Entering a new technology based B2B business – Part XI

What are the backend opportunities available to you

If you have read some of my earlier posts, I have talked about the Life Time Value of a customer. I came across this concept , first, when I read Jay Abraham’s works. If you haven’t. heard of Jay, you should go and look him up on YouTube or Vimeo. He has an amazing number of thought provoking, marketing related videos.

Now coming to this episode, on the checklist that I have been running for the last few weeks. It doesn’t make sense to acquire a customer, if you are only going to do one transaction with them. In a B2B context, it’s extremely expensive to acquire a customer. Expensive both from time and money perspective. At the end of the day, you are running a business or product line. You are not running a charity.

So every customer has to become profitable for you. You may initially acquire the customer at cost. But you should be able to sell him more of the same product or other products or services, which can then get you profitable.

To be able to take a decision to acquire a customer, even at cost, you need to be clear, from the beginning, about the life time value – simply put, what else can the customer buy from you and how often, over a period of time that she remains a customer with you.

For example – we acquired a global television brand as a customer by just selling an item worth about $20K in the first transaction. Over the next five years that company gave us more than 0.5 million dollars of business. This would not have happened, if we had not taken the first low value order. Of-course the caveat is, that you will provide the customer with exceptional service in the first deal and in all the deals, so that they stick to you and want to keep doing business with you.

The advantage of B2B, that I have reiterated multiple times earlier also, is , that there is a lot of inertia in corporates. If they have a good supplier for something, they don’t want to waste time, trying to identify a new provider. So once you get in and provide exceptional service, B2B buyers will generally ensure that you have continuous business from them, even when they know you are not the cheapest. That is because they value reliability over cheapness.

So whenever you launch your new product/service, please also analyse and see, what will the customer need, after they have used your product/service. Can you help them realise more benefits, in areas other than the one they have initially taken from you. May be you start with some product or service from the plant, can you go to their finance and offer something else, or can you go to marketing and provide them something. Then see if the revenues from all these backend services will be worth doing the first transaction with the customer at “cost”.

In my next post I will elaborate further on this concept and how you can use this concept to dominate the market.

Till next time then.

Carpe Diem!!!

Entering a new technology based B2B business – Part X

B2B, Marketing, Marketing Stamina, new launch

Is the solution dependent on a specific platform or product to be able to deploy

It has multiple times for me. We thought we had a niche market, where we were the dominant player and anyone who needed the service, had to at least check us out. But then the base product, on which our services were based, suddenly started losing market share. New upstarts started capturing the market, for that product, with their offerings and suddenly within a matter of a couple of years, we had lost a complete line of business.

So as a matter of policy, now, whatever new service we launch, we make it a point to ensure that the services can be deployed across multiple platforms without any significant disruption in our revenue.

If you look at other industries also, you will find a lot of such examples. In the telecom space, with the CDMA technology becoming obsolete, all the companies that only made CDMA phones, suddenly had to rethink their operations.

In case you were making software for the Blackberry phones, with the advent of Apple and Android phones, the demise of Blackberry phones was amazingly sudden. So if you were building software, that required the code or security, of Blackberry, to make it run, you were also suddenly out of business.

So while this post is short, if you have been reading my posts on this subject over the last 8-9 weeks, then you will realise the benefit of this item on the checklist. Ticking this item will ensure that you have sustaining power in the market.

Sometimes it so happens, that we forget this point, because we get success with the first platform on which our solution is based and because the revenue is consistently flowing, no one wants to disturb something which is going on well. And then you get hit from nowhere.

So please ensure that you have multiple platforms available to port your solution.

Till next time then.

Carpe Diem!!!

Entering a new technology based B2B business – Part IX

B2B, checklist, Marketing, Technology

Will the customer need any special additional things to be able to run your solution

If you have gone through the last 8 posts, where I have shared my checklist of launching a new technology based B2B business, then this post will be a logical next step.

Have you gone to the car dealership and seen a car which has the best features in the world and you could also afford it and you had the need and it was available in the color of your choice, with all the accessories that you wanted, but still did not buy it. If you have to buy a car which only runs on ATF (Aviation Turbine fuel), will you buy it? The car may be amazing and have the most incredible features, but if you can’t get ATF near you on a regular basis, you will not buy this car, because you won’t be able to use the car.

Similarly if you have a tremendous technical solution, for a B2B business, but the company will need specific additional inputs to get the solution to actually work out, then the solution will be a non-starter.

As I have mentioned many times earlier, if there’s even a slight amount of resistance in your solution, in a B2B environment, you will not be able to convince most customers to take your solution. Most B2B managers (whatever be the level of the manager) are risk averse. One, because of the peer pressure , where even a small mistake gets highlighted and could spoil the manager’s career and second, the inertia to move through various levels of the hierarchy to get approvals is extremely high and the questions that need to be answered, to get the approval is a major pain.

If after doing all the activity, they realise, that other than the solution, they also need to arrange for specific inputs which are either too expensive or generally unavailable, then they will just not want to take it forward.

There are some managers, who like to take risks and try new things, but even they will be averse to trying this kind of a solution which entails handling two different variables, where the outcome is not certain.

Has any of you heard of the satellite phone that was launched by Motorola, just before the GSM mobile phones were launched on a large scale. These were bulky sets which had a huge cost of the phone as well as the cost of making the call. You had to specifically carry it in a specialised case. And Motorola had to launch multiple satellites to ensures that there was coverage across the world, all the time. Without the satellites, the phone wouldn’t work (specific item).

The positive of these satellite phones was that, you could be anywhere on earth (except in water) and you could make a call to your dear ones, by connecting via the satellite. So this was a unique proposition. But the cost, the size and carrying such a bulky phone in a special case, were big resistance points and the competitive GSM technology was available at a fraction of a cost.

So until and unless you were climbing mountains or going on treks in the forest, where there was no GSM “tower”, you would not need a satellite phone. Many millions of dollars later, Motorola just got out of the business.

So you may have a great solution, which is technologically very advanced and has a unique value, but if the customer sees resistance points (at your end – like the satellite, or at their end – like the ATF fuel) they will just not move forward.

So build your solutions which can run on generally available infrastructure or commodities and then take it to the market.

Till next time then.

Carpe Diem!!!

Entering a new technology based B2B business – Part VIII

B2B, Marketing, Technology

Are there any regulatory clearances to be taken to implement your product/solution

You may have heard , from time to time , issues that ride aggregator apps like Uber face , from local governments in various countries. Some countries have laws which require cabs to be commercial vehicles – private cars cannot be used for this business. In some states there are laws, where dynamic pricing is not allowed.

If you have been reading my blog thorough this whole series, I have taken up one issue at a time, that you need to keep in mind before launching either a new business itself or a new service / product line within an existing business.

While the Uber example above is a consumer related business, the issue remains the same in case of B2B businesses as well. In case of B2B business the added complexity happens because people are anyway averse to change anything which is “not broken”.

There was a time, in India, when we had to fill multiple forms and file with the government agencies, when changing the bandwidth on leased lines. So each time our requirement for bandwidth would go up, we would have to question all the concerned departments on “why” the need for more bandwidth. It was just the hassle of filling up and signing forms and then going through the government departments to close the issue.

So in case your solution requires certain government clearances, before it can be deployed, then figure out how it will be done, without the customer having to go through the hassle of applying to government agencies. If the customer is expected to do it, then rest assured, you have brought a resistance point in your business.

Make the process as frictionless as possible. As an example, drones need clearances from multiple agencies, before they can be deployed by commercial entities, because they can hamper aircraft traffic or can cause national security issues etc.

So some companies came up with drones which had a limitation on the height they could achieve and now drones are being used to spray pesticides on crops, in so many parts of the world, without having to take permission, because they don’t have the ability to cause any challenge to aircraft traffic.

Whenever regulatory issues are involved, either find a way to solve it for the customer or better still create the product or solution in such a way that the regulator doesn’t need to get involved.

In all sales, especially more in case of B2B, you have to remove all points of friction, which can make a customer avoid taking the solution. That will be the only way, you will be able to scale.

Till next time then.

Carpe Diem!!!