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Selling 101 In B2 B

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A guest lecture at the FH Steyr / International Marketing Management

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Selling 101 In B2 B

  1. 1. Selling 101 in B2B How to crack the industrial buyers nowadays Guest Lecture, June 26th 2009 International Buyers Behavior Herwig Kirchberger
  2. 2. Who is bugging you from 6:00 – 7:30pm? Herwig Kirchberger 1975 St. Florian Enns Hargelsberg Steyr Wels Graz Dublin Schärding Krems
  3. 3. <ul><li>B2B Sales and its characteristics </li></ul><ul><li>B2B Sales/Marketing Strategies </li></ul><ul><li>Purchasing process in the investment goods industry </li></ul><ul><li>International B2B Strategies </li></ul><ul><li>Enterprise 2.0 </li></ul><ul><li>Personal Experience in international B2B Sales </li></ul>I know a bit about …
  4. 4. B2B Sales and its characteristics
  5. 5. Purchase Behavior in B2B <ul><li>So the key is to find out, what your customer is EXACTLY looking for </li></ul><ul><ul><li>The fact is, that most of the time your customer doesn’t even know! </li></ul></ul><ul><ul><li>This is a big chance for you! </li></ul></ul><ul><li>This on the other hand is depending on the market your customer is doing business in </li></ul><ul><ul><li>B2B Sales = Industrial Marketing </li></ul></ul>Not quite the case for industrial B2B Sales…
  6. 6. A view significant differences between B2B and B2C <ul><li>Customer need to buy in order to stay profitable </li></ul><ul><li>Purchase is structured and depends on multiple persons </li></ul><ul><li>Multi-level buying procedure that expands over long period </li></ul><ul><li>Complex Products / Service </li></ul><ul><li>Customer is going with his gut feeling (Price can overshoot costs tremendously ) </li></ul><ul><li>Needs can change rapidly according to trends </li></ul><ul><li>High Brand Awareness and Importance of Trend Setter </li></ul><ul><li>Selling at special occasion & place </li></ul>
  7. 7. B2C Marketing & Maslow’s hierarchy of needs
  8. 8. B2C psychological multi-layered Buying Behavior Cultural Factors Social Factors (family, friends, status, etc.) Personal Factors (age, job, etc.) Psychological Factors
  9. 9. Business-to-Business Sale <ul><li>Its all about personal relationships (and power) </li></ul>Its all about strategies Business Life is a game and not a war, so don’t take Sun Tzu & Clausewitz literally! That’s your customer, not you!
  10. 10. In B2B we have a Multi-Layered Buying Behavior as well Environmental Factors (economy, demand, interest rates, etc.) Organization-specific factors (vision, structure, etc.) Interpersonal Factors (authority, interests, etc.) Individual Factors
  11. 11. The value chain is spreading around the globe <ul><li>Different </li></ul><ul><li>Culture </li></ul><ul><li>Speed </li></ul><ul><li>Manufacturing costs </li></ul><ul><li>Hierarchies </li></ul><ul><li>Regulations </li></ul><ul><li>Currencies </li></ul><ul><li>Etc. etc. etc. </li></ul>
  12. 12. Business in a hypercompetitive market environment <ul><li>Competitive Advantages are of temporary nature only (product life cycles are getting shorter, flexible business strategies) </li></ul><ul><li>Strike & Counterstrike Actions </li></ul><ul><li>4 Arenas according to D’Aveni </li></ul><ul><li>Cost and Quality (Coke vs. Pepsi) </li></ul><ul><li>Timing and Know-How (First Mover vs. Follower) </li></ul><ul><li>Strongholds (UPS vs. FedEx) </li></ul><ul><li>Deep pockets (big player vs. small player) </li></ul>
  13. 13. The solution to hypercompetition: market knowledge If you are selling equipment to IDMs … … you’d better try to find out the needs of these guys as well!
  14. 14. B2B Sales/Marketing Strategies
  15. 15. SAD BUT TRUE <ul><li>… Customers don’t want to see Salespeople anymore! </li></ul><ul><li>John M. Coe </li></ul><ul><li>Mc Graw-Hill Book, 2003 </li></ul>Marketing is the way to make them call you!
  16. 16. Your Customer has a Lifecycle – the CLC <ul><li>CLC = Basis for CRM + KAM </li></ul><ul><li>Getting a potential customer's attention = MARKET </li></ul><ul><li>teaching them what you have to offer = SELL </li></ul><ul><li>turning them into a paying customer = FULLFILL </li></ul><ul><li>keeping them as a loyal customer who urges other customers to join the cycle = CARE </li></ul>The repeat customer is your best marketer!!!
  17. 17. Do you know who are you selling to? Geoffrey A. Moore, Crossing the Chasm, Marketing and Selling High-Tech Products to Mainstream Customer (revised edition), HarperCollins Publishers, New York, 1999
  18. 18. Strategies to cross cross the chasm <ul><li>Early Adopters : Driven by a dream – take high risks to achieve a rent (ROI) of high magnitude </li></ul><ul><li>Achieve leadership in specific niche </li></ul><ul><li>Assembly Invasion Force by thinking through your customer’s problem </li></ul><ul><li>Differentiate with your elevator pitch </li></ul><ul><li>Cross the chasm with direct sales </li></ul>Early Majority: they won’t buy from you until you are established & you can’t get established until they buy from you. REFERENCES PATIENCE
  19. 19. 1 out of a 1.000.000.000 sales consulting advises in B2B <ul><li>Get your value figured out, it is most important to your success </li></ul><ul><li>Decide who fits your model, who are your best prospective customers </li></ul><ul><li>Understand your strengths, and focus on them </li></ul><ul><li>Focus on asset-based thinking rather than deficit-based thinking </li></ul><ul><li>Prospect to warm leads and more probable-prospective customers </li></ul><ul><li>Grow your alliance network like a big web, and nurture it often </li></ul><ul><li>Appreciate existing customers and learn from them </li></ul><ul><li>Create systems and tools to track revenues, profits, expenses, and other metrics </li></ul><ul><li>Get great at selling - overcome the &quot;selling is bad&quot; mindset </li></ul><ul><li>Creatively build products, services, and the business as a whole </li></ul>
  20. 20. From my point of view it comes down to: <ul><li>Technology Focus </li></ul><ul><li>Market Focus </li></ul><ul><li>Customer Focus </li></ul><ul><li>Core Competence </li></ul><ul><li>Differentiate (or die) (Jack Trout) </li></ul><ul><li>Customer Value (in max. 2 sentences) </li></ul><ul><li>Your personality </li></ul><ul><li>Your skills </li></ul><ul><li>Your attitude </li></ul>
  21. 21. Industrial Marketing during a recession <ul><li>Spend time marketing to the people you already know </li></ul><ul><li>Spend time marketing to prospects who are ready to buy </li></ul><ul><li>Include customer references, reviews, awards, and other validation to convince risk-adverse buyers </li></ul><ul><li>Align Sales and Marketing. Today's prospects start their buying process by interacting with online marketing channels long before they ever speak with a sales representative. </li></ul><ul><li>Sales delivers revenue and Marketing is a cost center (?) - change these perceptions especially in a recession! </li></ul>HESITATION
  22. 22. Purchasing Process in the investment goods industry
  23. 23. The classical purchasing process in organizations <ul><li>Organizations are purchasing in order to: </li></ul><ul><li>Increase revenue </li></ul><ul><li>Decrease costs </li></ul><ul><li>Conform to regulations </li></ul><ul><li>The organization usually runs through 8 phases in the purchasing process </li></ul>
  24. 24. Addressing each phase in the purchasing process <ul><li>Noticing Demand Make them aware of the demand </li></ul><ul><li>Describing Demand Get involved in the description </li></ul><ul><li>Specifying Product Make him specify your product </li></ul><ul><li>Supplier Screening Tell him what to screen for </li></ul><ul><li>Collecting Quotes Find out his parameters for the deal </li></ul><ul><li>Selecting Supplier Again, show competence </li></ul><ul><li>Fixing order details Price is only a small portion of the deal </li></ul><ul><li>Evaluating Performance This was a battle – win the war! </li></ul>COMMUNICATION!!
  25. 25. Short Excursus to Key Account Management <ul><li>USER: he registered demand & he defines the specification </li></ul><ul><li>INFLUENCER: he is a specialist and will be called in for important decisions </li></ul><ul><li>PURCHASER: He negotiates conditions – he is the clerk and not the decision maker </li></ul><ul><li>DECISION MAKER: he relies on its specialists and knows nothing about the product. He is the one that judges the value and signs off. </li></ul><ul><li>SUPPORTER: he is your internal pipeline to hidden information. </li></ul>Varies between initial & repeated purchase! You are selling to a GROUP of people!
  26. 26. 1. Noticing demand -> Make them aware of the demand <ul><li>It’s important to know the capabilities of the potential customer in relation to the one’s of its competitors </li></ul><ul><li>Make them aware of the fact that your solution provides a competitive advantage to his product & service </li></ul><ul><ul><li>By decreasing his production costs </li></ul></ul><ul><ul><li>By increasing his output </li></ul></ul><ul><ul><li>By improving his quality </li></ul></ul><ul><ul><li>By boosting his status in front of his customer / his competition </li></ul></ul>TOTAL COST OF OWNERSHHIP
  27. 27. TCO – Total Cost of Ownership <ul><li>Value-to-Customer: what is the REAL value of your product – individual from customer to customer! </li></ul><ul><li>The purchasing price is just a small portion – what are the running costs?? </li></ul>
  28. 28. 2. Describing Demand -> Get involved in the description <ul><li>The description of the demand is the basis for the product specification </li></ul><ul><li>If you can not fulfill the product specification you are out of the race </li></ul><ul><li>At this stage it is essential to establish personal contact with the person in charge (for the investment goods industry it is mainly the technician) </li></ul><ul><li>There are always more than 1 solution for a given problem , let him describe it the way that your product is addressing it </li></ul>The description is the main part of the investment proposal that will run through a signature loop within the company
  29. 29. 3. Specifying Product -> Make him specify your product <ul><li>This is the most horrifying part in the process </li></ul><ul><li>Your goal is to make him create a “lock out” spec, so let him specify items, that can only be addressed by your product </li></ul><ul><li>That’s the phase where you have to link the technicians of your customers with your technicians </li></ul><ul><li>Give him options </li></ul>
  30. 30. 4. Supplier Screening -> Tell him what to screen for <ul><li>That’s a done deal if you did your job during specification </li></ul><ul><li>You know exactly your competition and thus the potential supplier for your customer </li></ul><ul><li>Often, there is not just an alternative product available but also an alternative solution </li></ul><ul><li>You have to know your potential competition vertically AND horizontally </li></ul>
  31. 31. 5. Collecting Quotes -> Find out his parameter for the deal <ul><li>How far can you go? </li></ul><ul><li>Give yourself enough room to tumble! </li></ul><ul><li>3 Strategies in the investment goods industry </li></ul><ul><ul><li>“ Free Demo” </li></ul></ul><ul><ul><li>“ Conditional Demo” </li></ul></ul><ul><ul><li>Regular Deal </li></ul></ul>Money up front After Sales Obligations
  32. 32. 6. Selecting Supplier -> next to last move: “Check” <ul><li>The catwalk – you NEED to be the one that differentiates </li></ul>“ Is there anything else I can help you with?” <ul><li>Innovation History </li></ul><ul><li>Financial Situation, Ownership </li></ul><ul><li>References, Sustainability </li></ul><ul><li>Problem solving capability, reaction time etc </li></ul>
  33. 33. 7. Fixing order details -> Price is only a portion of the deal <ul><li>Payment Terms </li></ul><ul><li>Delivery Time </li></ul><ul><li>Acceptance Criteria </li></ul><ul><li>Service Obligations </li></ul><ul><li>Framework Agreements possible? </li></ul><ul><li>Legal Issues !! </li></ul><ul><li>Agreement on Testimonial etc. </li></ul>
  34. 34. 8. Evaluating Performance -> Last move: “Checkmate” <ul><li>Lasting of competitive advantages </li></ul>
  35. 35. International B2B Strategies
  36. 36. The essence in International Business The Ricardo Model You can never change a culture!
  37. 37. Affordable Loss and Opportunity Costs <ul><li>International Sales Strategy upfront is not wise – start local! </li></ul><ul><li>If there is no local market – get a trustworthy international partner! </li></ul><ul><li>If there is no good partner </li></ul><ul><ul><li>Don’t enter the business </li></ul></ul><ul><ul><li>Use the internet </li></ul></ul><ul><li>What is your affordable loss considering: </li></ul><ul><ul><li>Cultural Risk Control Risk Exchange Rate Risk Legal Risk Service Risk Economic Risk </li></ul></ul>What else could you do instead?
  38. 38. Principal-Agent-Theory in international B2B Sales <ul><li>Whenever one individual depends on the action of another, an agency relationship arises. The individual taking the action is called the Agent . The affected party is the Principal . </li></ul><ul><li>Typical for local sales representatives </li></ul><ul><ul><li>Agent want to maximize commission and minimize workload (you can not proof!) </li></ul></ul><ul><ul><li>He wouldn’t share all customer information with you, you wouldn’t share all deal information with him. </li></ul></ul>
  39. 39. Enterprise 2.0
  40. 40. How we are going to work in the future? <ul><li>New Business Models will evolve mainly because of </li></ul><ul><li>the world is getting REALLY flat (see T. Friedman!!!) </li></ul><ul><li>Demographics </li></ul><ul><li>Technology </li></ul>From Command & Control to Coordinate & Cultivate Connecting people is the enabler (“we are one”) But it will be difficult to teach a machine the principles of this side of our brains 
  41. 41. The main reasons to get involved in Web 2.0 <ul><li>Enterprises will have to implement more and more Web 2.0 Technologies in order to provide the framework for the problem solution competence of the future workforce </li></ul>
  42. 42. Web 2.0 – The participation Web <ul><li>Web 1.0: Webmaster is administrating web site, users are accessing data </li></ul><ul><li>Web 2.0: </li></ul>
  43. 43. Catching the long tail for niche segments – a business? <ul><li>Costs to reach the long tail (the niche segments) in traditional marketing are enormous, because demand in local areas is too small – but it isn’t globally! </li></ul><ul><li>Selling less to more, but still – quality is key </li></ul><ul><ul><li>Democratization of resources (e.g. wikipedia) </li></ul></ul><ul><ul><li>Democratization of sales (e.g. amazon, ebay) </li></ul></ul><ul><ul><li>Reduction of sourcing costs (e.g. amazon reviews) </li></ul></ul>
  44. 44. Simplification combined with functionalism Transparent and self-regulating Markets => Quality over Quantity REVIEWS
  45. 45. Personal Experience
  46. 46. Some Notes from my old trousers <ul><li>Speed is trump !! </li></ul><ul><li>Learn to be patient, always smile  </li></ul><ul><li>Don’t get choked about anything </li></ul><ul><li>Be different but stay credible </li></ul><ul><li>The money you have is yours! </li></ul><ul><li>Refuse the sale before signing a bad deal </li></ul><ul><li>Try to think like your customer </li></ul><ul><li>Strategic Marketing is the key to success </li></ul>
  47. 47. Selling 101 in B2B Herwig Kirchberger Mail: [email_address] Mobile: +43 660 810 2493 How to crack the industrial buyers nowadays

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