Many great business innovations started as new ways of reaching customers. In the late 19th century people living in rural America had to go into town to their local store to buy the goods they needed. The selection was poor and the items were expensive. A young railway company agent, Richard Sears, decided to try a new approach. Together with a watchmaker, Alvah Roebuck, he set up a mail order catalogue – initially offering watches and jewellery but expanding over the years to include a vast array of goods. They used the railroad and post office networks to deliver goods. The catalogues were novel, exciting and appealing to clients. Sears Roebuck became the world’s largest retailer.
In 1886 David McConnel found a new way to sell cosmetics. His sales agent, Mrs P.F.E. Albee, was the first Avon Lady. Using a network of women sales agents to sell directly to women in their homes, Avon grew rapidly. By 1928 Avon had 25,000 representatives. Avon has continued to grow and to empower women. It has more women in management positions (some 85%) than any other Fortune 500 company. It is estimated that 90% of American women have at some time bought something from Avon.
In 1959 two High School friends, Jay Van Andel and Richard DeVos, founded a company called Amway, an abbreviation for ‘American Way.’ They developed an innovative sales approach based on multi-level marketing networks. They sold a concept of owning your own business to people who sold their products and they convinced people to convince their friends of the benefits of the business model. It grew exponentially. The products were incidental; the network sold the model of the network. It is now a multi-billion dollar corporation with over 3 million business owners operating in 80 countries.
In the early 1990s Microsoft dominated the PC software market with their desktop packages sold through distributors, dealers and retail outlets. Anyone trying to sell a new software package faced huge barriers to entry. A little company called Netscape found a way to bypass the traditional channels by offering their browser product, Navigator, as a free download on the internet. They charged for professional and developer versions. At the time it was a revolutionary way to distribute software. Netscape became leaders in the browser market.
We tend to think of innovation in terms of new products and services but new routes to market can be far more effective means to gain competitive advantage. There is a new way to reach the customers you serve today and the customers you want to reach tomorrow. Spend some time focusing on this issue, brainstorm new routes to reach clients and new ways to sell. It could be the best innovation investment you make.
Paul Sloane writes, runs workshops and gives keynotes on innovation. He is the author of The Innovative Leader.