Do The Hustle
This story appears in the May 1998 issue of Startups. Subscribe »
I recently received a letter from an inventor who had mailed fliers to 150 potential customers. Not one response came back, and the inventor was devastated. He had been convinced all he had to do to get orders was send out a mailing.
I've heard at least 10 to 20 similar stories per year for the 10 years I've worked with inventors. Selling any product is hard work--even for large companies, which typically make several sales calls per customer before they start receiving orders for a new product.
Generating initial sales is even more difficult for inventors, who are selling a new, unproven product, and who often don't have a track record of business success. When retailers look at an inventor's product, they don't just worry whether the product will sell; they also worry whether the inventor will be around in two months. They want to be sure that if the product doesn't work, the inventor will be able to pay refunds for returns. All this means that new-product entrepreneurs must work extremely hard to generate their first sales.
Daniel Cugino introduced Absolutely Delicious Authentic Italian Dressing & Marinade, based on a 150-year-old family recipe, in 1995. Cugino's Gourmet Foods product line, which now contains nine items, is sold in almost 500 stores in 15 states and has annual sales of about $750,000.
Cugino has a great-tasting product and a great label, but he ran into the sales resistance virtually every product entrepreneur encounters. Here are the three steps he used to respond to this challenge:
1. Offer incentives to get stores or customers to buy the product. Cugino targeted fine food shops and high-end supermarkets for his product. Unfortunately, the stores weren't interested in stocking it. The buyers said they already had enough products and didn't need another Italian dressing on their shelves. Cugino finally asked stores to let him come in and demonstrate his product to customers. If the store buyer wasn't satisfied with the results, Cugino promised he'd issue a full refund for any unsold product. Some store owners and buyers agreed to his proposal, and after a successful day demonstrating his product, Cugino usually got an order.
Even if your product doesn't lend itself to demonstrations, there are other incentives you can offer to get those first few sales. You might offer an instant rebate of half the product's purchase price, offer a free gift to every customer, or offer to run a direct-mail campaign with a coupon to use at the stores that stock your product. All these tactics may cost you more than you'll make on these initial sales, but losing money during a product's introduction is not important. Your primary task is to get the product into stores, where it can build sales momentum.
2. Use these successes to sign up independent sales agents. One key to success for inventors is getting other people to sell the product. You can only sell a limited number of products on your own. Cugino was targeting fine food stores and upscale supermarkets. These sales are typically made through independent sales representatives or food distributors. Cugino touted his success at the initial stores to get representatives to sell his product throughout a larger geographic area. He told representatives he would pay for a person to give away samples at new stores. Several reps who sold to Cugino's target market agreed to take on the product.
Moving quickly is important to generate sales momentum. If you've been selling for a year at two stores before you look for representatives, their natural question is, "If your product is so great, why aren't more stores buying it?" Agents believe the delay reflects sluggish consumer acceptance of the new product.
I recommend inventors test their products in a small market first. One reason is, test-marketing uncovers potential problems. Another equally important reason is that a test-market period can minimize the perception that you're off to a slow start when you run into the inevitable problems of a start-up.
Most product entrepreneurs have a four- to six-month period in which they iron out problems. If you call it a test-market period, people will think you're careful and smart. If you say you had a slow start because of production or sales problems, the same people will wonder if your product will sell.
Cugino also enhanced his image by quickly adding more products to his line. Representatives saw a company on the move and felt they were taking on a hot new line.
3. Use every tactic to help your independent agents succeed. Building steady sales momentum is crucial when introducing a new product. Sales agents will drop a product if it doesn't produce sales, so new-product entrepreneurs must do everything possible to make their first agents successful.
Cugino hired sampling services--companies that place people in stores to offer customers free samples. They weren't nearly as motivated or successful demonstrating the product as Cugino, who sold seven to 25 cases at product demonstrations; often, they sold just a few cases.
So Cugino switched tactics and began attending crafts fairs throughout the Midwest. He sold his products at the fairs and passed out fliers telling people which local stores carried his product. The representatives gained confidence as the product sold in stores, encouraging them to keep pushing Cugino's products.
There are many other ways you can help your sales representatives succeed: Run newspaper ads or radio promotions, run in-store seminars, set up tent displays in parking lots and sponsor area events.
Don't worry about making money at first. Worry instead about creating sales momentum. You'll make profits once you have a wide distribution network. To reach that goal, you need the biggest promotional budget you can afford and an intense personal sales effort when you start out. As Cugino realized, inventors can't rely on the product or its packaging to make sales. Cugino hustled for his initial sales success; you'll need the same type of hustle to get your product off the ground.
Don Debelak, author of Bringing Your Product to Market (John Wiley & Sons, $19.95, 800-225-5945), is a marketing consultant specializing in bringing new products to market.
Show Off
Question: I have created some new T-shirt designs, and I'm considering displaying them at a trade show that retailers attend. The show will cost $5,000, not including the booth display. Would this be a good investment?
Answer: Trade shows are expensive. Specialty merchandise shows typically feature fancy booth displays that can cost you an additional $10,000. I recommend you simply attend the show first to see how the show is run and observe what types of booths other companies have.
You can do a lot to promote your product as an attendee. Your aim should be to line up sales representatives, distributors or other manufacturers. At a specialty trade show, most of the people working booths will be manufacturers' representatives. When you talk to people, ask if they work for the company or if they're representatives. Collect the representatives' business cards, and tell them you have a new product coming out and would like to contact them later to discuss it. The best times to talk to representatives are early and late in the day, when the show is less crowded.
Distributors will also have booths at the trade show where you can meet with their key personnel. Often, the easiest way to get distributors to carry your product is to go through their sales managers, who have a strong influence over their companies' decisions.
Another distribution network to pursue at a trade show is selling through other manufacturers. Distributors devote their time to the products that make them the most money. Small companies typically don't have a broad enough line to generate significant income, but they often band together to make their product lines more competitive. Find manufacturers whose products complement yours. They may be willing to work with you to acquire representatives or to provide more lines to their current sales networks.
Contact Source
Cugino's Gourmet Foods, 9176 Trinity Dr., Lake in the Hills, IL 60102, (888) 592-8446.
