B2B and the Sales Funnel

Today I was going to write about B2B Marketing Strategies.  But I couldn't really do that until I had dipped into the B2B Sales Funnel. 

The sales funnel demonstrates the sales process.  B2B marketing and sales team seek to fill their
sales funnel, and then to track and predict sales. These are critical functions and metrics given the
typically long and complex sales cycle for B2B relationships.

The funnel is shaped like a funnel (was that too obvious).  At the top of the funnel, there are
millions of prospective customers.  But, really there aren't many real prospective customers in
there.  So, as these people fall through this funnel, you find that there are fewer and fewer and
fewer real potential customers.  At the end of the of the sales process very few prospects become real
customers.

Depending on the funnel you look to, you will find different stages and different numbers of stages.  The Marketing team is responsible for the "top half" of the funnel - i.e. attracting qualified leads - while the sales team takes the relationship from there and closes the deal.  A good B2B organization tracks the funnel and customers at each stage to know how much potential business they have in their funnel.  This helps a business to accurately predict sales. 

A B2B sales organization uses Marketing Automation software like SalesForce.com to help track the funnel.

Next up ... a discussion of a more complex B2B sales funnel which shows some additional dynamics.

What is B2B and what makes it different?

Let's start by understanding what B2B is.  B2B describes commercial transactions between businesses.  In a B2B transaction the commodity being sold is typically an input - like a raw product or a machine - to help a business produce another product.  B2B transactions can include anything:

• Services (like legal servcies, IT services, marketing services, accounting services, etc.),
• Products (like chemicals, plastics, steel, concrete, wood, rubber, glass, and so on), or
• Information (e.g. customer lists, demographic information, geological studies, weather reports, etc.).

B2B can be contrasted with two other major B2's.  The first is the B2C.  Those are transactions that are between a business and a consumer - and the transactions that most of us bump into daily: buying your groceries, buying some clothes, buying a new car.  This is also where the majority of advertising appears to take place.

The other B2 is B2G.  B2G is a bit like B2B and a bit like B2C.  It is Business to Government.  These sales are all about selling items to Governments.  Typically this requires participating in complex bidding processes and negotiations.  But, the payoff can be very high.  The goods and services that are purchased by governments are sometimes "B2B" in nature - for instance a government might buy a telephone system to run a call centre (e.g. an input to other deliverables).  Sometimes the government might be buying tourism brochures to mail out to their citizens (e.g. consumers).

Finally, there is also C2C.  This is rarely considered but is Consumer to Consumer sales.  Good examples of C2C are classified ads (like in a newspaper ... hey, what's a newspaper).  The modern and more effective equivalent is Kijiji, Craig's List or eBay.

(I wonder it C2B is when a consumer returns something to a business - effectively selling it back to the busines ... hmmm ... deep thoughts.)
 
According to Wikipedia -

The volume of B2B (Business-to-Business) transactions is much higher than the volume of B2C transactions. The primary reason for this is that in a typical supply chain there will be many B2B transactions involving sub components or raw materials, and only one B2C transaction, specifically sale of the finished product to the end customer. For example, an automobile manufacturer makes several B2B transactions such as buying tires, glass for windscreens, and rubber hoses for its vehicles. The final transaction, a finished vehicle sold to the consumer, is a single (B2C) transaction.

B2B and B2G are substantially more complex than your average "2C" marketing and sales transaction.  Major differences include:

• Multiple Buyers - A B2B/B2G sale will often involve many people in the buying process - such as the user, the influencer, the decision maker, the evaluator, and a purchaser.
• Sales Team - Due to the complex nature of many B2B sales there is often a sales team in place to handlea variety of specialized tasks that take place through a sales funnel - such as prospecting (marketing), sales lead, technical analyst, sales engineer, and so forth. 
• Needs vs. Wants - A B2B transaction is precipitated by a NEED.  A Business needs a product, service, or information to achieve a goal.  They NEED steel-toed boots for their workers so that they can meet safety standards.  On the other hand, a consumer often may just want to have a new pair of shoes.  There's a bit of artistic license in that ... consider a business that builds a new building and has an architect design a unique and enormous tower.  They don't need that.  They WANT that.
• Long cycles - Back in 1988 I became interested in B2B sales when I read an article about a Sales Executive with GE who had worked for 10 years on selling one set of generators to one client.  In the end he closed the deal.  As I recall that was something to do with the Three Gorges Dam on the Yangtze River.  I wonder what that commission was like?
• Significant evaluations - It doesn't always happen, but the chances are that before a decision maker will commit to buy something, the B2B decision maker will demand substantial technical evaluation of the product and will have a "bake-off" among several competitors.  It is often a winner takes all contest.  Consider how long an airline will take to choose the purchase of a new plane and the due diligence they put into buying a $350 million jet that will carry 800 people more than half-way around the world.  Initial cost, operating cost, performance, longevity, comfort, efficiency, and safety (among other things) all get evaluated over many months or years.

Even with all of the scrutiny in a B2B transaction, it would be wrong to think that emotion doesn't enter the equation in a BIG way.  In head-to-head comparisons the scoring between products will often be pretty close.  The final decision may come down to the sales executive who has the best handshake, or the one that makes the least mistakes.  To that end, I worked for a company that was vieing for the IT Services of a very large credit card company.  The two companies that were in the final running for the work each took the client out for supper.  The company I worked for picked up the bill and paid with a credit card from the client's company.  The other contender took the client out on another night and also picked up the bill.  Unfortunately (for them), they used their corporate credit card.  It wasn't the client's brand.  The client saw.  Can you guess the emotion?  Can you guess who won the business?

(With thanks to Steve Woods for his blog that provided me some additional direction and information for my post.)

Next up ... B2B Marketing Strategies.

B2B Marketing

Over the next several days I'm going to dig into the strategies and trends in B2B Marketing.  I'm also going to poke away at "what makes a good B2B product demo", and B2B sales close techniques.

As I write this it will be interesting to see where the topics lead and how close I'm able to stay to my outline. 

Check back over the next days and weeks for the details.

Make sure you check TripAdvisor.com

If you are in the travel industry, be sure to check TripAdvisor for reviews on your business.  This week my family was planning a side-trip to the Dells in Wisconsin.  This is an area famous for amusement parks and especially water slides.  We were going to go to the Mt. Olympus Water Park and Hotel.  That was until my wife read through the reviews on TripAdvisor.  Maybe we could have stayed and played somewhere else.  But this review turned us off the entire area. 

Lessons for Hotels and Attractions - Check and respond to reviews on TripAdvisor and other similar reviews.

Lessons for Destination Marketing Boards - Do the same for everyone you look after.

Google vs Bing vs Yahoo (Update for July 2011)

Over a year ago I wrote a blog looking at how the top search engines were doing.  I thought it was time for an update.  An article on Search Engine Watch, called "May 2011 Search Engine Market Share from comScore, Compete, Hitwise" by Danny Goodwin, (June 19, 2011), gave me the input for that.

Back in April 2010, Experian Hitwise reported that Google had 71.4% of share, Yahoo was at 14.96% and bing was hovering at 9.43%. 

Now?

According to  comScore, in May of 2011 that looks like: Google is at 65.5%, Yahoo is at 15.9%, and Bing has grown to 14.1%.  (You probably aren't asking, but in case you are curious, Ask.com is continuting to linger way, way down in the rankings.) 

So, year over year Google has dropped somewhere around 6%-8% in search rankings (depending on the web analytics company's stats you look at).  At the same time, Bing is enjoying growth!

I kick butt on a First Beer

A long time ago I wrote a blog called "Bad Buzz ... Yeah I remember my first beer".  This blog was part of a series talking about how to respond to social media that goes bad. 

What I get a kick out of is that that page is my most popular blog page BY FAR. 

I suspect that people are finding my marketing-focused blog based on searching for information about really having their first beer.  It does make you see the potential for stuffing a page with top hot words to build traffic to your page. 

How do you find hot words?  Have a look at the Google Hot Trends in the left column of this blog and similar stats like Trending Now on Yahoo.ca, or Trending Topics on Twitter.  But stuffing a page with hot words is something Google really frowns on.  So I won't and you shouldn't either. 

Focus on relevant and interesting content, and your audience will follow.  At least, that's the theory I'm working on.

Advertise, Advertise, Advertise

An economic downturn brings opportunity for those who are willing to take a leap of faith and who have a cash cow they can use to buy advertising when times get tough.  When you go looking for success stories - or survival stories - from the Great Depression, you read that there are a number of examples of brands becoming successful through the trying times. 
The most widely quoted are Chevrolet cars, Camel cigarettes and Procter & Gamble.  Each of these relied heavily on advertising because they realized that they needed advertising to create and maintain brand loyalty.

In 2008, Dave Chase wrote "How brands thrived during the Great Depression", and provided a good rundown on these three:

• Procter & Gamble. To this day, P&G maintains a philosophy of not reducing advertising budgets during times of recession, and the company certainly did not make any such reduction during the Depression. It's not a coincidence that P&G has made progress during every one of the major recessions. While competitors cut ad budgets, P&G increased its spending. While the Depression caused problems for many, P&G came out of it unscathed. Radio took P&G's message into more homes than ever, and P&G became a pioneer in effective use of that medium, including its role in creating the notion of soap operas.
• Chevrolet. During the 1920s, Fords were outselling Chevrolets by 10 to 1. In spite of the Depression, Chevrolet continued to expand its advertising budget and, by 1931, Chevrolet took the lead in its field. It is believed that Ford's weaker balance sheet entering the Depression rendered it unable to respond to Chevrolet.
• Camel Cigarettes. In 1920, Camel was the top-selling tobacco product. American Tobacco Co. then struck back with the Lucky Strike brand, and by 1929 Lucky had overtaken Camel as the No. 1 brand. Two years later, in the heart of the Depression, Chesterfield also overtook Camel. Camel countered with a dramatic increase in ad spend and, by doing so, demonstrated the power of advertising during depressed times. By 1935, it was back on top.

Advertising Lesson #5 from the Great Depression: Advertise ... Hard.

This is my final installment on Depression Marketing.  Hope you enjoyed it, and found it uplifting.

SCARE Them

Fear is a very powerful motivator.  In an economic downturn, people are particularly vulnerable.  Preying upon those fears is a food way to sell your product (questions about ethical considerations aside, perhaps).  To use fear, you need to understand individual's fears and how your product can solve those:

• Will I lose my job?
• Will I be able to buy groceries?
• Can I keep my house?
• What if something happens to me?  What will happen to my kids?
• Can I afford to buy that car?
• Should I cut-back my cable service?

Robert Bruce Donald in his article "Buying the Dream" wrote about advertising in Life Magazine:
"Another reaction within the advertising community was to insinuate guilt for products such as insurance, which, when not purchased, put family in an unreasonable situation in "these times"."

Russell Johnston in his article "Opportunity Knocks" wrote: "Many agents turned to fear campaigns to sell their goods, admonishing consumers not to let themselves get yellow teeth, bad breath, unsightly clothing, or a host of other socially disagreeable ailments that might lead to lost opportunities. For instance, in 1934, Gillette ran a series of ads for its Blue Blade line suggesting that men who were careless about their appearance were more likely to lose their jobs."

Advertising Lesson #5 from the Great Depression - Fear Sells.

 

The sun will come out, tomorrow

When you are in the depth of a financial crisis it is hard to believe thing will ever get better.  You have to know that they will.  They always do.
 
How long is a recession?  The average length of the ten recessions since World War II has been 10.4 months, with a range of 6 months in the 1980 to 16 months in the 1981-82 recession.  Of course, the big Depression is the thing that everyone worries about.  The Great Depression lasted from 1929 to 1941.  US GDP contracted by 28% between 1930 and 1932 and hit the bottom in 1933.  The Great Depression featured global impacts of massive bank and business failures, and crazy unemployment.  Not a fun time.

When a recession hits, adjust your strategy to the future.  Robert Bruce Donald looked at advertising in Life Magazine between 1936 and 1939, in his article "Buying the Dream"

… In truth it seems that 30s consumers must have needed to have one foot in a "dream world" of aspiration while one foot remained firmly on the planet, with the pendulum swinging toward the dream as the duration of the hardship lengthened.

In summary about the Great Depression:

What was illusion and what was fact?

Advertising twisted the message to serve an admittedly self-serving, yet useful purpose. Many of the products advertised were just beyond the reach of the consumer who read Life. That was absolutely as it should be and Life along with its advertisers knew it. Striving toward a better grade of whiskey, a smoother smoke, and even down the road perhaps a new automobile, served a very useful purpose: it reinforced the cultural imperative that if you were not climbing the ladder of success, you were not buying into the American Dream.

If you were not buying into the American Dream, weren't you just fooling yourself?

Advertising Lesson #4 from the Great Depression ... Remember that the economy and prosperity will improve.  When it does, you want to be sure that your products are top-of-mind and something for which your prospects have a yearning.  Give them something to need.

They still need to buy things ... make sure they are your things

Over on Profy.com, back in 2008, Svetlana Gladkova wrote “Are We Sure About Pending Collapse of Ad-Supported Internet?” 

Svetlana wrote a great story about the impacts of the depression on companies and how they responded to it.  Svetlana found that advertising remained a relatively healthy industry through the depression.  Why?  Given the very bad economy, why would companies continue to advertise?

Simple answer really when you think about it.  People still need things.  Those things may be pretty basic.  Those things need to be really cheap.  Those things must be the things you are selling.

The first thing to keep in mind is that people will not stop buying products that are essential to them. True, people will hardly buy luxury products when they need to make decisions on what is really important and what they could live without given limited resources. But that does not mean people will not buy anything at all - it simply means the focus will change for them. So the first conclusion is that we will obviously see less luxury brands advertised. But it does not mean that manufacturers of those essential products will stop advertising as well. What’s more, they will have to compete with each other for those scarce money people will have in their disposal.

What’s more, in a bad environment consumers will be actively looking for better deals to spend those scarce money wisely. And if a company can offer a better deal to a consumer, it should advertise this opportunity because if no one knows you have something better to offer when compared to your competitor, how will you manage to make consumers make a choice in favor of your product.

So ... Lesson #3 from the Depression is ... be a value-product and make sure your target market knows about your value through clear and concise advertising.

The dirty 30s and advertising your way through 2011+

Back in April 2008, Russell Johnston wrote a great article on "Marketing". The article - Opportunity Knocks - tells a great story about the horrors of the Great Depression, and the actions of advertisers.

At its worst point, in 1933, more than one in four Canadians was out of work and the average farm income dropped to less than half its peak from the 1920s.

... radio experienced phenomenal growth despite the hard economic times. From 1928 to 1933-the year before the crash to the depth of the Depression-the number of licensed sets in Canada almost tripled to 763,000. ... the actual number of sets might have been closer to one million ... Radio offered one winning advantage during the depression: once a set was purchased, the programs were free. If you could build a crystal radio, the sets themselves were free.

... the trick of radio advertising lay not in the medium itself but in the careful pairing of product with program.

Fast forward a few years (okay about 80 years), and here we are with more new media in our hands.  The web is getting old, and it is being quickly eclipsed by the small-screen  (a.k.a. the third screen) mobile browsing.  Is this the radio of our generation?  It's a great place to be (and generally pretty cheap) in this economic time.  There is also plenty of opportunity to pair with a product with a "program" - also known as an "app".

Lesson #2 from the Great Depression - Look for opportunities and be relevant.

How to advertise in 2011, based on lessons from the Great Depression – Public Relations

To understand the Great Depression and how it affected people, it is important to understand some of the psyche at the time. Travis Scott Luther, President of Luther Media wrote a really good piece a few years ago which described the economic climate:

During the Great Depression of the 1930’s, a backlash against corporate America gained more traction than the bull of the 20’s market ever had. Citizens displaced and bankrupted by the financial fallout of the markets came to call on government for strict regulation and oversight. …

Understanding the increased challenges they faced in earning not only the populations’ business, but their trust, corporations were forced to find ways to bridge the widening gap between themselves and the consumers they so desperately needed to continue to operate. Deconstructing a world-view of large corporations as anti-person, evil teeth gnashing machines grew a new industry usually retained by government, “public relations.” One PR man told Standard Oil Company it would have to alter fundamentally the way it explained itself, saying “Identify yourself not with bondholders,…Wall Street, but with labor, with Americans.”

Public Relations is an element of marketing which is used to build relationships with customers, employees, investors, and other stakeholders. Public Relations may be called corporate communications, media relations, investor relations, or community investment.

Community Investment is perhaps the most visible form of Public Relations. This includes financial sponsorship or active involvement in community programs.This typically works best when it is closely aligned with the corporation’s target market and their interests.

For instance – McDonald’s Restaurants involvement with the Ronald McDonald House has very close alignment with their target market (families) and their interests (their kid’s health).

Lesson #1 from the Great Depression … Public Relations is important.

Where's the economy going ... and what can you do about it

The current noise is that the economy is teetering on disaster once more.

What is the best marketing strategy when the economy is in the dumps? Cut back? Well, yes, in some areas of your business you should cut costs to the bare bones. But, history of “tough times” has shown that companies that invest in marketing and selling value will come out the other end of an economic slump as the champions.

I'll see what I can dig up as evidence over the next few days.

Ask the question

Are you a sales person? Do you spend your days in front of customers?

Next time you meet with a prospective customer, check out how much you talk versus how much you let them talk. Then decide if you are a Sales Professional or an order taker.

More than anything, your prospective customer wants to be heard. They want you to ask them questions that will help them describe the problems they are facing. They want to tell you how badly they need your help. They want to tell you their dreams and visions.

If you are an order taker, you can wait for nothing more than the chance to tell the customer all about what you are selling. You want and need to talk. You don't ask questions. You talk.

As a Sales Professional, your job is to ask the questions that will help the prospective customer tell you what they need. The who, what, when, where, why, and how questions from many angles are the ones that make the difference. Then when they are really done telling you what they need (and only then), you get the opportunity to describe how your solution will help the prospective customer see a clear and easy path to achieving that state.

Are you a sales person? Do you want to be an order taker or a Sales Professional. It is in your hands.