Selling Innovation

It is almost impossible to sell something which customers can’t use unless they change the way they do business.  That’s a hard lesson for an innovator to swallow because the best use of innovative products is to change the way business is done.  The more you tell your prospect that your product is revolutionary, the more nervous he’ll get.  Besides, it may not matter to him that what’s inside your product is revolutionary; he doesn’t want to buy a revolution.  He wants something that’ll make his business work better.

My former company ITXC was a wholesaler of Internet telephony.  We sold to traditional retail carriers (that’s all there was in the beginning) whose subscribers used ordinary phones to call other people who also had ordinary phones.  Our technology was revolutionary: we used the Internet instead of the public switched telephone network to transport the call internationally.  Before bandwidth prices plummeted, the savings in using the Internet were enormous.  Even after bandwidth was overbuilt, the saving were substantial.  You know what happened when we went to carriers and told them our service was based on revolutionary technology which would change everything?  Nothing.  We scared our customers out of buying from us.  Telco are particularly change-adverse but almost no one (except we nerds) likes change for change’s sake.

So we changed our sales approach.  We reengineered the interface to our product so that we looked like a traditional wholesale carrier.  Customers’ switches were connected to our switches just the way carriers always connected to each other.  On a sales call we said “we can reduce your costs for international calls.”  That’s it.  Nothing about revolutions.  We didn’t hide the fact that we used the Internet.  Initially we had to convince carriers that we could deliver quality on the Internet.  But we didn’t sell the unsellable novelty of the way we did our business; we sold cheaper phone calls.

However, you don’t have a customer locked in until she changes the way she does business so that she becomes dependent on your product.  But first you have to get her using your product or using your company without changing her company as I described above.  After that comes the time to get your customer to build her product in a way that requires your product.

Once a customer trusts you, you can sell innovation in limited doses but still not change for change’s sake.  The trick is to become part of the customer’s new product design team, to help the customer find ways to succeed which happen to use what only you can deliver.  We tried to get carriers to deliver VoIP products all the way to the premises of their end users.  We were a little early.  It’s tempting to say that the carriers were late but that would just be an excuse.

IBM at its peak as a mainframe company was expert at getting its customers to build applications like massive consumer credit or automated inventory which required more and more big iron.  Both credit and inventory had existed forever, of course; but IBM helped customers expand in these areas in ways which moved computers from useful to essential.

The other way to sell innovation is to find innovative customers who already know they need it.  But this approach is all a question of timing.  These innovative customers have to arrive in the marketplace at the same time you have product available to sell to them.  When we founded ITXC in 1997, we thought the world would soon be full of retailers of VoIP who would want to and have to buy from us.  Again, we were a little early which was why we had to learn to sell innovation based on price to carriers who DIDN’T want a revolution.

Comments

[Bernard Moon]

Great post. Thanks!

[Rahul Jain]

Tom,

I am part of the nerd community and slowly making my way into the sales area (or maybe I am being pushed into it). I like it and this post of yours has given me an insight to where I am usually wrong when going to a customer to sell our software. Thank you very much for this wonderful article.

--
Rahul Jain

[Tom Evslin]

Ellen:

Don't think about it much but don't like the awkward use of "they" and "their" as pronouns with singular nouns like "everyone" or "anyone" to avoid being sexist.

So seems more natural just to pick "he" or "she" for each example. More fun, too.

Thanks for your comment.

Tom

[ellen]

I love the way you used the pronoun "she" in your post. How long did you debate whether to use "she" or "he" or just the "customer?"

[Chris Yeh]

This is a fantastic post. The most important lesson an entrepreneur needs to learn is that customers don't give a crap about most of the things you're passionate about. All they want is something to make their lives easier. Sell them that, not the whiz-bang technology.

[Josh Kerbel]

just came across your blog........WOW. Love the ideas and especially the sub title of your blog, "nothing great has ever been accomplished without irrational exuberance".

Many people forget this fact, all you have to do is read a lil' bit of economic history and see that the railroad, oil and electronics industry all depended on irrational exuberance to grow. The trick it seems (obviously) is to avoid getting caught in the downdraft........in other words, listen to the hype, just don't believe too much of it!