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Product-led v. Sales-led Business Style

Technical companies are by definition specialists in some area of science. The people who work for them are knowledgeable in their particular discipline. In many cases the work they do is complex and, to the scientific mind, highly interesting.

So far so good. The challenge comes when you need to be making money in order to develop your new concept or fledgling business. The type of person I have described above is likely to be unqualified and inexperienced in what it takes to achieve commercial success.

There are exceptions.

But more often inventors and scientific innovators will resemble my father, an aircraft designer-turned-businessman.

When the war was over and there was a surplus of pilots and the people who designed and built the military's flying machines, it was time for Dad to look for different work. So he and colleagues conceived and built a plane they saw as suitable for civil aviation. It was called the Newbury Eon, a single-engined 4 seater. I have a picture of it hanging on my wall.

The Newbury Eon, built by Aviation & Engineering Projects Ltd, Hounslow, UK

Did this fresh departure lead to business success? No, far from it. Apart from the unfortunate incident, when a pilot managed to let the plane take off unmanned and crash, destroying itself, worse was that the hoped for market simply didn't exist.

Flying planes for fun and private business use is, was and probably always will be, expensive. In rationed Britain, luxury activities were available to few people.

So a rethink - back to the tried and tested. Dad pulled of a coup by convincing the Ministry of Aviation that he had a large team of engineers and designers available to help with the development of Britain's early attempts at rocket technology.

(When the Ministry man came around for a meeting, Dad called in likely looking bods from the street and paid them a fiver to stand at otherwise unmanned drawing boards and look busy with pencil and tee-square while the meeting proceeded.)

Now the tribulations of the open market were behind him - "Cost Plus" as he termed it for the next 40 years. (What that expression means is, you invoice the client for your outgoings, wages, materials, sundry expenses PLUS a percentage which is your profit. As long as this is tolerated by the client, you can't go wrong.)

That's the background, a wonderful golden goose, which allowed Dad to follow his interest in other technical areas (as well as playing a lot of golf). Based on an idea from an associate, Dad developed devices to make it easy to start vehicle engines in cold climates. The product met a demand, but the company, (a separate one) never managed to do much more than break even.

Why? Because the business was product-led. That means the focus was on how to improve the hardware and the manufacturing process. Very little thought was given to how to sell it. Not too surprising considering that Father and his colleagues had never been salesmen, they were all engineers and proud to be so.

Sales was an adjunct, in their view an unfortunate necessity, certainly not the raison-d'etre of the company.

Although I spent some years working with Dad, making the equipment, the time came when I felt frustrated - we weren't getting anywhere as a business. I had the chance to join a completely different kind of company and that changed my outlook and prospects radically.

I entered the world of direct sales. The definition of that term being, selling an article directly for the manufacturer without (or very limited) advertising and any form of middle man. The consequence of this structure is that far more money than would otherwise be available can be employed as payment to sales people.

A sales-led business "manufactures sales", which is to say income; that is its clear, unambiguous purpose. The product needs to be good enough to satisfy customers, but there is little interest in pursuing technical refinement (other than for the purpose of claiming some benefit in advertising).

We had weekly sales meetings in which I and the other salespeople had to announce their results for the week and the prospects for the next period. If the figures were good, then the paycheque which followed a few days later was impressive. My average earnings in those days were at the same level as those of a doctor or lawyer.

The sales management hierarchy were paid an override on sales made by those under them, meaning that the District, Regional and National Sales Manager were making their fortunes. Not that this was easy money, it wasn't I worked seven days a week and often to late in the evening. And when I had a bad week, I was paid nothing at all.

The consequence of the sales-led structure is that earnings, money, share price are scrutinised relentlessly and every way that can be conceived is tried to increase them. And it works.

In the end, I moved on; I had a hankering for designing and making things - I'm an engineer at heart. But my time in direct sales (at other periods I dropped back into that milieu) was the foundation for the way I ran a number of profitable technical businesses. It also led me to be able to present my Selling for Engineers seminars.

If commercial success is your goal, get a job for a while in a direct sales company. You'll learn lessons that will help you for the rest of your life. For me it was always a love/hate relationship, but the experience was invaluable. I recommend it to anyone.

If you enjoyed this article, take a look at my book.

How to Motivate Sales People manual

       

And if another challenge facing your business is recruiting an effective salesperson, see also:

 

How to Hire a Really Good Technical Sales Engineer

 

More articles on better selling

 

 

  

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