selling 101 in b2 b

Selling 101 in B2B

How to crack the industrial buyers nowadays

Guest Lecture, June 26th 2009

International Buyers Behavior

Herwig Kirchberger

Dipl.-Ing. Herwig Kirchberger, MBA

Selling 101 in B2B – how to crack the industrial buyers nowadays

Confidential and for restricted use only

Who is bugging you from 6:00 – 7:30pm?

Herwig Kirchberger1975 St. Florian

Enns

Hargelsberg

Steyr

Wels

Graz

Dublin

Schärding

Krems




B2B Sales and its characteristics

B2B Sales/Marketing Strategies

Purchasing process in the investment goods industry

International B2B Strategies

Enterprise 2.0

Personal Experience in international B2B Sales

I know a bit about …




B2B Sales and its characteristics




Purchase Behavior in B2B

So the key is to find out, what your customer is EXACTLY looking for The fact is, that most of the time your

customer doesn’t even know!

This is a big chance for you!

This on the other hand is depending on the market your customer is doing business in B2B Sales = Industrial Marketing Not quite the case for industrial B2B Sales…




A view significant differences between B2B and B2C

Customer need to buy in order to stay profitable

Purchase is structured and depends on multiple persons

Multi-level buying procedure that expands over long period

Complex Products / Service

Customer is going with his gut feeling (Price can overshoot costs tremendously )

Needs can change rapidly according to trends

High Brand Awareness and Importance of Trend Setter

Selling at special occasion & place




B2C Marketing & Maslow’s hierarchy of needs




B2C psychological multi-layered Buying Behavior

Cultural Factors

Social Factors (family, friends, status, etc.)

Personal Factors (age, job, etc.)

Psychological Factors




Business-to-Business Sale

Its all about strategiesBusiness Life is a game and not a war, so

don’t take Sun Tzu & Clausewitz literally!

Its all about personal

relationships (and power)That’s your customer, not you!




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




The value chain is spreading around the globe

Different Culture

Speed

Manufacturing costs

Hierarchies

Regulations

Currencies

Etc. etc. etc.




Business in a hypercompetitive market environment

Competitive Advantages are of temporary nature only (product life cycles are getting shorter, flexible business strategies)

Strike & Counterstrike Actions

4 Arenas according to D’Aveni

Cost and Quality (Coke vs. Pepsi) Timing and Know-How (First Mover vs. Follower) Strongholds (UPS vs. FedEx) Deep pockets (big player vs. small player)




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!




B2B Sales/Marketing Strategies




SAD BUT TRUE

…Customers don’t want to see Salespeople

anymore!John M. Coe

Mc Graw-Hill Book, 2003

Marketing is the way to make them call you!




Your Customer has a Lifecycle – the CLC

CLC = Basis for CRM + KAM1. Getting a potential customer's

attention = MARKET

2. teaching them what you have to offer = SELL

3. turning them into a paying customer = FULLFILL

4. keeping them as a loyal customer who urges other customers to join the cycle = CARE The repeat customer is your best marketer!!!




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




Strategies to cross cross the chasm

Early Adopters: Driven by a dream – take high risks to achieve a rent (ROI) of high magnitude

Achieve leadership in specific niche

Assembly Invasion Force by thinking through your customer’s problem

Differentiate with your elevator pitch

Cross the chasm with direct sales

Early Majority: they won’t buy from you until you are established & you can’t get established until they buy from you.

REFERENCES PATIENCE




1 out of a 1.000.000.000 sales consulting advises in B2B

1. Get your value figured out, it is most important to your success

2. Decide who fits your model, who are your best prospective customers

3. Understand your strengths, and focus on them

4. Focus on asset-based thinking rather than deficit-based thinking

5. Prospect to warm leads and more probable-prospective customers

6. Grow your alliance network like a big web, and nurture it often

7. Appreciate existing customers and learn from them

8. Create systems and tools to track revenues, profits, expenses, and other metrics

9. Get great at selling - overcome the "selling is bad" mindset

10. Creatively build products, services, and the business as a whole




From my point of view it comes down to:

Technology Focus

Market Focus

Customer Focus

Core Competence

Differentiate (or die) (Jack Trout)

Customer Value (in max. 2 sentences)

Your personality

Your skills

Your attitude




Industrial Marketing during a recession

Spend time marketing to the people you already know

Spend time marketing to prospects who are ready to buy

Include customer references, reviews, awards, and other validation to convince risk-adverse buyers

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.

Sales delivers revenue and Marketing is a cost center (?) - change these perceptions especially in a recession!

HESITATION




Purchasing Process in the investment goods industry




The classical purchasing process in organizations

Organizations are purchasing in order to:

Increase revenue

Decrease costs

Conform to regulations

The organization usually runs through 8 phases in the purchasing process




Addressing each phase in the purchasing process

1. Noticing Demand Make them aware of the demand

2. Describing Demand Get involved in the description

3. Specifying Product Make him specify your product

4. Supplier Screening Tell him what to screen for

5. Collecting Quotes Find out his parameters for the deal

6. Selecting Supplier Again, show competence

7. Fixing order details Price is only a small portion of the deal

8. Evaluating Performance This was a battle – win the war!

COMMUNICATION!!




Short Excursus to Key Account Management

USER: he registered demand & he defines the specification

INFLUENCER: he is a specialist and will be called in for important decisions

PURCHASER: He negotiates conditions – he is the clerk and not the decision maker

DECISION MAKER: he relies on its specialists and knows nothing about the product. He is the one that judges the value and signs off.

SUPPORTER: he is your internal pipeline to hidden information.

Varies between initial & repeated purchase!

You are selling to a GROUP of people!




1. Noticing demand → Make them aware of the demand

It’s important to know the capabilities of the potential customer in relation to the one’s of its competitors

Make them aware of the fact that your solution provides a competitive advantage to his product & service

By decreasing his production costs

By increasing his output

By improving his quality

By boosting his status in front of his customer / his competition

TOTAL COST OF OWNERSHHIP




TCO – Total Cost of Ownership

Value-to-Customer: what is the REAL value of your product – individual from customer to customer!

The purchasing price is just a small portion – what are the running costs??




2. Describing Demand → Get involved in the description

The description of the demand is the basis for the product specification

If you can not fulfill the product specification you are out of the race

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)

There are always more than 1 solution for a given problem, let him describe it the way that your product is addressing it

The description is the main part of the investment proposal that will run through a signature loop within the company




3. Specifying Product → Make him specify your product

This is the most horrifying part in the process

Your goal is to make him create a “lock out” spec, so let him specify items, that can only be addressed by your product

That’s the phase where you have to link the technicians of your customers with your technicians

Give him options




4. Supplier Screening → Tell him what to screen for

That’s a done deal if you did your job during specification

You know exactly your competition and thus the potential supplier for your customer

Often, there is not just an alternative product

available but also an alternative solution

You have to know your potential competition vertically AND horizontally




5. Collecting Quotes → Find out his parameter for the deal How far can you go?

Give yourself enough room to tumble!

3 Strategies in the investment goods industry

“Free Demo”

“Conditional Demo”

Regular Deal Mon

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6. Selecting Supplier → next to last move: “Check”

The catwalk – you NEED to be the one that differentiates

“Is there anything else I can help you with?” Innovation History

Financial Situation, Ownership

References, Sustainability

Problem solving capability, reaction time etc




7. Fixing order details → Price is only a portion of the deal

Payment Terms

Delivery Time

Acceptance Criteria

Service Obligations

Framework Agreements possible?

Legal Issues !!

Agreement on Testimonial etc.




8. Evaluating Performance → Last move: “Checkmate”

Lasting of competitive advantages




International B2B Strategies




The essence in International Business

The Ricardo Model You can never change a culture!




Affordable Loss and Opportunity Costs

International Sales Strategy upfront is not wise – start local!

If there is no local market – get a trustworthy international partner!

If there is no good partner Don’t enter the business

Use the internet

What is your affordable loss considering:

Cultural Risk Control Risk Exchange Rate Risk

Legal Risk Service Risk Economic Risk

What else could you do instead?




Principal-Agent-Theory in international B2B Sales

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.

Typical for local sales representatives Agent want to maximize commission and minimize

workload (you can not proof!)

He wouldn’t share all customer information with you, you wouldn’t share all deal information with him.




Enterprise 2.0




How we are going to work in the future?

New Business Models will evolve mainly because of

the world is getting REALLY flat (see T. Friedman!!!)

Demographics

Technology 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




The main reasons to get involved in Web 2.0

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




Web 2.0 – The participation Web

Web 1.0: Webmaster is administrating web site, users are accessing data

Web 2.0:




Catching the long tail for niche segments – a business?

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!

Selling less to more, but still – quality is key

Democratization of resources (e.g. wikipedia) Democratization of sales (e.g. amazon, ebay) Reduction of sourcing costs (e.g. amazon reviews)




Simplification combined with functionalism

Transparent and self-regulating Markets => Quality over Quantity

REVIEW

S




Personal Experience




Some Notes from my old trousers

Speed is trump !!

Learn to be patient, always smile Don’t get choked about anything

Be different but stay credible

The money you have is yours!

Refuse the sale before signing a bad deal

Try to think like your customer

Strategic Marketing is the key to success

Herwig Kirchberger

Mail: [email protected]

Mobile: +43 660 810 2493

Selling 101 in B2B

How to crack the industrial buyers nowadays