Product Pitch Advice From A Shark with Kevin Harrington

Protect your brand, product or invention from the hazards of consumer product launching and go from idea to product to big brand with guidance from retail product design and development experts Tracy and Tom Hazard. Get the insider secrets to put the right things in the right order with the right resources so you can out design, outsource and out profit your way to retail success.

Hey everyone. Welcome to product launch Hazards. I have Kevin Harrington with me today and I'm super excited about that. And I don't know how you could not know who Kevin Harrington is at this point. One of the original sharks. Kevin, you've been in direct response marketing when it was TV version of it. You're now in more direct response marketing again in a whole new way. Online, you're exploring all new fields. I saw a speech you gave at the city gala and you are exploring what's on the forefront, what's next, what's next for shopping. So you're always on the cutting edge of what's going on in the intersection between products and consumers.

Yeah, I think I'm an entrepreneur. So I go back 35 years ago when I was watching cable TV when it first came out and I'll never forget when I tuned into, I had a 30 channel package that I ordered when cable first came out. I mean today you get hundreds of channels, right? But back in the early 80s it was 30, right. And I got to channel 30, which was Discovery Channel. And and there was just bars on the screen. And so the idea hit me, hey, I found out Discovery, it was a new channel, was only an 18 hour a day channel. So I talked them into putting products on the air. And this was in the early 80s and that was the beginning of the infomercial business which became as seen on tv. And then, I mean this is before qvc, this was before Amazon. We were selling a lot of products.

So you and I have both been in the industry a long time. So we've seen it pre Amazon, we've seen it via catalog, we've seen it via TV emerging. So there's been lots of changes over time and now we're seeing a shift again. The interesting part about this shift right now is that it's so much more data driven, right? It's not as emotional and selling driven as it used to be. And you know, getting that through is you've got to get through the data search portion, then you get to the emotion and then you get to the selling portion of it. So how have you found that to be? Because you, I mean you're a consummate salesperson of great caliber at presenting products in a way that people just want to buy it right at this moment.

Hey, well, so I think I worked in the first dozens of years, you know, going back to the early days, more on a gut feel basis. So somebody would come in, they pitch me, and I would see, well, okay, what problem does that solve and is it unique? And I had a little checklist that I would go through. Right. But I found that the funny thing was I would pick, let's say in a month, we would do about 50 projects a year for dozens of years. 50 projects a year? Right. One a week. And I'd find, so I'm going to line up my next five projects. I would have one or two that I thought were going to work, they didn't work. Out of the other three that I didn't necessarily have high hopes for, one or two of those would work. So I actually found out, hey, your gut. Yeah, as an entrepreneur, you got to learn to go with your gut here and there. But I started finding that we were hitting successes that weren't part of the gut reaction. And so as we went, we're like, okay, well why is this happening? And so nowadays with the Internet, what, what's happened is this. We can go on Facebook, we can go on Instagram and target these offerings to people that are very specific in an age demographic, in a zip code demographic. Like we have a product that deals with people that just bought prescription glasses. We can get down to these certain niches of categories. So it's a much more scientific business today. We call it the test before we invest model. Right.

So I love that. So my process here is you and I both probably have pretty similar statistics, but I love to check yours. So mine is that most products in the consumer market, it's about a 7 out of 10 failure rate. So whether that's at mass market or even on E commerce, that's typically where it is. Direct response is different.

Yeah.

And it used to be in the home shopping network. The statistic was awful. And it was almost like 14 out of 15 failures. So you didn't have, you know, you really hoped your 15th one was just amazing. To counteract that. I'm sure you had some better odds than that or you wouldn't still be doing this.

You know, I say in general, and I think the 7 out of 10 fail is right on, because I've said for many years, we're pretty much, we succeed one out of three times, which means two out of three times we're not successful. So we fail more often than we succeed. And now what we try to do is with getting access to good data, which we've been talking about this data of who buys and all the different kinds of background situations that we have when we're sending emails out or videos out to certain places, again, Facebook or Instagram or LinkedIn or Pinterest or YouTube, etc. We can send them into an audience that we might know a little bit more about that audience, so we might elevate that level of success. So, yeah, I mean, the more times you can get more targeted in who you're going to go to, obviously the more targeted you are, the more success you're going to have. So this is where.

I love the.

Test process, because that's really big here. So on product launch hazards and on my income, we talk about this all the time. We have a process that we call market proof first. So Pruvit is our first phase. And so my partner and I, we have eight out of 10 successes. So we have 86% success rate. And how did we do it? Well, we dialed in to realize that we were killing products ideas very early on in the process through a market testing that we were doing. And because we knew our consumers really well, because we were working in Costco or Walmart or Target, so we had a really much better sense of who those consumers were and much more data than most people had back then. Way back when we didn't have the algorithms we have now. And so we were able to check these things really early on with them. And we had subsets of people that we would go to that would say, oh, it's for juvenile products. Okay, we've got these moms with toddlers. Okay, great. Do they like it? And what I think most entrepreneurs fall in and I'm sure you see that is they come in with this beautiful idea that everybody loves it because they said, yes, we love this. This is great. And I always say, that's your mom and your sister and your friends, and of course they love you. So they say yes. And they are not the people who are going to plunk down a dollar at the end of the day. That's who we have to check it with. And now we have all these resources to be able to do that. So what's kind of a part of your screening criteria and your test process nowadays?

Yeah, I love what you just said. You know, you said, I think market ready. I call proof of concept. So what you just said, people will come. Oh, yeah, everybody that I've talked to, loves my product. Right?

You've heard it every day, I'm sure.

Aunts, relatives. Yeah, they all are going to love it. Right? Now I tell people, go out to the flea market, okay, where people don't know you. Take a stand now. Start pitching people that walk by, get their attention, create a great pitch, and see if you can make it happen. Now, I mean, that, by the way, was say you got to buy a stand at the flea market for $500. Well, at the end of the day, did you have 2,500 in sales, enough to cover what the stand cost you, the cost of the product, and some of your other costs of operating that business that day. And if the answer is, yes, I had enough sales, maybe you've got proof of concept. Because this is. I like to say, I look at where does the rubber meet the road? You know, you could go to flea markets. You can do crowdfunding. Put it up to the crowd, see what they say. You can go on shopping channels. You can sell to a catalog. There's a lot of different things you can do to market. Test your product to get proof of concept. But I like to see that before I invest too much money. Now, I will invest. You get the proof of concept. But this is called the test before I invest again, because I like to see that people are responding in a very positive fashion on the product. Being willing to actually put their money where their mouth is and buy it.

Actually, yeah, that's exactly what we want to test that as well. We also want our clients from our standpoint, because we're at the design phase of it, so we're starting really early on with most of them. We also like to say we want to test here right now, before a lot of these things get fixed in and are unable to be changed, before you spend a bunch of money on tooling and inventory. Can we test it out? And thank goodness we have great new technologies like 3D printing. So we actually run 3D printing runs and sell them and see if people will buy them. Because there's. Why not? Why tool for something when you don't even know if it's going to work yet?

Exactly. Yeah. No, I love it. Just the other day, we were talking to a bunch of people that were doing crowdfunding, and I do crowdfunding. Not necessarily to raise the money. I do crowdfunding to. To see the response we're gonna get from the crowd. Because if I have a great idea, great product, great video, put it up and nobody cares Nobody wants to buy it in advance or very few people. We may not have the right kind of item. Again, it's not market ready, it's not proof of concept, and it's not something that we're gonna go put tons of money into if the crowd didn't respond in a positive way.

That's so interesting. Cause we're actually at that stage right now. So we're doing our first product that we've done for ourselves in about almost a decade. We haven't done our own products in a decade. And we have decided to go the crowdfunding route. Not because we're not confident in the product, we're actually really confident in the product, but we want to be confident in the marketing message. So we're actually testing the marketing message through the crowdfunding model. And so people thought that was odd. And I was like, well, you know, but it is promotion at the same time too. So if it really works, you've got a higher level of hype and promotion. We're going to bring the product in, so we're not worried about that portion of it. So, you know, we didn't need the money.

Nice. And you could test a couple different options to see which marketing method gives you the best conversion then too, right?

Exactly. So let's talk about. You get pitched all the time. I'm sure products are coming. And a lot of them I see as well, they're not ready yet. What makes them not ready yet?

Well, a lot of things. I mean, I see things in very crude prototype stages. For example, some people bring these very complicated things and they're electrical, or they require very significant, possibly investment in tooling, in electrical approvals. Some things people think, oh, this is a very simple product, it's an ingestible. But you can't make any claims if you don't have, like clinical data. Right. So you may need a clinical study. People say, oh, but this is a weight loss product. And I've got testimonials from people that lost weight. Well, just because you've got testimonials doesn't mean the government allows you to make those claims. You need clinical data. So there's all different times and places where people have issues of being able to go to market, getting the product ready, getting the manufacturing taken care of, getting the studies done, getting the packaging done. There's a lot of elements that go into creating an amazing product that's going to be successful and out in the marketplace.

So that's a little too early stage. Without enough information and A lot couldn't go wrong. So I actually refuse anything that requires FDA approval of some kind. I will go UL listing, but that's kind of like borderline. Anything that goes beyond that and has an app or anything that's going to require upgrades or platform that you have to pay attention to. So we don't do that kind of technology integration because it is, it's so complicated and so many things can go wrong in the process and it just takes you so long to get to market too, that it's not worth it.

I invested in a product a few years back. They said, oh, we just have this FDA thing that we made application for 60, 90 days max. Right. So I invested money, was going through the whole process. Three years later, no FDA approval. Right. So what happened? My money's tied up. I'm spending all this time with legal, with accountants, with lawyers, with this, with that. It's, you learn the hard way. It wasn't ready, actually never did get FDA approval and my money was gone. So I work smarter and like to know that, you know, some of these things are already in place.

Yeah. So in the new model that you're working in, it's, you know, it's really different and it's fast, it's very speedy. So you're getting data back, I imagine, quite quickly on whether or not something's working. So what is that speed for you guys?

It can be as quick. It depends on whether we're doing everything internally or we use outside resources. If we do something internally, I can see a product, build a funnel or website for it and get some ads running with less than 30 days time. That's moving pretty quick. If, you know, see a product, put a deal together and get some websites up. We like to also have a little bit of crude video with it at least. So I own a studio. We own a lot of different assets that we can move quickly. But 30 days is quick to move. Generally it's about a 60 to 90 day process. And it also depends upon how much testing we're going to do. We're going to use one channel of testing, like just Facebook or do we want to do Facebook, Instagram, YouTube? Sometimes you got different types of ads that go to the different kinds of places that you're going to. But I like to try to get reads on my testing within 30 to 90 days so that I know whether I've got something. Now in some cases we can actually do some of that with prototypes if they're far enough along. We do like to have finished product. But if you have the ability to ship finished product to people and they're seeing a prototype, then that's okay. If you're able to ship them finished product within that short window, maybe within 30 days, for example.

And as I was referring to before, we've done that with 3D printed product before. So we were testing out a pet product and it was like one of those sock collars and so it had different designs on it. So we were, we made a run of a thousand pieces total, but four different designs to see which design would fly and then made the decision on what to injection mold. So our size was about, you know, in this case it was about 250 pieces per, per design. What is your ideal size for testing?

For most products, I say that I like to see in the neighborhood of 30 to $50,000 at the retail level. So if, let's say something is selling for $50, I like 1,000 pieces, that would be 50,000 at retail. Because if I'm going to spend 10 or 15,000 in ads, then if I have a two or three or four times return on 10 or 15,000, I'm going to get 20, 30, 40, 50,000 in sales.

And you see that then scaling up, which is why you see that kind of conversion rate and the amount of turns that you would do in that time would be worth the long term investment of continuing forward with that type of product. So that's really telling.

And a shopping channel, by the way, an HSN or a qvc, they're going to tell you they want to see somewhere in the 50 to $100,000 range at retail value. So if something sells for $50 and is going to go on a QVC, they're going to want 1,000, maybe 2,000 pieces because they want maybe a little extra in the warehouse if it hits and does very well. So they'll ask for a little bit more. But I say generally in that $50,000 retail selling price range on a shopping channel, no more than probably 100,000.

Yeah, see, and that's not too big to really understand. Is this going to fly? Is it going to move? Is it going to do something? And if you're going to go from there and then want to get onto a shelf somewhere, you've got some really telling numbers that really play with the buyer.

Yeah, if the product is a cost of goods to you, sells for 50, your cost is 10 to make it and you need 1,000 pieces. You only have a $10,000 investment in inventory. That's not a bad Number between building the funnel, getting a couple ads, 10,000 in inventory, maybe you can shave that inventory, maybe you can do it for 5,000 in inventory. But at the end of the day, if you can take a new product, get it tested and launched you and in 30 to 60 days and 10 or 15, $20,000, get a great read on it, that is not a bad way to be in business is spend 10 to 20 grand, 30 to 60 days, see if you got a winner. Hey. And if it works, then you're off to the races and maybe you could do millions. That's not a bad way to go.

No, it's really not. And on the side of the inventory as you're mentioning, I mean that's one of the reasons we do Recommend Things like 3D printing them or you know, making like stage 1 instead of stage 2 of your product, which has way more complicated or bells and whistles that it might have. So even if the cost of goods is higher than you would like it to be because you're buying a smaller run and all of that, at the end of the day, this is an investment in. Should I move forward before you spend hundreds of thousands of dollars in inventory and have to buy too many pieces?

Exactly. Yeah, I agree.

So you know, the other issue that we have a lot is pricing. You probably get a lot of people who really don't understand their pricing structure yet.

Yes.

Is there a way for them to get that?

Yes. So I just mentioned, I said, hey, if you have a $50 product and a $10 cost and you need 1,000 pieces at 10 bucks, you got $10,000. That multiple $10 cost to $50 retail. I like a five time multiple when you're dealing in the lower price points. So if you're selling something for $20, you should not have any more than about a four, no more than a $5 cost of goods. That gives you a four to five time multiple because you got allowance for media allowance for credit card processing, affiliates, all the other things that you've got.

And are you saying landed cost of goods too? I want to make sure you work correct. Yeah. So everyone, you have to hear that that means that you know your tariffs, you know all the things you need to make that land and that's in the warehouse at that price.

Correct. And some items freight in can be expensive. If it's a heavy little item, you might spend 50 cents or a dollar on getting something in on freight. Now I'm not talking about air freighting it in, I'm talking about you Know, even a boat if it's a heavy product. Right. So make sure that you add. You need all your royalties, your profits to finders to, you know, like we have royalties to people that bring us deals. So if they're getting 20 cents royalty and you got, you know, 30 cents for shipping and you got the cost of goods added all together, all your cost and you should. I like to see a five time multiple. So.

And I think that's really important for everyone to hear that because, you know, a five time multiple really gives you. Because the most costly thing you're going to find at the end of the day is this marketing and some of it is investing to get it right as well. So having budget for that at your very, in the very beginning, especially if you're doing it yourself, not using a team like Kevin's who have a lot more dialed in about the process and how it works, you're going to run through and it might take you much longer than 90 days for you to get it going. So you've got to have some budget and the ability to last that amount of time as well.

Yes, absolutely. Yeah. I mean, when you have a good multiple like that, you've got allowances for all kinds of things to sell to distributors who are going to sell to the retail stores, to sell to international affiliates, et cetera. The whole world of affiliate marketing is huge. And so if you say, oh, I got a $10 cost, I want to sell it for $24, there's not enough margin there to pay for the people that you need to pay for through the distribution processes. You may be able to test it and make the numbers come close to working, but you'll never have full rollout dollars for the distribution channels you need to allow for.

Yeah. Wow. Such great insights. And I'm so glad you're reinforcing a lot of what I say here and a lot of what our other experts say as well. Because you know that having that margins, having those spaces to move for retail is so critically important in the future because you want to get beyond doing units yourself. You want to get into the larger volumes. So before we go, I want to just cover one more thing that I think is pressing on a lot of people's minds is that them deciding if they're ready to present to someone like you, them deciding how they know if they're ready and what that takes for them. What's your advice there?

So that's a really good question. I appreciate that. I think some people came on Shark Tank a little Too soon. And then they get grilled by the sharks and Mr. Wonderful is pulling a rug out from under them. Right. So I just talked to somebody this morning that had been on Shark Tank and told me it was a horrible experience that he had.

I have a few of those.

There's an article about that really bad by one of the sharks. I won't mention any names, but I tend to be a little more constructive with folks. And if somebody is too early, I'll tell them that. And I'll also maybe give them some advice on fixing their pitch a little bit. Because I think one of the things that I say is I can appreciate anybody that's willing to give me a pitch if they've given me at least a good pitch, even if it's not ready to go. Okay. So I've had people say, oh, so, Kevin, I've been following you and I know what you look for. You look for something that solves a problem. And I call the system that I use. And I'm just going to say it for your folks that are listening. Does the pitch tease, please and sees. Okay, awesome. When you tease, you got to tease with, give me an attention getting problem that I can identify with. All right, now I'm listening. You got my attention. You've got a problem. Yes, I agree. That is a problem. Now you're pleasing by solving the problem with features and benefits that are also giving you some kind of maybe magical transformation, maybe some great testimonials. So that's the please solve the problem, but also can you solve it uniquely? Is it a unique way to solve the problem such that nothing else is solving the problem in a similar fashion? Right. So that's the please. And then the C's is, do they have an irresistible offer? So somebody may not be ready actually when it's all said and done for me. But if they do a tease, a please and a C's, I'll say, okay, great, you followed the steps to giving a good pitch. Congratulations, that's great. But maybe you're a little too early. You don't have proof of concept. You don't have any kind of success anywhere. Have you shown that this works anywhere? Has it worked in a catalog? Has it worked in a shopping channel? Has it worked in a digital test? Did you put it up on a Facebook? On an Instagram? Did you take it to a flea market? Where have you shown this to other than your relatives and your friends? Okay, because we talked about that already. So, I mean, at the end of the day, some investors May get a little rough with you, may get a little nasty that you're too early, you're wasting their time. I'm going to just be constructive and tell you, okay, give me a good pitch, and I'm going to thank you for that. But these are the reasons why it's too early and come back to me at a later time. And I actually welcome people back to come back. I say, hey, look, if you want to come back, I only ask you to do one thing. I want to see. Show me where you were and why. I said it was too early. Now show me what you've done to bring it to a point of now being ready to go. And now we can talk.

Well, that's so great that you're constructive. So not quite shark, like, at all. Much more, I don't know, dolphin friendly, maybe. I don't know.

You know, look, when you're on the show, you know, they want you to get, you know, a little tough every now and then. So, you know, I had to do that on the show here and there. But when I'm in real life, I'm just a businessman and I'm trying to help entrepreneurs. I'm at a stage in my life where I like to empower entrepreneurs. So I. I found that I could be mean and nasty, and what good is that going to get me? I'm really all about kind of teaching in my days now. I want to help, I want to empower. But I also am not going to give you false hopes. I'm going to tell you, you're not ready for prime time. You're not ready for Broadway. You got to do off Broadway first. Let's get the proof of concept. Let's prove that this thing has potential. And now we can test it before we invest. And then if that works, then we're ready to invest. And that's what everybody's looking for. Are they ready for prime time? Are they ready for that big investment? And that's what I'm looking for.

Wonderful. Well, before we leave, I want to make sure that you have an opportunity to tell us, because I know you're always working on stuff that's brand new. Is there anything you want us to know? Anything you want me to share in my column as well as here with my listeners?

So one of the things that I have really believed in for many, many years is learning how to sell is very important. And I learned how to sell back in the early 80s because I was following somebody, and this person ended up becoming a mentor to me. His name is Zig Ziglar. Zig wrote, if you all don't know.

Who that is, you should look that up. Google that right now.

Yes, Zig Ziglar with a lot of Z's. Right? So, and Zig, one of his books was the Secrets of Closing the Sale. He had over 100 closes. Zig taught me some amazing things. And one of the things, just one tip here, he said, if the selling price is here and the value is lower, you're not going to maybe make the sale. What do you need to do? You need to add value stacks to create more value than the selling price. And that took this form for me. I said, hey, look, we have a product that we're selling you, and it's 39.95, and here was the value. But wait, there's more. We're going to give you six free steak knives, some other things, maybe a free video. We increased the value stack and now we had a value higher than the sale price. We made the sale. This was just one of the closing techniques that led to creating this. But wait, there's more concept out in the marketplace. And so make a long story short, Zig Ziglar mentored me. I love all the things that he did. He passed away six years ago, so I actually have a relationship now with the family. Tom Ziglar, Julie Ziglar, Cindy. The family is amazing. So I believe that people can learn how to sell. And so I've helped the family bring back Zig Ziglar. And we actually am now partners with the family. Family to take the Zig Ziglar assets back to. I say back to the future, the future of where we are today to teach entrepreneurs and folks out there that aren't familiar with Zig going to teach you how to sell. So that's one of the things I'm spending some time on is like this weekend I'm going to be up in Toronto teaching people how to sell, and we're going to be teaching some of the Zig Ziglar techniques. So it's one of the things I'm having a lot of fun with. In addition to taking pitches, investing in businesses, we're teaching people how to sell and all that good stuff. So it's been a lot of fun.

Yeah, that's so great, Kevin. And I've written an article about that. So I'll make sure to link that in this post for all of you listening or watching here so that you'll be able to read all about that as well. Because he also shares some of the great secrets of closing in the article. So thank you for that.

And that'd be a great link to put in, too.

Yeah, actually, we will definitely make sure that that happens. But, you know, this is the thing that I really want everyone to hear is that the reason people like Kevin Harrington had such a sustainable success through all these years of the shifts in the marketplace of how shopping has changed, how consumers have changed buying habits and patterns, is because you base that all on the same principles of what drives us to buy. And those principles haven't changed. They're the same ones that Zig Ziglar was using. Those principles are the change. And those of us who have managed to last through all of these different technology changes and still be as successful and still bringing products to market, it's because you're basing it on good, strong foundation of things that work again and again.

Hey, you summarized it pretty good. I like that. It's great. Yes, I agree totally. I mean, 35 years ago, I met people that were selling products at trade shows and fairs, put contracts together to take them to television. We then took them around the world. We're now putting them on shopping channels. And at the end of the day, it's still some of the same techniques of connecting with the customer and selling the products by using certain techniques and systems. And this is what we've been using for 35 plus years. Continue to use. And it's great that we have folks like yourself, Tracy, that are willing to share this along with folks like myself willing to do this too. And I think this is what makes for great podcast content. And like we're doing right now, is sharing some of our thoughts with those entrepreneurs that are out there looking for some great tips. And so thanks for having me today. It's been really fun to be with you again. I think third time's a charm. So we had a lot of fun over the years here and great to be part of your podcast today.

Well, thank you so much, Kevin. I really appreciate it. Everyone, Kevin Harrington on product launch hazards. And you can find us@productlaunchhazards.com and you'll be able to access all of the past interviews, but also all of the same articles. So you'll be able to access that article that Kevin was referring to and I was referring to about Zig Ziglar and also the other two that I've written about him. So they'll all be linked there. So please go to the blog post and you can find us anywhere on social media. Hazdesign. Which is me. H A Z Z has design. So thanks everyone for listening. This is Tracy Hazard and Kevin Harrington on Product Launch Hazards.

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