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I recently received a letter from an inventor who had mailedfliers to 150 potential customers. Not one response came back, andthe inventor was devastated. He had been convinced all he had to doto get orders was send out a mailing.
I've heard at least 10 to 20 similar stories per year forthe 10 years I've worked with inventors. Selling any product ishard work--even for large companies, which typically make severalsales calls per customer before they start receiving orders for anew product.
Generating initial sales is even more difficult for inventors,who are selling a new, unproven product, and who often don'thave a track record of business success. When retailers look at aninventor's product, they don't just worry whether theproduct will sell; they also worry whether the inventor will bearound in two months. They want to be sure that if the productdoesn't work, the inventor will be able to pay refunds forreturns. All this means that new-product entrepreneurs must workextremely hard to generate their first sales.
Daniel Cugino introduced Absolutely Delicious Authentic ItalianDressing & Marinade, based on a 150-year-old family recipe, in1995. Cugino's Gourmet Foods product line, whichnow contains nine items, is sold in almost 500 stores in 15 statesand has annual sales of about $750,000.
Cugino has a great-tasting product and a great label, but he raninto the sales resistance virtually every product entrepreneurencounters. Here are the three steps he used to respond to thischallenge:
1. Offer incentives to get stores or customers to buythe product. Cugino targeted fine food shops and high-endsupermarkets for his product. Unfortunately, the stores weren'tinterested in stocking it. The buyers said they already had enoughproducts and didn't need another Italian dressing on theirshelves. Cugino finally asked stores to let him come in anddemonstrate his product to customers. If the store buyer wasn'tsatisfied with the results, Cugino promised he'd issue a fullrefund for any unsold product. Some store owners and buyers agreedto his proposal, and after a successful day demonstrating hisproduct, 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 fewsales. You might offer an instant rebate of half the product'spurchase price, offer a free gift to every customer, or offer torun a direct-mail campaign with a coupon to use at the stores thatstock your product. All these tactics may cost you more thanyou'll make on these initial sales, but losing money during aproduct's introduction is not important. Your primary task isto get the product into stores, where it can build salesmomentum.
2. Use these successes to sign up independent salesagents. One key to success for inventors is getting otherpeople to sell the product. You can only sell a limited number ofproducts on your own. Cugino was targeting fine food stores andupscale supermarkets. These sales are typically made throughindependent sales representatives or food distributors. Cuginotouted his success at the initial stores to get representatives tosell his product throughout a larger geographic area. He toldrepresentatives he would pay for a person to give away samples atnew stores. Several reps who sold to Cugino's target marketagreed to take on the product.
Moving quickly is important to generate sales momentum. Ifyou've been selling for a year at two stores before you lookfor representatives, their natural question is, "If yourproduct is so great, why aren't more stores buying it?"Agents believe the delay reflects sluggish consumer acceptance ofthe new product.
I recommend inventors test their products in a small marketfirst. One reason is, test-marketing uncovers potential problems.Another equally important reason is that a test-market period canminimize the perception that you're off to a slow start whenyou run into the inevitable problems of a start-up.
Most product entrepreneurs have a four- to six-month period inwhich they iron out problems. If you call it a test-market period,people will think you're careful and smart. If you say you hada slow start because of production or sales problems, the samepeople will wonder if your product will sell.
Cugino also enhanced his image by quickly adding more productsto his line. Representatives saw a company on the move and feltthey were taking on a hot new line.
3. Use every tactic to help your independent agentssucceed. Building steady sales momentum is crucial whenintroducing a new product. Sales agents will drop a product if itdoesn't produce sales, so new-product entrepreneurs must doeverything possible to make their first agents successful.
Cugino hired sampling services--companies that place people instores to offer customers free samples. They weren't nearly asmotivated or successful demonstrating the product as Cugino, whosold seven to 25 cases at product demonstrations; often, they soldjust a few cases.
So Cugino switched tactics and began attending crafts fairsthroughout the Midwest. He sold his products at the fairs andpassed out fliers telling people which local stores carried hisproduct. The representatives gained confidence as the product soldin stores, encouraging them to keep pushing Cugino'sproducts.
There are many other ways you can help your salesrepresentatives succeed: Run newspaper ads or radio promotions, runin-store seminars, set up tent displays in parking lots and sponsorarea events.
Don't worry about making money at first. Worry instead aboutcreating sales momentum. You'll make profits once you have awide distribution network. To reach that goal, you need the biggestpromotional budget you can afford and an intense personal saleseffort when you start out. As Cugino realized, inventors can'trely on the product or its packaging to make sales. Cugino hustledfor his initial sales success; you'll need the same type ofhustle 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 marketingconsultant specializing in bringing new products to market.
Show Off
Question: I have created some new T-shirt designs, andI'm considering displaying them at a trade show that retailersattend. The show will cost $5,000, not including the booth display.Would this be a good investment?
Answer: Trade shows are expensive. Specialty merchandiseshows typically feature fancy booth displays that can cost you anadditional $10,000. I recommend you simply attend the show first tosee how the show is run and observe what types of booths othercompanies have.
You can do a lot to promote your product as an attendee. Youraim should be to line up sales representatives, distributors orother manufacturers. At a specialty trade show, most of the peopleworking booths will be manufacturers' representatives. When youtalk to people, ask if they work for the company or if they'rerepresentatives. Collect the representatives' business cards,and tell them you have a new product coming out and would like tocontact them later to discuss it. The best times to talk torepresentatives are early and late in the day, when the show isless crowded.
Distributors will also have booths at the trade show where youcan meet with their key personnel. Often, the easiest way to getdistributors to carry your product is to go through their salesmanagers, who have a strong influence over their companies'decisions.
Another distribution network to pursue at a trade show isselling through other manufacturers. Distributors devote their timeto the products that make them the most money. Small companiestypically don't have a broad enough line to generatesignificant income, but they often band together to make theirproduct lines more competitive. Find manufacturers whose productscomplement yours. They may be willing to work with you to acquirerepresentatives or to provide more lines to their current salesnetworks.
Contact Source
Cugino's Gourmet Foods, 9176 Trinity Dr., Lake in theHills, IL 60102, (888) 592-8446.
