Summary - Fundamentals Of B2B Sales And Marketing - John M. Coe
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Summary - Fundamentals Of B2B Sales And Marketing - John M. Coe

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Summary of "Fundamentals Of B2B Sales And Marketing" by John M. Coe produced by John Kivit (www.multiscope.nl). Useful for your B2B marketing knowledge.

Summary of "Fundamentals Of B2B Sales And Marketing" by John M. Coe produced by John Kivit (www.multiscope.nl). Useful for your B2B marketing knowledge.

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Summary - Fundamentals Of B2B Sales And Marketing - John M. Coe Summary - Fundamentals Of B2B Sales And Marketing - John M. Coe Document Transcript

  • Summary Fundamentals of Business to Business Sales & Marketing John M. Coe
  • John Kivit – Multiscope john@multiscope.nl March 2010
  • 1. Why is it so tough to Sell Today The author’s background is that he is a salesman! “In the classic marketing definition sales is a part of marketing. In the real world, the sales group almost always dominates marketing within a company and is the power source between the two”. Marketing involves three groups: 1. Product / market management 2. Marketing communications 3. Sales 4. (Customer service) Four major trends causing the breakdown (why it is so tough so sell today): 1. Customers don’t want to see salespeople anymore • “At large companies where contracts are negotiated and complex servicing is required, a salesperson still has value” • (Lack of) time is the salesperson’s enemy • Buyers now are far more educated • Three sales visits per day is now the norm (x 200 days a year) 2. Communication clutter is high and getting worse • We see or hear 4,000 to 5,000 messages daily (Advertising Age) • In the office we receive up to 200 messages daily (Pitney Bowes) • “We have become an over communicated society” • Awareness does not equal behavior anymore 3. The buying process is more complex • From a single buyer to a decision making unit with diverse roles • There are more steps in the buying process than in the sales cycle 4. Multiple channels and choices are more available View slide
  • • Multiple channels of distribution • Competition has many faces (direct, indirect, technology) An average sales visit (call) cost $ 329. But there’s hope, thanks to a new sales coverage model: 1. Marketing communications handling inquiry generation, lead qualification and sales opportunity development 2. Technology to dramatically increase the sales productivity 3. Direct communication to prospects and customers in databases 4. Inside sales and telemarketing to support face-to-face contact 5. The internet View slide
  • 2. The New Sales Coverage Model The leverage so ensure sales success: - Hire the best salespeople you can find - Train, both professionally and technically, and then reinforce the training - Motivate the sales group through compensation programs and recognition - Organize sales territories fairly - Stand back and let people do the job, but coach like hell - Fire them quickly if they didn’t cut it. Four phases of the customer lifecycle: 1. Customer acquisition 2. Customer growth & retention 3. Customer loyalty 4. Customer reactivation In the new sales coverage model, the budgets should be focused on direct mail, e- mail and telemarketing. The new sales coverage model is intended to build customer relationships that go beyond the salesperson. Here are the characteristics: - Database: information regarding decisions makers and influencers is stored in a database - Familiarity: decision makers are familiar with your company & value proposition - Multi contact: customers have methods of contact or interface with your company other than through the salesperson - More contacts: number of sales calls decline, both frequency and total number of contacts will increase Four primary communications media to target the individual and initiate the contact:
  • 1. E-mail ($0,01 - $0,10 each) = Direct Marketing 2. Postal mail ($0,50 - $10+ each) = Direct Marketing 3. Telephone call ($20 - $45+ each) = Direct Marketing 4. Sales call ($150 - $1,200 each) “Back in the late 1980’s, McGraw-Hill reported that it took an average of 5,4 sales calls to close a sale. Most B2B sales experts contend that this number is now close to seven or eight.” “Do not cover the market by size of customer, but pursue the share-of-customer view.” Maximum field sales call per day = 3 Completed telemarketing calls per day = 8* * = Defined as one that reaches the intended individual and meets the goal of the call. It is not a dial, callback or partial complete. Average provided by Businesslink, a firm that specializes in B2B telemarketing.
  • Telemarketing (phone call) is divided into four functional categories: - Inbound call centers: received phone requests stimulated by marketing communications. - Lead qualification telemarketing: a phone call to qualify inquiries - Lead nurturing (development) telemarketing: follow up calls for leads that were not ready yet. - Inside sales: qualified leads that are not appropriate for coverage by field sales - Lead generation: outbound (cold) calling for generation new leads. Other media are considered “surround” sound in the new sales coverage model: - Public Relations: real value is using the reprints in a direct marketing program. - Advertising: especially brand response advertising. A mix between of both brand advertising and response advertising. - Trade shows: if the show is highly targeted to your primary market or segment, then go. And if you do, go with force. - Seminars: are drawing cards to seriously interested buyers. • A strong offer to use in DM campaigns (also use outside experts) • Personal contact is possible (make video!) • Online seminars with Webex or Placeware save time • Use all opportunities for public speaking The author of the book is not very positive on CRM. “No marketing or sales software ever made a sale”. 1. Nature of product/service solution and lead-time to ship/service - Commodity: product or service widely available, has few distinctions and is sold mainly on price and availability features (e.g. office supplies) - Customized: something must be done to the product or service to meet customers needs (e.g. adding fields to software solutions) - Designed: the product or service needs to be engineered or designed to meet
  • customer needs (e.g. advertising agency services) 2. Degree of relationship desired / needed combined with dollar amount: - Order ship (low dollar, off-the-shelf) - Contract or purchase order (negotiation, supply and service) - Strategic relationship See figure 2.2 for a combination of contact media and 1 and 2 above.
  • 3. The Start: Profiling and Targeting the Market It’s a three-step process: 1. Profiling: Where are you now? 2. Targeting: Where should you go? 3. Segmentation: Who’s going to get you there? Profiling is the process of counting how many customers/prospects in your database are in specific cells (industry / company size). “Past success is almost always the best predictor of future success”. Two main pillars of profiling: 1. Industry type • SBI code 2. Company size • Revenue • Employees A typical breakdown for company size: • 1-4 employees • 5-9 employees • 10-24 employees • 25-49 employees • 50-99 employees • 100-249 employees • 250-999 employees • 1,000-2,499 employees • 2,500-4,999 employees • 5,000+ employees Overall small (1-24), medium (25-249) and large (250+) can also be used.
  • Profiling can be improved with: • Penetration analysis: The number of customers in a cell versus the total number of companies in the cell • Inquiry analysis: the actual number of inquiries you get from companies in that cell Profiling by industry is better than by company size. People will respond to relevance, and the type of business they work in is highly relevant to them – less so for size of company (or location).
  • Four inputs for the identification of a target market: 1. Results of the profiling: segments in which success has been achieved. Considering ‘broadening’ the successful industries. 2. Markets of know opportunity 3. New product introductions: most of the time involves new target markets. 50% of the sales of a new product are in areas that were not envisioned in product development. Keep track of the inquiries! 4. Competitive openings: openings based on the activities (or lack of) of the competition. Include a field in your CRM system regarding the customers found at a client or prospect. Then you can move quickly when a competitor has gone out of business, or experiences quality problems. Targeting: “put your head in the right position and your body will follow soon”
  • 4. Segmentation for Communications The capability of using a database of information has enabled marketers to act more like salespeople and come closer to that one-to-one communication. Three definitions of segmentation: 1. Macro: by industry or market category. (E.g. banking) 2. Micro: cluster of companies within a macro segment. (E.g. large regional banks) 3. One-to-one: a segment of one (Rogers & Peppers). The concept works best in consumer markets. Micro segmentation is required to execute the new sales coverage model: A process of grouping individuals and/or companies that share common characteristics into clusters that possess a unique relationship to your product or service, selling process or company. Micro segmentation approaches: 1. Demographic segmentation a. Geographic area b. Industry type c. Company size d. Location type (HQ, Plant, Regional office etc.) e. Fiscal year f. Year founded g. Relational demographics: factual information related to the sale of your product or service. E.g. do they have an inside or outside sales force (if you sell sales force automation software)? Has to be obtained on a company-by-company basis but gives good opportunities for ‘stealth’ marketing. 2. Sales cycle segmentation a. Suspect: companies that you have some reason to believe should want
  • or need your product or service. They have not indicated that they are interested yet. Typically found on ‘lists’. b. Inquiry: you still have no idea whether they have a serious interest or can even qualify to buy your product. An inquiry is an unqualified lead. c. Lead: someone who represents a company that can buy your product or service and is seriously intended to do so. d. Proposal/quote e. First purchase: get the second sale and ensure the customer. Give extra attention; increase communications, customer satisfaction calls, welcome letters etc. f. Repeat or good customer g. Past customer 3. Behavioral segmentation a. General inquiries b. Responses to specific offers c. Trade show stop-buys d. Seminar attendees e. Multiple responders f. Purchasers g. Calls to customer service: up sell or cross-sell h. Others: e.g. attending sponsored events 4. Competitive segmentation a. Direct competition b. Indirect competition c. Budget or lack of it d. Status-quo attitude: the why should we change attitude? 5. Analytical segmentation a. Single or multiple regression b. RFM i. Recency: which customers bought most recent ii. Frequency: which customers have bought the highest number iii. Monetary: which customers have bought the largest amount in money.
  • Divide into quintiles (divide into five groups) and assign a score of 5 to the top fifth and 1 to the lowest fifth. Recency is the most predictive of the three. 6. Need based segmentation 7. Job functions (Psychographics) segmentation 8. Customer segmentation FAB’s: features, advantages & benefits over the competitor
  • 5. Redesigning the Inquiry-Generation Process “It takes bundles of time and money to create brand awareness” John Wanakar: Half the money I spend on advertising is wasted, and the trouble is I don’t know which half. We know that the general brand or image advertising is certainly part of the half that is not working. It’s only the rare large company that can justify and afford brand/image-awareness advertising today. For the rest of the world, we need inquiries and sales to be driven from the marketing communications budget. New planning process for inquiries: 1. Determining the balance desired between the quantity and quality of inquiries 2. Developing offers that generate the type of inquiries desired 3. Deploying the proper outbound media to communicate to the target audience Choose for quantity if: - You have a new product introduction - You have a broad-based buying process that involves multiple individuals - The target market for purchase is not well defined Choose for quality because: - Screening and lead qualification costs money - With a mature market, the quality is the only criterion for success - At a high price point you need qualified buyers (no “tire kickers”) The offer is not the product or service! Soft offers have two traits in common: - Low risk - High perceived value
  • Premiums in your DM help in quantity, but definitely not in quality. The word “Free” will always bump response rates. Different types of premium testing: 1. One premium versus the other 2. A premium versus another type of inquiry generation offer 3. The premium in the outbound package versus offering it for the response Other types of inquiry generation offers: - White papers - Case histories - Subscriptions (newsletter / e-zine) - Product sample (free cd) - Brochures & catalogues - Opportunity to attend a “free” seminar - Something else free Your offer should always carry an expiry date! Lead development (nurturing) offers: what offers will move buyers from one to another stage of the buying process. Information of value offers work best. Valuable and objective information that will enable them to make better decisions, advance in their career and even get promoted. The best lists for a direct mail campaign: 1. Customer list 2. List of all old inquiries 3. Response lists 4. Compiled lists People reflect a need that the company has, but companies have never bought anything. The people in the company buy.
  • 6. High-yield lead qualification Classic definition of the different stages of the sales process: - Suspect: a company that possesses the demographic characteristics of a potential customer - Inquiry: an individual who has in some manner responded to one or more of you companies marketing communications. (all the person has done is raised his or her hand) - Prospect: an individual who not only has responded but also works for a company that fits you predefined demographic customer criteria. - Qualified lead: an individual or even a selling situation that meets the minimum qualification criteria. - Sales opportunity: a qualified lead AND one who wants to see a salesperson, plus is in the later stages of the buying process and wants to purchase in the near future. A step-by-step process for lead-qualification: 1. Inquiry screening a. Outbound media that generated the inquiry - Inquiries from PR efforts - Responses to advertising - Trade show inquiries - Responses to DM campaigns - Event guest lists b. The offer accepted by the inquirer c. The response media d. Profile fit 2. Lead qualification a. Inquiries should not be sent to sales b. The most accepted lead qualification criteria (BANT) - Budget
  • - Authority - Need - Timing c. Lead development (nurturing) is the key to high yield lead conversion - Benchmark how inquiries translate into sales - Get input from sales - Test the lead-development system - Keep in mind that lead development will be done by phone and this medium is ‘controversial’ among salespeople. - Chart the progress of a lead through the buying process - Allow sales access to the database of leads in the development process - Benchmark the competition 7. Sales conversion First pages of this chapter are not very interesting!!! Working with distributors / VAR’s in the new sales coverage model: 1. Manufacturers educate, train & motivate distributors 2. Manufacturers target end markets trough the use of database techniques 3. DM programs are launched to these markets, inquiries generated and leads qualified by the manufacturers 4. A decision is made to which sales resource the leads will be passed 5. The leads are passed to the selected distributor and accepted by that firm 6. Follow-up is required within an agreed-to number of days 7. The distributor proceeds to call on the lead 8. Feedback is then sent to the manufacturer within the set number of days
  • “Salespeople want to sell. It’s the job of marketing to make it easier for sales to occur.”
  • 8. Up-selling / Cross-selling and Creating Customer Loyalty Two types of customers stop buying: 1. Long term customers • 68% stop buying because they don’t feel ‘loved’ anymore 2. First time customers • Customers from their viewpoint are trying you out to see if they want to continue to purchase. This is especially true with product with low added valued. The job is to get the second sale. First time customers can also be called “very qualified leads”. Additional effort is needed to truly convert them to real repeat customers. Loyalty is a human emotion. Hierarchy in loyalty: 1. Loyalty to a set of values and principles (what does your company stand for?) 2. Loyalty to groups (make sure your company is a team of people) 3. Loyalty to individuals What works is “random acts of kindness”. Select your top 100 contacts and send them a nice gift (below $25) and say “Thanks for your business, we enjoy having you as a customer”. Do not ask for anything in return.
  • 9. Campaign Planning and Execution Target marketing or direct marketing leads the campaign process and is supported by advertising, PR, trade shows etc. The four elements for direct marketing success: 1. List (50-70% of success) • In B2B the list is far more important than in consumer direct marketing and should consume a commensurate share of the time and attention in the planning process 2. Offer (20-30% of success) • The product is not the offer, but it is the offering 3. Sequence and frequency of contact (15-25% of success) • Mail, Phone & E-mail are the three media 4. Creative (10 – 15% percent of success) • Copy, art and format Direct marketing campaigns launched from Thanksgiving (end November) through New Years Eve produce higher response rates in B2B. The end of the summer is a relatively bad time. For consumers the best time is January and February. This is why: 1. Business travel and activity is low. More of the targets are in the office (Hut effect) 2. Companies are preparing for a new year and making plans 3. Fewer marketers are communicating. Less clutter. Steps in a buyers process: 1. Need awareness & definition 2. Vendor identification 3. Information gathering 4. Vendor evaluation / initial selection 5. RFP or quote
  • 6. Narrowing of vendors 7. Demonstration / presentation by vendors 8. Reference checking 9. Vendor selection 10. Negotiation 11. First purchase 12. Evaluation 13. Second purchase Traditional ways of budgeting: - Last year plus or minus some percentage (usually 10%) - Set percentage of sales. 1-3% in B2B while in consumer it can add up to 30% - Gut budgeting based on one guys gut feeling - Copycat budgeting based on competitors spending
  • Better ways of budgeting: - Breakeven analyses: the amount of sales revenue (at gross margin) that must be achieved to pay for the campaign. Tells you what is at stake. It’s also an evaluation of the reasonableness of the budget - Allowable cost of acquisition: how many dollars can we afford to acquire the customer? Also take into account the costs for follow up, sales visits etc. - Expense to revenue (E/R): a placeholder for ROI. It’s simply the number of dollars spent on the entire campaign as a ration to the number of dollars in revenue generated. Normal ratios are between 1/10 and 1/20. Over 1/20 you are doing extremely well. Campaign plan (outline): - Goals & objectives - Targeting and list selection - Offer strategy and specific offers - Contact strategy - Creative (see creative brief) - Testing plan and rationale - Response handling & fulfillment - Lead criteria & qualification process - Sales handoff procedure - Flow control - Flow chart - Budget - Measurement of activities and results Creative brief: - Target audience description - Key fact - What marketing problem must the campaign solve? - What is the objective of the campaign? - What is the most important benefit or promise offered by the client that the
  • targeted audience must believe? - What facts support this benefit or promise? - What negatives may the targeted audience cite about the benefit, promise, or use of the product or service? - Who is your competition? - What are the advantages & disadvantages of the product or service? - What action do we want the target audience to take? - What stage of the buying process are we targeting? - What offers do we feel incite the target audience to take action? - What tone and manner should the direct marketing have? - What items are mandatory? - How will the success of the campaign be measured?
  • What can be tested? - List - Offer - Sequence and frequency - Creative Three methods of testing: 1. A/B split testing 2. Expectation testing (among smaller sample) 3. Focus group Make sure there is enough diversity in the testing, so you will get clear testing results. Case story: guilt works (the dollar for completing the survey). “To get sales appreciate the leads they should be more like rare eagles than common pigeons” (Less is more ) A study by Performark showed that if the response time was accelerated to twenty- four hours, the rate of conversion to sale rose by an eye popping seven to ten times. Sending confirmation messages to responses works. You open up the opportunity for the potential customer to ask a few more questions and when your fulfillment package arrives, the potential customer pays closer attention to it.
  • 10. How to build your company’s database Database marketing consists of two words. Database and marketing, both should get equal attention in the process. Make clear decisions on what is essential and what is desirable (must have, nice to have). In addition to customer information, the key issue for usage is the ability to target and segment current and potential customers so that relevant communications can be delivered. What data could be in the database? 1. Customer information a. Address (multiple?) b. Contacts c. Industry d. Company size e. Transaction or sales history 2. Other standard demographic data a. Economic indicators b. Credit rating c. Company age d. Fiscal year 3. Relation demographic data (the data sales need to know before they walk in the front door) 4. Outbound communication flags 5. Stage of sale or buy (choose!) a. Selling process i. Inquiry ii. Qualified lead iii. Proposal sent iv. Sample sent v. Final negotiations vi. First sale
  • vii. Multiple sales viii. Long-term customer ix. Past customer b. Buying process i. Need awareness ii. Information gathering iii. Setting specifications / RFP iv. Requesting proposals v. Supplier qualification and interviews vi. Trial / sample run vii. Supplier selection viii. Price/contract negotiations ix. Contract signing x. First purchase xi. Initial performance evaluation xii. Repeat purchases xiii. Valued long-term vendor 6. Response behavior (all the “touches” accumulate into behavior) Sources of data for you database: 1. Internal sources a. Accounting or customer files b. Marketing lists or databases c. Sales staff contact information d. Customer service contacts / records 2. Public or outside information providers a. Business information compilers (D&B, Experian etc.) b. Response lists c. Co-op or merged lists 3. Primary data gathering Updating the database: 1. What data must be updated and how often?
  • 2. What is the method for updating each element 70% of businesspeople undergo changes in their situation (business card) in a twelve-month period with 31% changing companies and the other 39% changing jobs or locations within the same company. Try to validate the data at least once per year by asking people in it if their information is still ok. The value is in your data (it’s the data stupid!)
  • 11. How to measure the results that will sell the management The measurement ladder: 1. Activity measurement a. Cost per thousand (CPM) b. Response rate c. Cost per inquiry d. Cost per lead 2. Value measurement a. Value per lead b. Value of market opportunity from the campaign 3. Result measurement a. Breakeven - How many sales (at gross or net margin) are needed to be break even. Divide that on the total number of mail outs = breakeven % b. Number of sales c. Dollar value of sales d. Expense to revenue ratio (E/R) e. Return on expense (ROE) f. Lifetime value (LTV) Four most common criteria used in developing the definition of a qualified lead: - Need level for the product or service - Timing of the purchase decision - Authority of the individual to make or influence the purchase - Budget available to purchase Normally 10 to 20 percent of all inquiries will become qualified leads. Studies have shown that approximately 30 to 50 percent of all B2B inquiries will buy the product or service they inquired about within twelve to eighteen months. It is not unusual to have a lead cost exceed $1,000 each. The good news is that in
  • almost all B2B situations the number of sales to required to pay for the campaign is very low. In B2B E/R ratios vary between 1/10 and 1/25.