← Quora archive  ·  2011 Jun 21, 2011 10:14 AM PDT

Question

What strategic role does sales play in product design and development?

Answer

This is far too general a question. The relationship between sales and product development induces a combinatorial explosion of possible situations that is vast enough that you can practically fingerprint a business uniquely based on the relationship.

For instance, Coca Cola considering a new soft drink will get very different value out of its sales group (which, remember, sell to varied customers ranging from bottling plants to airlines to vending/fountain machine operators and retail stores...) compared to an enterprise software sales business of 3 people, which offers one $200,000 product and is considering another one for the suite.

So the best we can do is to point out some of the different dimensions that define the "coupling space" between sales and product development.

  1. Is the business a complex systems business or a volume business (see Geoffrey Moore's Dealing with Darwin)
  2. What is the pricing model for existing products? Upfront? Pay-by-sip?
  3. How illegible is the pricing strategy? Is there an RFQ process in the industry? Are quotes uniquely crafted proposals or simply checkbox computations from a modular offering?
  4. What is driving the business, marketing or sales?
  5. Is it a new first product or a line extension?
  6. How many segments does the market have?
  7. Are the sales made to end-users or intermediaries?
  8. How integrated are sales and support? Where/how does existing product feedback come in?
  9. How do customers break out in terms of profitable vs. lossy customers?
  10. What is the churn rate/repeat visit rate and lifetime value for existing products?
  11. What is the compensation structure for the existing sales force? (this will determine whether they will fight new products or help develop them... even if sales is a goldmine of product dev intelligence, it is of zero value if they lack the incentives to share it because the new product would make their incentives worse)
  12. What is the portfolio strategy with respect to competitors? Are you going for best-in-class point solutions or trying to span the entire offering space and get economies of scope? Sales and product dev are usually more at odds with full-spectrum suites than with point-set suites, because in a full spectrum, there is always some illegibility about more/less profitable products.
That's just 12 bullet points, each of which induces a few variables. The overall relationship between product dev and sales is determined by the position in the space.

Depending on that position, sales could be your worst enemy or best friend. It could play no strategic role at all, or it could own strategy outright.