The True Meaning of B2B Sales in the Solutions Marketing context

Hi readers,

My understanding of Solutions Sales in a B2B business has been enhanced considerably after my MBA program where I had taken Solutions Marketing as one of my key electives.

Based on my experience in B2B solution sales of 18 years and contemporary coursework in Solutions Marketing taught by Prof. Stephen Hurley, I am sharing what I believe is the essence of B2B sales in a Solutions marketing context.

B2B sales, as I was taught, and which I have practiced  is heavily dependent on an ROI analysis. The numbers used in the ROI analysis are the customer’s numbers, gathered through effective questioning.

(NOTE-2 key skills MUST HAVEs for a successful solutions sales professional- Financial analysis capability AND Interviewing /researching skills)
I taught my B2B sales people to look for ways of contributing to the prosperity of their customers’ business in five key areas: (1) sales, (2) employee or process productivity, (3) profits, (4) competitive advantage, and (5) cost control…If a B2B salesperson is talking about anything other than those five issues they are probably wasting their time and their customer’s time.

(NOTE- Keeping a focus on issues that are top priority for your client is key to success, otherwise there is the real danger to scatter your thoughts and energy all over the place and end up delivering nothing to your client, and certainly losing your incentives!!)

The five elements, mentioned above are interesting because they’re a map of what most companies think are important — and therefore provide hooks for B2B selling. 

I claim that there are only important two (2) goals inside every company: 1) increasing sales revenue and 2) decreasing cost of sales.  

To illustrate this point, let’s look at the five elements mentioned earlier

  1. Sales.  Nobody wants to decrease their sales, so this element is simply a restatement of the goal to increase sales revenue.
  2. Employee/Process Productivity.   Increased productivity decreases the cost of doing business, thereby decreasing the cost of sales.  If you increase productivity somewhere in a company in such a way that it increases the cost of sales, you’re decreasing profitability, which is stupid.
  3. Profits.  Increased revenue and decreased profitability means more profit, by definition.
  4. Competitive Advantage.  Any one can beat a competitor by giving away more value for less money; the trick is to grow at the competitor’s expense and still remain profitable.  Therefore, competitive advantage consists entirely of increasing revenues while either decreasing the cost of sales or keeping them stable.  Even product development (like building a better mousetrap) is actually just a way to increase revenues by making more sales.
  5. Cost Control.  You’d have to be an imbecile to control costs in one part of company in a way that ends up increasing the cost of sales and/or decreasing revenue.  Therefore, the only meaningful cost control consists of decreasing the cost of sales.

To repeat, there are only two (2) things important in a company: 1) increasing sales revenue and 2) decreasing cost of sales.

Therefore, if your B2B offering, through a solutions sales proposal,  focuses on helping your customer do either of those two things, you’ve got something that’s worth buying.

And if your product does both of those things, you’ve got a real winner.

So, in order to help you succeed in your product driven solutions sales efforts, you need to brush up your solutions marketing skills!!

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Five Critical Negotiation Skills for qualified success

Hi readers,

I did write on the subject of negotiation by mentioning 9 rules that may be helpful to executives while negotiating complex deals…and I know for a fact that since the financial debacle of 2008, the deals have only gotten complex !!!

Here is the link to my earlier post of the subject for your reference 9 Rules for Negotiating a Complex Deal

After giving this subject much thought, I decided to share these 5 skills that I personally believe have been crucial to my successes while negotiating with my suppliers, while negotiating with my sales teams, my logistics team, my production staff, my contract labor AND my clients and trade channel partners!!

So here goes….

  • Completely and honestly assess your relative position. Information is everything, and so is making sure you’ve got a completely honest and straightforward assessment of your position and your opponent’s, going in.  In my view it takes guts to look your self objectively in the mirror and say to yourself that given the information that you have you may have to decide a strategy- which may often mean, retraction, or simply “holding your ground”.
  • Study precedent, inside and out. Precedent means terms you and your opponent have agreed to in prior negotiations with other companies. It doesn’t matter if the terms were confidential; assume everybody knows everything. There’s virtually no defense against precedent in a negotiation. But remember, it works both ways.
  •  Plan for all contingencies, up front. Go in with a solid plan: Good cop, bad cop; worst case scenario; bottom line terms; under what circumstances do you walk out; which terms are negotiable and to what extent; when to hold back and when to offer a negotiating chit; the extent of your authority, etc. Anticipate all the same things from your opponent’s side.This definitely requires a 360 degree view and assessment of the negotiation process. Introspect, think , strategise and then act logically, without getting emotionally  involved in the process.
  •  Never negotiate with yourself. Under no circumstances should you offer revised terms until your opponent has countered. Make sure they’ve responded fully on every term before you counter. Of course, feel free to try to use this in reverse, but most are savvy to it and it may hurt your credibility.
  • Always seek to raise your opponent’s risk. This is especially critical in prolonged negotiations with ongoing litigation. Your actions, both at the negotiating table and in the court room, must always be designed to raise your opponent’s risk. Also, your opponent must believe you’re willing and able to go the distance. That means a big war chest and minimal exploitable vulnerability.

Your inputs and ideas are welcome….

 

 

 

Critical key factors for going global in the next decade

The rush to go to “low cost producing economies” ( Read- BRIC+ Mexico) and to create a long term competitive advantage has proven to be short term and not really a sustainable competitive advantage for many branded product and service providers, especially in the developed , competitive economies.

The reality of availability of vast pool of “quality” engineers in India ,waiting to be leveraged has proven to be a myth- majority of graduate engineers from the Indian sub-continent , or those from China, dont come close to western benchmarks and thus cannot be deployed to extract the cost versus value advantage!

The answers perhaps lie in the successes coming out of the “low cost producing economies”- Embraer aircraft from Brazil has slowly but surely made a global mark as a successful maker of medium range, cost effective commercial jet aircraft, competing successfully against giants like Airbus and Boeing. So what can we learn from this example and many others like it?

Closer analysis reveals that the following factors may be crucial inputs for developing and deploying long term strategies for successfully transforming into a truly global enterprise

  • Focus on people- Corporate are beginning to grapple with the harsh reality of skill gaps in their ranks today- and given the systemic   faults in recruitment and engagement, skill gaps will only widen tomorrow. It may be prudent to invest in your existing work-force , as well as the work force of the future- a PPP (Public private partnership) model may be the long term strategic answer.
  • Dont focus only on the low hanging fruit in developing markets- global players, enter , large, under exploited, under developed consumer markets, and immediately go for “quick wins”, by addressing the high end of these markets- and quickly get into a comfort zone, often “managing” (read- mis-representing the real potential of the market at the BoP) the expectations of the board and the shareholders. The real potential lies in the low income consumer groups in these markets; these markets are no doubt challenging to access and develop, but they offer tremendous, and real, long term business value to the serious global enterprise.
  • Managing cost gaps- developing economies offer low cost upfront- but managing “hidden costs” in these economies is key to success- you need a mix of creative thinkers and number crunchers to successfully crack these markets.
  • Prioritize and pin point- Old school of thought reeked of a herd mentality- “if my competitor is moving production to China, so should I”….gone are the days when that idea worked across the board. Critical evaluation of your markets and associated real costs ( including opportunity cost, sunk costs, economic costs etc) will often reveal that having your production in a “high cost” center, often provided strategic advantages, that far outweigh the obvious cost advantage of a low cost center.
  • Innovation and innovating fast is the ONLY long term comparative and competitive advantage – the ability to copy successful western designs, and to make them cheaper and faster, was the innovation model of the Chinese economy- but over the last 5 years, the growth of real innovation in the Chinese economy has picked pace. Western enterprises, serious about going global will have to pick up their pace in the innovation space and go all out if they want to succeed.
  • Embracing diversity in enterprises, markets, consumers and geographies- acceptance of the reality of the vast diversity of a global village will be key to your going global. This will commence from your enterprise, and then slowly move to regional operations and down the line. This will naturally foster a collaboration driven model where diversity in thoughts and ideas will create long term competitive advantage for the enterprise, which can then be leveraged by key decision makers to develop and deploy successful business strategy to take the enterprise, global.
  • Think big , think fast and ACT fast- speed will be of the essence; if you as an enterprise, with global ambitions want to establish you markets in geographies across the globe, you will need to develop teams that are quickly able to roll out tried and tested GTM strategies from one geography to the next.

Future of branded products 2020- some suggested strategic options

Branded managers are struggling to manage and maintain brand equity of products that they have in their portfolios. This challenge has become especially acute after the global financial markets meltdown of 2008.

2008 has not put a stop to new branded product launches in developing and developed markets, in urban and rural markets- studies and data suggest that nimble competitors, copy cat challengers have seen opportunities in these tough times and launched branded products in markets, big and small. This is adding to the stress faced by brand managers across markets.

Increasing competition, despite the apparently tough market conditions, will be a reality that all brand managers will have to accept and live with from now on.

So what should the brand managers do?

After detailed discussions with professionals in marketing, thought leaders known to me and countless references to study materials provided by my marketing professor at the HULT Business School, Boston, I believe that 3 options are clearly available to the brand manager today to not only take on increasing competition, but also create a competitive advantage over close competitors as well as future entrants in the same markets.

Option 1- NICHE MARKET BRANDS

Branded products are widely available in urban markets across the globe, and they are slowly making inroads into lucrative rural markets of emerging economies. As soon as a brand manages to establish its consumer base, a competitor follows. However, if the brand manager were to adhere to the basics of consumer analytics, unmet needs will be unearthed, and these unmet needs would form the basis of a sound brand and marketing strategy that can sustain profits in a market that is turning competitive by the day.

Option 2- ADD service to the product and offer a SOLUTION

Branded products are offered just as products and nothing more to consumers. So is the case with branded products offered by competitors? So the question arises- what can established brand with first mover advantage, now faced with price driven competition do different, that will offer discernible value to the consumer, that differentiates your offer dramatically from that of your competitor or the imitator?

The key to this dramatic difference is SERVICE.

Product+ Service= Solution

So what “Services” are customers looking for today? Some options to consider may be

  • Product financing options.
  • Free door delivery.
  • Free service and spare parts.
  • Extended warranty and guarantee.

 

Option 3- Enter BOP (Bottom of Pyramid) Markets

Brand managers find developing and deploying a go-to-market strategy for BOP markets extremely challenging and to some extent, apparently, they are indeed challenging.

Limited economic means in the BOP consumer segments, poor infrastructure, poor connectivity, lack of access to markets and cheap substitutes are some challenges facing the brand manager in the BOP markets; but are these challenges for real?

In close analysis one finds that despite the apparent challenges mentioned above, there are definite positives in these markets- namely

  • You have a golden opportunity to gain the first mover advantage in these markets and your competitors have most likely not made a foray into these markets because of numerous reasons (financial mostly, which you will not face)
  • BOP consumers are very traditional in their outlook – and this consumer behavior can be translated to establish strong (traditional) brand preference which will be rock solid and virtually impossible to dislodge, even when a “me too” imitator or competitor attempts to enter this market with lower prices.

Competitive advantage in a cluttered and globally seamless market is a scarce commodity and brand managers would do well to master the following skill sets that would be best utilized to exercise the above mentioned options and thus gain that critical advantage.

  • Systems to capture data from all consumers touch points.
  • Data analytics.
  • Consumer insights.
  • Knowledge of services.