In B2B, products and services are not always self-explanatory, and this is one reason why many vendors have been slow to make significant investments in online sales channels. They often focus on a qualified salesforce to explain their complex solutions face-to-face to their customers.

But new research by McKinsey indicates that B2B suppliers cannot choose between a great sales force and great digital assets and capabilities. To drive growth, they need both.

Here are some of the key findings:

  • Industry sector is not a factor. What determines the channel of choice is whether or not the buyer is making a first-time purchase.
  • The majority of buyers still asks for the expertise of a salesperson when making about first-time purchase decisions.
  • Online functionality will have to meet expectations for speed set in the B2C world. Buyers are frustrated if they cannot complete a repeat-order easily.
  • Be they online or off, B2B buyers want an immediate response. Slow response times are by far the biggest frustration for buyers, bigger even than pricing issues!

Investments in digital assets will indirectly help the sales force meet customer needs, freeing them up from dealing with routine inquiries. So, they can devote time to help customers with more complex needs, as well as seeking out new customers.

Relatively simple tools will help salespeople directly, for instance to track customers’ previous questions and help anticipate needs. Virtual product demonstrations on a tablet will assist in a sale. Customer-segmentation and value-proposition engines help sales representatives build tailored offers in the field that quantify the value for the customer. And as in the online world, advanced analytics can prompt buy recommendations.

MerkenMerken

At what point should you mention your price? As Mark Stiving puts it, the correct answer is “it depends.”

However, if there is one guideline on this topic it is this: Communicate price only after value is understood.

In most B2C sales situations customers see the price of the product immediately. Consumers often already know the product, the brand and the quality – and decide if the price is worth it. In automobile-sales though, it is a negotiated deal. The (good) salesperson doesn’t just quote you their best price. Instead, he will try to figure out how much you are willing to pay.

This same thinking transfers to B2B pricing as well. In B2B sales we often use direct salespeople. The most important role of a direct salesperson is to communicate the value of a product to the buyer.

If we can lead with price, we don’t need a direct salesperson.

If you agree with that, your salespeople have to listen to their customers first, and then communicate value to the buyer. Only after that, they should quote prices. If you sell a product where the value is already known—think office supplies—the price can be delivered right away. In all other cases: never lead with price! Or as Mark says: „When a salesperson leads with price, either we have scared a customer away or we have a price that’s too low. If we can lead with price and don’t scare the customer, … we don’t need a direct salesperson … .

Silent Killers

22. September 2016

It’s been quite a long time, since my last post. I’ve been really busy this summer travelling to Spain, UK and the U.S., and sort of managing growth for our small (but of course very „boutique“) business.

change_directionGrowth, at some point, involves Change. And management of change  is always a real challenge.

Recently I found this really interesting article in Harvard Business Review: It’s title – „Why Leadership Training Fails—and What to Do About It“ – is almost a bit misleading. The most interesting aspect, to me, is how to overcome Barriers to Change.

The three authors identify six barriers, companies consistently struggle with:

(1) unclear direction on strategy and values (which often leads to conflicting priorities)
(2) senior executives who don’t work as a team and haven’t committed to a new direction or acknowledged necessary changes in their own behavior
(3) a top-down or laissez-faire style by the leader (which prevents honest conversation about problems)
(4) a lack of coordination across businesses, functions, or regions due to poor organizational design
(5) inadequate leadership time and attention given to talent issues, and
(6) employees’ fear of telling the senior team about obstacles to the organization’s effectiveness.

Because of that fear, they call these barriers “Silent Killers”. They almost always appear together, and they block the systemic changes needed.

If the system does not change, it will set people up to fail.

Any individual development of employees – individual target setting and performance measurement, team-building, training measures etc. – are doomed to fail if a favorable organisational context is missing. Management practices and leadership behavior needs to shape the system before training individual employees. But read yourself …

 

size mattersConcentration has been a trend in many industries for a long time. M & A activities, in order to enhance economies of scale (and to eliminate competition), keeps these industries in motion. In the automotive business for instance, the number of independent manufacturers declined from more than 60 in the 1960s to only 12 in the early 2000s. And most specialists, despite some new players such as chinese producers or disruptors such as TESLA, expect this consolidation process to continue.

Big is beautiful, and now this: Subaru, sales figures somewhere between number 15 and 20 in the world, is the most profitable car manufacturer – for the second year in a row! According to the Center of Automotive Management, Subaru’s margin jumped another 3 percentage points in 2015. Sure, Subaru does have a strong link to Toyota, but then, what about the cooperation between Daimler and Nissan or Toyota and BMW?

From my point of view, Subaru’s strength is their distinct focus on a particular niche segment and the specific wants and needs of the customers in this segment. Obviously, even in the very competitive automotive mass-markets, niche players are able to hit the bull’s eye – big is not always beautiful.

leicester-cityIt was THE headline in the Sports pages of the European press last week: On May 2nd Leicester City, the underdog, became de facto champion of the English Premier League, „a competition … so infused with money that those among the biggest-spending clubs—Arsenal, Chelsea, Manchester City and Manchester United—have won all 20 league titles of the past 20 years“ (The Economist).

Sports obsessives will spend the summer debating how they did it. And the world of business will once more look to sport for lessons on management and leadership. What lessons might there be? („The success of Leicester City will be pored over for management lessons“, The Economist, May 2nd, 2016):

  1. A relaxed management style may cultivate a particularly strong sense of team spirit.
  2. Successful leaders learn from their failures.
  3. Smaller outfits can prosper by emulating what bigger ones already do well. And, thanks to technology, this has never been so easy.
  4. Not succeeding in one area can be helpful—if you can then focus on doing better elsewhere. Avoiding distractions and focusing on the “core” is a management trope.

My own experience is this: SMEs simply can’t  juggle too many balls at once. They need to focus on their target markets, concentrate on their own strengths (this is often easier than removing weaknesses, and abandonment – those, who try to please everybody, won’t thrill anyone.

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