3 Ways to Drive Sales Innovation
New digital strategies can now be leveraged to drive sales innovation. That innovation is essential to company growth. But, the wrong use of resources and focus can be devastating.
Successful businesses seek justification and a Return on Investment (ROI) before starting any new initiative. Funds are limited, so an evaluation process can help to ensure only the highest potential value-added strategies are pursued.
Too Much of a Good Thing?
Given all the heightened pursuit of new investment to improve ROI, what happens if too many potential projects are pursued? Can too much of a good thing be a problem?
It turns out, the answer is “yes.” This situation could be described as the “dark side” of digital transformation – pursuing too many new ideas and spreading out company resources too thin.
Royal Philips, the Netherlands’ most valuable brand, had long been a leader in product innovation throughout the 20th century. But, in the first 10 years of the new millennium, the company’s revenue plunged 40%.
Their problem was excessive innovation. According to a Forbes article, in the early 2000s, executives expanded the company’s product portfolio through in-house development and acquisitions to encompass an extraordinary array of new products and services. In 2003, Philips was the top patent filer in Europe, and among the top 10 in the United States. By 2011, Philips was active in more than 60 product categories. Then they hit a wall.
Too much complexity nearly killed the company. Fortunately, changes were made to reverse their situation. Today, the company has simplified operations across their enterprise. By introducing several new simplification strategies, Philips has adopted new company directives to help better manage its digital transformation with far better effectiveness. New productivity gains have once again positioned the company as a leading innovator in the industry.
Lessons Learned to Drive Sales Innovation
Removing complexity from a business can create immediate benefits. Further, these benefits can be easily extended to other parts of the business by embracing a companywide simplification strategy. The rest of this article will focus on how investing in new sales innovation strategies could be a compelling way to drive new profitability, process improvement and justify an investment in your digital transformation strategy.
Here are three examples of how value can be achieved when choosing to drive sales innovation through digital transformation. A common theme is a focus to remove complexity from the business process.
1. Be selective in what markets you serve and products you sell – it is impossible to be all things to all customers. Extreme complexity is the only guaranteed result. One-off deals never make sense in hindsight. Special pricing or support requirements are seldom fully realized at the time of sale – focus is typically with just a short-term perspective. Get the sale and make a commission.
In the 1990s, the LEGO Group pursued an all-out effort to innovate by doubling the number of unique bricks to more than 12,000 from 1997 to 2004. As product variety grew, so too did complexity in operational processes and their supply chain. Out-of-stock issues resulted, sales cycles were disrupted leading to upset retailers, and then inventory issues nearly bankrupted the company.Staying true to what you know and the customers you already serve can be a far more lucrative sales innovation strategy than pursuing every opportunity and serving every market.
2. Consider the impact on product development, customer support and marketing before pursuing the next sale – while the thought of opening a new market or discovering a new way to use an existing product can be tempting, don’t do so before considering the full impact on your entire value chain.New product usage applications might require new product designs, different quality testing, new regulatory requirements as well as modified support requirements and processes. Instead, perhaps a more lucrative sales innovation might be to drive the pursuit of a new partnership or alliance.
In this case, a combined value proposition could drive greater value for the customer with higher margins. The point is that the answer can’t be understood without a complete analysis. Knowing the full impact of every sales pursuit before making any commitments could, in and of itself, might even lead to improved process innovation, yielding greater profitability or return on innovation investment.
3. Explore new digital technologies for process and data integration, including how to add information that can personalize customer interactions – sales innovation can be achieved in how processes are integrated, including the information that accompanies each process.Making this information available to co-workers or end users could result in new value being added, commanding an additional price premium.
Understanding a product’s complete lifecycle from initial design specifications through disposition could be leveraged for future potential product recalls, performance improvement analysis as well as root cause analysis for unforeseen future product modifications.
Each of these scenarios point to the value of integrating processes and data, which when delivered in context, could provide the basis to drive sales innovation and provide competitive differentiation. Alternatively, this information could yield the key to significant future efficiency or process improvement, which could dwarf the pursuit of new market exploration or product innovation. In the digital world, data and process integration are two very real benefits that are possible through the implementation of sales innovation strategies that can be readily captured.
The Importance of Innovation
The decision to be mindful and avoid value-destroying complexity is not to stop innovating. Advances in digital technologies presents new opportunities to enhance products with information and to personalize customer interactions. These enhancements can be applied to the sales process in just the same way it can be added to an actual product.
Research validates that value can be captured by integrating products as combined offers. Many examples come to mind, such as one as simple as peanut butter and chocolate.
Complexity is always best avoided. Applying this concept to the sales process can unlock countless new sales opportunities – provided the right visibility is possible. Tracking how the sales process is performed is a necessary step to drive sales innovation.
How much time is allocated to each sales activity, how this sales activity can be measured and how that measurement can be compared across an entire sales team is critical. Only then can you improve sales productivity and sales innovation by looking at overall sales performance, measure it, identify a baseline, and then improve upon it.
Next time you are faced with a unique sales opportunity that seems just too good to pass by, take a moment to pause and consider all the implications of that one sale.
Can it really be leveraged across other markets, to other customers by the rest of your sales team? Is this a truly saleable activity, with processes that can be readily integrated across the organization? If not, perhaps a different option should be considered that might just yield the desired financial rewards without all the future headaches – or even company threatening activities.