Selling in B2B versus consumer sales

B2B, Business, client management, Sales, Trust

Most books in sales that you get int he market are written by people who have sold houses, or FMCG products with cater to the psychology of the end consumer. So they have tricks to handle objections and ways to close the sale. The advantage for the consumer sales person is that the market is generally huge. So if you can find a pattern with a few sales, then you are on to big commissions. The other side of the coin is that the consumer market is grossly populated with so many brands already, that it takes an enormous amount of energy to break into the market.

On the other hand the B2B customer is difficult to enter because companies have massive processes to enrol a new vendor and there is a huge amount of inertia to go through the process to get a new vendor. Since I have been involved in doing B2B sales for all my career, I have had so many situations, where, inspite of spending multiple years on trying to break into an account, we were not able to enter the customer. This is especially true for large companies. With SMB, it is relatively easier but still a process.

The key reason for this inertia is the fact that no one wants to have a “failed project” with a new vendor. There’s a lot of peer pressure in an organisation and people are looking at opportunities to ‘showcase a failure’.

It’s also very rare that you have a product or service which is very unique and you are the only provider of that service. Actually if you are the only person in the market, then chances are that there is No Market for your product or service, otherwise someone would have found it. I have also gone into market with a unique technology and failed because customers weren’t willing to take the risk with a unique technology.

Geoffrey Moore had written a wonderful book and come out with a unique idea on “Crossing the chasm”. As per this it takes enormous amount of energy to propel a new technology from the “risk takers” to mass adopters. It’s similar to a rocket needing tremendous energy to get out of earth’s orbit and again needing enormous energy to enter the orbit of another planet. Most unique technology products fail because they don’t have the energy to cross the chasm.

But having said that, once you enter into a B2B customer and you successfully execute the first couple of orders, then it will be very difficult to dislodge you. It’s the same logic that I had mentioned earlier, now being used to your advantage. Since managers don’t want a failure and you have successfully showcased that you can be relied upon and trusted, they will want to keep working with you.

You may have some hiccups with some new managers coming in or the organisation getting resized or re-engineered, but if you have built relationships across different functions, then these things can generally be managed more easily.

The other advantage in B2B is that most of your competitors are known and you figure out how they will react to what situation. This allows you to choose your sweet spot in the market and then just stick to it.

If you have any queries on B2B sales/marketing – do drop in your question and I would love to se if I can be of help.

Till next time then.

Carpe Diem!!!

How do you do pricing?

B2B, Marketing, pricing, Product Management, single target market

Pricing is one of those concepts, that whenever a sales guy will lose a deal, they will blame it on price – our price was too high. For customers, the easiest way to push you away, is to say that your price is too high. In both the situations, the easiest people to blame is the product/marketing folks – “they don’t understand the reality of the market place, they just sit in the office and tell us what to do without understanding what the customer wants”. Pricing is one of the key reasons – marketing and sales don’t see eye to eye.

Just to clarify – its not that I don’t lose cases on price.

My agenda from this post is to help you not waste time with a customer who does not have the ability to value what you offer in return for the price that you charge. Its both marketing and sales’ responsibility to showcase the value to the customer.

That was a loaded statement – so let me break it down – what is the customer’s perception of what you provide and what she should pay for it. The other is, how do you do your pricing.

As a product manager or marketing manager, when you build a pricing for something, you generally take into account the costs involved at your end. Then you add a margin and give that as the price to be charged. This is the easiest way – Cost+Markup

On the other hand, if you were to look at the value / result / outcome, that the customer will get , by using your product or service and then work backwards, you will be able to come to a better argument. If you don’t know the result that you can get for your customer and there are others who can provide almost similar value at a lower price, then the customer will go with your competition.

I have lost a lot of deals where initially the customer didn’t appreciate the value of the kind of trainings we give our people and how they impact the execution of the project and the reason for us being almost double of someone else. But then we had them come back to us, at a much bigger value when they failed to get the project executed and the cost of penalties and reputation, was even bigger for them. Obviously there were also a lot of them where they got the project executed with someone else at a lower price.

The agenda for showing value has to be ours – not the customer’s. You can verify with the customer, during your meetings, if they value what you sell. Don’t ask this question to operational people. I have made that mistake many times. They have no view of what is going on in the mind of the leadership team. Ask it to people in finance or leadership. Those people look at it from the return of investment perspective. If what they value is what you give, then you have an easy task.

On the other hand, if what you have can enhance the value of what they think, they want, then you have to show them, what else is possible and they agree then you can move forward. Generally if you have chosen your Single Target Market well, then this task becomes comparatively easy because most people in that niche will value similar things.

If what you are selling can get them 10 times of the price you are charging, then you have an argument. If you are charging a price of $1500/- and you can show them how the value (reduction in cost or increase in revenue) will be 10 time or worth $15000/- then you can have a good discussion. But if the return on the investment Is only equal or couple of times more than the investment, it is not worth.

Remember the inertia is so high in B2B setups, that they don’t want to go through the whole process of identifying something where the return is minimal.

But you can use this same inertia to your advantage. If the customer has experienced you before and you have delivered on your promise or commitments, then if you are slightly more expensive then the competitors, they will prefer to deal with you because they know you can deliver.

So coming back to the main topic – how can you then do pricing. You can do it better when your argument of value is clearly identified – whether with your case studies or testimonials etc., in case they have not worked with you before. When the customer knows that you CAN deliver , what you promise and she Values what you deliver, then the pricing argument reduces. Doing pricing on a cost plus basis is generally a losing proposition in a highly competitive environment.

Till next time then.

Carpe Diem!!!

Messaging – how much is excess

B2B, education, education, follow-up, Marketing, messaging

“Won’t my prospect get irritated with me and unsubscribe” – this is one of the most common statements I hear when I tell people, that they should have a regular communication with their prospects and customers.

All your prospects and customers are in a state of a “moving parade”. So things keep changing for people all the time. And you don’t know when they may need what you sell. But when they need you, they should remember you first.

Now there will be somethings which are impulse purchases like a bottle of wine. Or small value items like a can of an aerated drink. Since the volume of transactions can be very high because of the spread of the decision making, you want to message more often. That’s the reason you see a Coke getting advertised multiple times a day. In the consumer space, you travel- international , less often, so you see airlines advertising less often.

In case of B2B, which is generally high value and less impulsive, you don’t advertise/message multiple times a day. But having said that, you need to keep messaging frequently – I generally recommend once a week. If not, at least twice a month. Anything less than this and chances are that you will float into oblivion.

The key in B2B is more about providing value. Finding ways to inform the customer, something new about what you offer – a new application, a new industry, a faster method, training for their employees. If you have segmented your market well, then you would typically know the kind of challenges that could take place, so providing education, value would be simpler. There can be a plethora of ways you can orient messages and multiple ways to get them delivered. Sometimes email, sometimes post cards, sometimes webinars.

If you keep adding value, then customers / prospects generally don’t mind receiving your mails and in a lot of cases may look forward to them. If some do unsubscribe, even after you are providing value / education, then its a good sign – because that person anyway would not have done business with you.

So don’t think in terms of excess, think in terms of value.

Till next time then.

Carpe Diem!!!

Messaging – Answering the Questions of a prospect

B2B, education, education, Marketing, messaging, problem solving, Questions, segmentation, single target market

In yesterday’s post I spoke about the pain (fear of) and pleasure (gain of) and how you can use it to get your message to stick with a prospect.

I have written multiple times earlier on the idea of a Single Target Market and how you can niche a segment further based on usage. This comes in useful when you want to build your messaging.

As an example you niched your B2B market by industry, then you further niched it by revenue. Now if you niche it further based on whether you are targeting prospects who intend to buy your kind of product or service for the first time or are you targeting prospects for whom this is a replacement. Another could be a backup to the main product for insurance purposes.

Once you have chosen the usage, you can now get into the shoes of the prospect and think what could go on in their mind. If its a first time buyer – you could help that company with messaging entered around evaluating your kind of offering from an unbiased angle. On the other hand if its a replacement market that you are targeting, then you could talk of how the technology has changed and how by replacing the old technology they could get more benefits.

Based on the usage criteria, the team of people to whom you will send the message, will also change. For the replacement market in the industry, you may need to talk to the operations or maintenance folks, while if its for the first time usage you may need to talk to the project folks. Each of these folks has a different “view of life” and hence the problems that you address and the education that you have to do is different.

You need to know your end game and then work backwards such that you have a delighted customer. Its only when you delight a customer can you hope to get referrals and move further to dominate that market.

Till next time then.

Carpe Diem!!!