B2b marketing


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B2b marketing

  1. 1. Hewlett Packard – Computer Systems Organisation: selling to enterprise customers
  2. 2. Situation analysis HP’s CSO are market leader in computer’s production  Price/performance factor is a USP Early success in the 1980s was followed by a decline in industry business  HP responded by redefining competitive strategy and revamping its product lines  Adoption of common RISC architecture, aimed at easing (low- reputed)marketing department’s job Buying patterns shift to increasingly including OEMs, VARs and distributors  Consequence: lowered HP’s average prices and increase in cost of sales Decision to focus on top forty to fifty customers  UNIX workstation’s demand growing 40% per year  application of Pareto 20/80 rule  20% of CSO customers account for 80% sales
  3. 3. HP’s CSO customers ENTERPRISE SMALL/MEDIUM INDIVIDUAL (large) SIZETURNOVER $0.5 - $200m each Below $0.25m each Not defined Daily orders Monthly/quarterly(2500 firms) orders% OF Top 5% of customers Not defined Not defined accounted for 40% ofTURNOVER HP’s total salesCHANNEL Direct sales by HP Combination of sales Exclusive sales by sales representatives reps and channel indirect retailUSED partners channels
  4. 4. Issue at hand Identify market and organisational Redefinition of industryopportunities to grow and focused approach toreduce operational costs selling to large/enterprise (i.e. Sales, support) from customers 30% to 10% solving the issue could yield another structural changein the sales organisation department (first change:1992) Robert Dudley from Leap Consulting commissioned toaudit HP’s enterprise customer management approach
  5. 5. Planning the next step: the sales process audit Goals:  illustrate how current HP sales actions aligned with buyer requirements  Suggest ways to optimise current approach to enhance return on productive selling time Two cells sampled for the audit: 1) Largest HP Customer (see next slide) 2) Industry in which HP was strong Commissioned LEAP Consulting’s Robert Dudley
  6. 6. Planning the next step: typology of sales opportunity TYPE Repurchase Replacement Expansion Innovation • customer initiated •HP initiated • not influenced by • influenced by IT ITDESCRIPTION • budget to be •Assigned budget created • 5 stages •4 stages •The three would generate 80% of the sales to the •Generate 20% of large customer (5 sales reps) sales from lead (1 •Project average length: 6 months =>4-stage process sales rep) PROJECT • 53 hours per week or 2400 hours per year (per sales •Length: 1year (for SPECS rep) 4 stages) + 1or2 •Turnover: $60m sales + $59m hardware + $1m years for last stage consulting = $120m total sales •Turnover: $22m  similar results are achieved with industry sample
  7. 7. The next steps Regrouping:  repurchase opportunities as downstream  replacement/expansion opportunities as mid-stream  innovation opportunities as upstream Next step, migration strategy: up to IT infrastructure and enterprise-wide solutions (HP is doing well downstream and mid-stream) TYPE Downstream Mid-stream UpstreamCRITICAL • improving • selection of • sell concepts and operational accounts, i.e. not instil deliverySUCCESS efficiency pursuing each ability toFACTORS opportunity customers
  8. 8. Current migration strategy Penetrate other constituencies to sell upstream solutions Move up and get into midstream business Entering an account at the downstream business• Alternate model: portfolio management  Entering an account at multiple levels  Tailored to the dynamics of different sales opportunities
  9. 9. Questions1) Is this the time for HP’s CSO to institute more changes? What are your recommendations to Diaz?• It’s about time for HP’s CSO to institute some changes to the current architecture:  Avoidance of numerous time drains due to sales rep “running in a treadmill” to do everything for their accounts, e.g. Developing quotes, configuring systems  Need to prioritise the accounts and institute a support team specialised on understanding the accounts’ needs further reducing wasted time  The latter point will reflect a better conversion rate in sales opportunities, focusing not solely on repurchase opportunities  In general give more specifications as to which procedures to follow in deciding to serve an account and at which conditions
  10. 10. Questions2) How is selling instruments (HP’s traditional business) different from selling computer systems? Why does HP treat its sales force as a cost centre? What are the implications of such a structure? it differs in that HP “evolved from a manufacturer of ‘hot boxes’ into a global supplier of information appliances and solutions” HP treats its sales force as a cost centre because they are focused on additional profits, thus making the salesforce strive to close as many orders as possible, not being able to add value to any business  also due to the transactional nature of the businesses HP serves; no customer seems interested in partnering up in the long term with HP so that to mutually benefit and add value  Emphasised by the (almost) lack of innovative projects
  11. 11. Questions3) What is HP’s CSO approach to building relationships with enterprise customers? What are its strengths and weaknesses? HP serves this segment directly HP sales rep invested time and effort from an early stage in learning their customers’ businesses both identifying problems and solutions to save money and increase efficiency  salespeople transformed in consultants Strengths: develop long-term relationship with customers, adding value to both businesses through customisation of offerings Weaknesses: need for optimisation in providing such kind of customised “consultant” service. In fact sales people are used by the customers to solve any problem they may have. Also, there is a need to prioritise accounts: skip that and you’ll lose business
  12. 12. Questions4) Do you agree with the findings of the two audits as well as the consultant’s recommendations? How is the new approach different from HP’s CSO current approach to managing enterprise customers? The recommendations by the consultant are consistent with the critical success factors of the three new categories (down,mid and up stream) and with the findings However HP needs to resolve its internal and external issues (e.g. being positioned only as a hardware supplier) before moving on to a portfolio management strategy  That means focusing on training more salespeople in forging relationships with large enterprises; it also involves prioritisation procedure for mid-stream and up-stream opportunities  Currently, HP salespeople are not prepared for such a switch (HP is not well known for its marketing savvy) In the new approach HP would enter an account at multiple levels instead of entering it at the downstream level and then trying to tackle the rest of the organisation’s needs