easier it will be to sell.  But, most importantly, products should never be stagnant:  the R&D department needs to continue to innovate and iterate their products over time, building new versions of their products on a consistent basis.  The better the features, the better the user experience, the better you can differentiate your product, the easier it will be for the sales team to sell.

And, again, it is not about only building one product.  It is about building a suite of products over time, where you can start selling clients on product A in year one, and upsell them on product B in year two and product C in year three, improving your average client ticket and lifetime value of your customer along the way.  And, we all know, it is a lot easier to "land and expand" inside one client over time, than it is to add new clients from scratch.  So, this mindset will make it a lot easier and more efficient on your sales team and process.

THE CAVEATS

Not to counteract anything I said above about doing the proper prior research and pre-selling ideas with your clients, you can't always pre-sell a product without a working protoype to "set the bait".  And, that means sometimes you need to make smart bets, building minimum viable products from which your clients can better grasp your solution.  So, don't let your desire to be cautious before acting, slow down the speed in which you are innovating and staying ahead of the market with next generation ideas.

Hopefully, the message here is loud and clear:  don't let your R&D department develop products in a vacuum.  The business demands should always drive your product offering, and not the inverse (which, unfortunately, is not always the case in startup land).

For future posts, please follow me on Twitter at:  @georgedeeb.


0 comments:

Red Rocket is a featured contributor on entrepreneurship for many trusted business sites:

Copyright 2011- Red Rocket Partners, LLC