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 Page 2
Who is bugging you from 6:00 – 7:30pm?
Herwig Kirchberger1975 St. Florian
Enns
Hargelsberg
Steyr
Wels
Graz
Dublin
Schärding
Krems
Dipl.-Ing. Herwig Kirchberger, MBA
Selling 101 in B2B – how to crack the industrial buyers nowadays
Confidential and for restricted use only Page 3
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 …
Dipl.-Ing. Herwig Kirchberger, MBA
Selling 101 in B2B – how to crack the industrial buyers nowadays
Confidential and for restricted use only Page 4
B2B Sales and its characteristics
Dipl.-Ing. Herwig Kirchberger, MBA
Selling 101 in B2B – how to crack the industrial buyers nowadays
Confidential and for restricted use only Page 5
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…
Dipl.-Ing. Herwig Kirchberger, MBA
Selling 101 in B2B – how to crack the industrial buyers nowadays
Confidential and for restricted use only Page 6
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
Dipl.-Ing. Herwig Kirchberger, MBA
Selling 101 in B2B – how to crack the industrial buyers nowadays
Confidential and for restricted use only Page 7
B2C Marketing & Maslow’s hierarchy of needs
Dipl.-Ing. Herwig Kirchberger, MBA
Selling 101 in B2B – how to crack the industrial buyers nowadays
Confidential and for restricted use only Page 8
B2C psychological multi-layered Buying Behavior
Cultural Factors
Social Factors (family, friends, status, etc.)
Personal Factors (age, job, etc.)
Psychological Factors
Dipl.-Ing. Herwig Kirchberger, MBA
Selling 101 in B2B – how to crack the industrial buyers nowadays
Confidential and for restricted use only Page 9
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!
Dipl.-Ing. Herwig Kirchberger, MBA
Selling 101 in B2B – how to crack the industrial buyers nowadays
Confidential and for restricted use only Page 10
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
Dipl.-Ing. Herwig Kirchberger, MBA
Selling 101 in B2B – how to crack the industrial buyers nowadays
Confidential and for restricted use only Page 11
The value chain is spreading around the globe
Different Culture
Speed
Manufacturing costs
Hierarchies
Regulations
Currencies
Etc. etc. etc.
Dipl.-Ing. Herwig Kirchberger, MBA
Selling 101 in B2B – how to crack the industrial buyers nowadays
Confidential and for restricted use only Page 12
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)
Dipl.-Ing. Herwig Kirchberger, MBA
Selling 101 in B2B – how to crack the industrial buyers nowadays
Confidential and for restricted use only Page 13
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!
Dipl.-Ing. Herwig Kirchberger, MBA
Selling 101 in B2B – how to crack the industrial buyers nowadays
Confidential and for restricted use only Page 14
B2B Sales/Marketing Strategies
Dipl.-Ing. Herwig Kirchberger, MBA
Selling 101 in B2B – how to crack the industrial buyers nowadays
Confidential and for restricted use only Page 15
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!
Dipl.-Ing. Herwig Kirchberger, MBA
Selling 101 in B2B – how to crack the industrial buyers nowadays
Confidential and for restricted use only Page 16
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!!!
Dipl.-Ing. Herwig Kirchberger, MBA
Selling 101 in B2B – how to crack the industrial buyers nowadays
Confidential and for restricted use only Page 17
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
Dipl.-Ing. Herwig Kirchberger, MBA
Selling 101 in B2B – how to crack the industrial buyers nowadays
Confidential and for restricted use only Page 18
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
Dipl.-Ing. Herwig Kirchberger, MBA
Selling 101 in B2B – how to crack the industrial buyers nowadays
Confidential and for restricted use only Page 19
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
Dipl.-Ing. Herwig Kirchberger, MBA
Selling 101 in B2B – how to crack the industrial buyers nowadays
Confidential and for restricted use only Page 20
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
Dipl.-Ing. Herwig Kirchberger, MBA
Selling 101 in B2B – how to crack the industrial buyers nowadays
Confidential and for restricted use only Page 21
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
Dipl.-Ing. Herwig Kirchberger, MBA
Selling 101 in B2B – how to crack the industrial buyers nowadays
Confidential and for restricted use only Page 22
Purchasing Process in the investment goods industry
Dipl.-Ing. Herwig Kirchberger, MBA
Selling 101 in B2B – how to crack the industrial buyers nowadays
Confidential and for restricted use only Page 23
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
Dipl.-Ing. Herwig Kirchberger, MBA
Selling 101 in B2B – how to crack the industrial buyers nowadays
Confidential and for restricted use only Page 24
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!!
Dipl.-Ing. Herwig Kirchberger, MBA
Selling 101 in B2B – how to crack the industrial buyers nowadays
Confidential and for restricted use only Page 25
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!
Dipl.-Ing. Herwig Kirchberger, MBA
Selling 101 in B2B – how to crack the industrial buyers nowadays
Confidential and for restricted use only Page 26
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
Dipl.-Ing. Herwig Kirchberger, MBA
Selling 101 in B2B – how to crack the industrial buyers nowadays
Confidential and for restricted use only Page 27
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??
Dipl.-Ing. Herwig Kirchberger, MBA
Selling 101 in B2B – how to crack the industrial buyers nowadays
Confidential and for restricted use only Page 28
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
Dipl.-Ing. Herwig Kirchberger, MBA
Selling 101 in B2B – how to crack the industrial buyers nowadays
Confidential and for restricted use only Page 29
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
Dipl.-Ing. Herwig Kirchberger, MBA
Selling 101 in B2B – how to crack the industrial buyers nowadays
Confidential and for restricted use only Page 30
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
Dipl.-Ing. Herwig Kirchberger, MBA
Selling 101 in B2B – how to crack the industrial buyers nowadays
Confidential and for restricted use only Page 31
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
ey u
p fr
ont
Afte
r Sal
es O
blig
atio
ns
Dipl.-Ing. Herwig Kirchberger, MBA
Selling 101 in B2B – how to crack the industrial buyers nowadays
Confidential and for restricted use only Page 32
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
Dipl.-Ing. Herwig Kirchberger, MBA
Selling 101 in B2B – how to crack the industrial buyers nowadays
Confidential and for restricted use only Page 33
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.
Dipl.-Ing. Herwig Kirchberger, MBA
Selling 101 in B2B – how to crack the industrial buyers nowadays
Confidential and for restricted use only Page 34
8. Evaluating Performance → Last move: “Checkmate”
Lasting of competitive advantages
Dipl.-Ing. Herwig Kirchberger, MBA
Selling 101 in B2B – how to crack the industrial buyers nowadays
Confidential and for restricted use only Page 35
International B2B Strategies
Dipl.-Ing. Herwig Kirchberger, MBA
Selling 101 in B2B – how to crack the industrial buyers nowadays
Confidential and for restricted use only Page 36
The essence in International Business
The Ricardo Model You can never change a culture!
Dipl.-Ing. Herwig Kirchberger, MBA
Selling 101 in B2B – how to crack the industrial buyers nowadays
Confidential and for restricted use only Page 37
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?
Dipl.-Ing. Herwig Kirchberger, MBA
Selling 101 in B2B – how to crack the industrial buyers nowadays
Confidential and for restricted use only Page 38
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.
Dipl.-Ing. Herwig Kirchberger, MBA
Selling 101 in B2B – how to crack the industrial buyers nowadays
Confidential and for restricted use only Page 39
Enterprise 2.0
Dipl.-Ing. Herwig Kirchberger, MBA
Selling 101 in B2B – how to crack the industrial buyers nowadays
Confidential and for restricted use only Page 40
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
Dipl.-Ing. Herwig Kirchberger, MBA
Selling 101 in B2B – how to crack the industrial buyers nowadays
Confidential and for restricted use only Page 41
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
Dipl.-Ing. Herwig Kirchberger, MBA
Selling 101 in B2B – how to crack the industrial buyers nowadays
Confidential and for restricted use only Page 42
Web 2.0 – The participation Web
Web 1.0: Webmaster is administrating web site, users are accessing data
Web 2.0:
Dipl.-Ing. Herwig Kirchberger, MBA
Selling 101 in B2B – how to crack the industrial buyers nowadays
Confidential and for restricted use only Page 43
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)
Dipl.-Ing. Herwig Kirchberger, MBA
Selling 101 in B2B – how to crack the industrial buyers nowadays
Confidential and for restricted use only Page 44
Simplification combined with functionalism
Transparent and self-regulating Markets => Quality over Quantity
REVIEW
S
Dipl.-Ing. Herwig Kirchberger, MBA
Selling 101 in B2B – how to crack the industrial buyers nowadays
Confidential and for restricted use only Page 45
Personal Experience
Dipl.-Ing. Herwig Kirchberger, MBA
Selling 101 in B2B – how to crack the industrial buyers nowadays
Confidential and for restricted use only Page 46
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