Yup, I said it. Product has surpassed sales. Product is the most important component to revenue.
Years ago sales was, without a doubt, the most important element in driving revenue. The reason for this elite position of power was lack of information. In most cases, sales people held all the cards. They knew more than the customer. They controlled the information. Customers and prospects were heavily dependent on sales people for product or industry information. This included the competitive information. Because sales people controlled information, product inferiority could easily be concealed or minimized. When information is not frictionless, sales people reign supreme.
When information becomes ubiquitous the value and importance of product to revenue changes. Sales can’t conceal product weakness. Prospects and customers have a greater understanding and knowledge of your product’s strengths and weaknesses, the competition and alternative solutions. With the existence of infinite information the role of sales has moved from the a provider of information to being a problem solver, where the product is the key tool. Environments where the product is the key tool in selling, the sales person is of secondary value. The lack of compelling products, or the existence of poor products, and weak products can not be overcome by killer sales teams with killer sales people. Those days are over.
The importance of product has surpassed the importance of sales people.
Last week RIM (BlackBerry) announced they are looking for a new marketing chief to revive their brand. It’s not going to work. RIM’s brand decline has had VERY little to do with marketing and everything to do with product. Their product isn’t innovative anymore. RIM was “the” innovative mobile phone provider for the last 10 years. They did this by capitalizing on the mobile value of email. They haven’t moved passed this from an innovation standpoint. It stopped being about email and moved to applications and browsing. RIM stayed with email and did nothing, Apple, then Droid did everything. Sales and marketing can’t fix this, product has to. Here is one of the best company analysis’s I’ve ever read on RIM’s problems.
The Internet has shifted the balance of power from sales to product. They’ve always worked together, but it has been sales leading the way. Things have changed. With the ubiquity of information, it’s the product that now leads sales. A good, strong, innovative product is far more important today, than the best sales team in the world.
What this means is when your looking at revenue declining, look to product first. Odd’s are you’ll find the problem there. Once you know the product isn’t the problem, then go kick sales in the butt.
It’s time to raise the profile of product development. It’s time to revamp the product development function. It’s time to hold it more accountable for sales. I think today’s product people should be compensated like sales people. They should be paid on commissions just like sales people. They should be paid 60/40 (60% base salary, 40% commission) based on the products ability to meet a product revenue quota. I think there needs to be a ranking of the people in product or product teams based on the success of their products to drive revenue. There needs to be a lot more alignment between those who build the products and the actual performance of the product. Hold the people and teams behind creating and building the products accountable and you’ll get better products, a tighter working relationship between product and sales and most importantly more revenue.
Sales is still critical, more so in some places, less so in others. However, product is now the most important revenue generating component in your organization. A bad product, a 2nd place product can on longer be saved by sales as it once could be. If sales is still your number one focus for improving revenue you may be making a mistake.
Product has surpassed sales accept it!