BB Marketing for Advanced Tech Firms

Transcription

B-B Marketing for
Advanced Tech Firms
Enterprise Chapter of Los Angeles
AIAA Western Office
999 N. Sepulveda Blvd., Ste. 440
El Segundo, CA 90245
5 May 09
Dennis Wonica, Ph. D.
LaserLight Networks Inc.
213-928-3822
[email protected]
Outline
Overview + Definition of Marketing Phases
Strategy
Tactics
Operations
Pricing
Distribution
& Sales
Segmentation
Forecasting
Buyer-Seller Response
E-Mail
WEB 1.0 vs. 2.0
LATEST
PROBLEMS
& TRENDS
Social Media
2 of 43
Motivation for Briefing
 Most ―Marketing‖ = Business to Consumer (B-C)
 Most high tech start-ups market and sell
Business to Business (B-B) and/or Business to
Government (B-G)
methods different
 Odds of success higher for advanced tech startup selling B-B




90% of fastest growing private businesses sell B-B
Higher prices
Higher growth areas
New, Unique, and Different products
STAT Source: Scott Shane, The Illusions of Entrepreneurship, Yale Univ., 2008
© 2009 Dennis Wonica
3 of 43
Adopting “Bigs” Best
Practices Myth
Bigs
Smalls
 Hierarchies to handle
processes
 Economy of advertising
scale = high fixed costs,
lower marginal costs
 Resources for
distribution, sales,
customer mgmt.
 Brand recognition
 Testing capabilities





Hierarchies; different
structures, bus. models
High advertising cost per
unit item
Limited resources processes inefficient,
ineffective, or nonexistent
Build Brand from zero –
takes time
Very limited testing
capability
Determine strategy first, then adopt/adapt
4 of 43
Typical M&S Numbers
Typical Costs for Industrial
Products via Direct Sales
Established
Lead
Percent of
Generation Revenue
Firms
Marketing
60%
3.8%
Sales
40%
11%
M&S Total
15%
As high as
30%
STAT Source:
Marketing Sherpa, New B-to-B Research; Business
Technology Marketing Trends, July 2007
New firms might
exceed 30% M&S
5 of 43
Marketing in Company Context
PROTOTYPE
Technology
Portfolio
FINISHED
PRODUCT
SUSTAINING
ENG.
NPD
MARKET
Resources
Debt &
Equity
Debt &
Equity
STOP
SALES
$
$
$
COMMERCIALIZATION
OPEN MARKET
Tactical
Marketing
Strategic
Marketing
Technology
Selection
Operational
Marketing
Product
Launch
DISTRIBUTION
REVENUE
6 of 43
Definition of Marketing Phases
STRATEGY
TACTICS
OPERATIONS
Ideate, define,
develop,
evaluate &
select
projects for
Commercialization
Support design,
development of
specific product,
prepare for
Commercialization
Distribution, Sales,
Customer
Relationship Mgmt.,
Servicing,
Operations &
Maintenance
Transform
Technologies
via projects into
products & service
Determine product
features for
customer, refine
plans, launch
product
Support
Post Product
Launch
GOALS
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Which Matters Most?
Marketing vs. Sales
Strategy
Tactics
Operations
Answer: A Continuum
No Strategy
No Customer
No Tactics
No Sellable Product
No Operations
No Revenue
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Phase Processes vs. Personnel
Founders
CTO, CFO, CMO
Strategy
Ideation/Concepts
Identify Segments, Targets
Position in Chain
Competition
Alliances, Mergers,
Acquisitions, Partners
Risks
Model Financials
Forecasts
Rank, Select Tech for NPD
Evaluate, select best portfolio
Company level communications
Product Director
Marketing Director
Tactics
Start Commercialization
Translate Customer
requirements into technical
requirements [Market Req.
Doc]
Analyze Customer
preferences for product
Functions/Features
Define Benefits
Position product
Prepare for Launch
Define promotional methods
Define distribution channels
Refine forecasts
Pricing
Salespeople
Administrative
Accounting
Operations
Sales
Admin/Collection
Customer Relationship Mgmt
Service, Maintenance,
Repair, Support
Distribution & partner mgmt.
Maintain brand
Manage product upgrades,
performance, enhancements
Feedback on trends
Acquire field data
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“You‟ve got to be careful if you don‟t
know where you‟re going „cause you
might not get there!”
--- Yogi Berra
STRATEGY
Why You Need a Strategy
Alice’s Adventures in
Wonderland






"Would you tell me, please,
which way I ought to go
from here?"
"That depends a good
deal on where you want to
get to," said the Cat.
"I don't much care where‖
– said Alice.
"Then it doesn't matter
which way you go," said the
Cat.
"– so long as I get
somewhere," Alice added
as an explanation.
"Oh, you're sure to do
that," said the Cat, "if you
only walk long enough."
?
Research suggests
innovators
have
10% chance of
starting with right
strategy
Source: C. Chistensen and S.
Anthony, “How to be a
Disrupter,” Forbes, Jan 2007
11 of 43
Segmentation
Market Driven
Incremental
RISK
Technology Driven
Evolutionary
Revolutionary
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Market Driven
SELECT CRITERIA
Common for B-B
Geography Industry Dimension Behavior Benefits Economic
State
National
Sector
Regional
World
Direct,
distributor Cost
VAR,
Number
OEM;
factories,
Performance
Tech
or
employees,
non-tech, “ilities”
users
brand
loyalty
Stage/
Timing
Turnover,
production
process,
Type/size Product
Life Cycle
of
customers,
Buying
cycle,
Patterns
Organization
Procedures;
Centralized
decentralized;
Profiles of
decision
makers
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Revolutionary: Create A Market
High Risk Problem:



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No Data Exist
No Comparable Products
Old Customers Provide Bad Input
New Customers Unreliable
Identify and Prioritize
Risks + Assumptions
• Define Good Enough
Solution to Problem,
Need
• Reverse Engineer
Financials
• Identify 50
Assumptions/Barriers
Solution Outline:
 Poke It with a Stick
 Observe Reactions
 Learn as You Go for Little Expense
 Develop Strategy from Responses
Validate Assumptions,
Reduce Risks thru
Experiments
Assess, Shape
Strategy for Best
Chance of Success
• Use Prototypes
• Simulate Market
Locally
• Examine External Data
• Research Market at
Grassroots Level
• Test, Test, Test
• Change as Necessary
• Enhance
Understanding
• Constantly Reduce
Risks
• Verify or Refute
Assumptions
Iterate, Continue Risk Reduction
14 of 43
Create A Market - Methods
External Focus - Triangulate
Talk to Sales
People &
Distributors
Perform Customer
Ethnography
Talk to VCs,
Consultants,
Sector Experts
Study Lead Users
Examine Non-mainstream
Fringes
Personal
Interviews With
Potential
Customers
Delphi Method
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Evaluate Segments—Filters
SEGMENTS
1. IDENTIFIABLE
2. DIFFERENT
3. ACTIONABLE
4. MEASURABLE
5. ACCESSIBLE
6. SIZEABLE
7. STABLE
1. Responds differently to
different tactics
2. Recognizable using
common variables
3. Can you make a useful
product for it
4. How large is it
5. Reachable through
distribution/sales
6. Big enough to be profitable
+ ID purchasing authority
7. Roughly static over time
period
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Forecasting
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Forecasting
 Financial Engineering
 Strategy includes Forecasting


Feeds into pro forma statements
External investors demand but discount projections
 Nail down Cost of Goods Sold because
 Revenue more difficult to estimate than Cost
 Forecasts are dynamic:

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Diffusion of Innovation
Product Substitution
Trends
Complementary Disruption
Changing Market Environment – Politics, Legal,
Economic, etc
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3 Sales Computation Methods
Sales = [# Buyers x Quantity Purchased] x Market Share x Price
Could Estimate
Separately for
Existing Market
Must estimate
Separately for New
Market
You Vs.
Competitors
Your Goal: 100%
Chain Ratio (aka
Chinese Market
Method);
Judgments
Top Down
Market Based
Your Price per Unit
Scenario Based
Optimistic
Bound & Converge
Bottom Up
Customer Based
Most
Likely
Direct Sales
Pessimistic
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Competitor Analysis
Rank Ordered Methods
Other
Competitors’ sales people
Customers
Speeches
Reverse engineering
Competitors’ reports
Business publications
Prof. reports (white papers)
10 K Reports
Distributors & dealers
Trade shows
Government publications
Company Insiders
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Check Point
If the numbers
don‟t add up +
timing is off, there
is no point in
proceeding
STOP
 Sufficient Target Size
 Revenue > Costs
 Niche  Low
Competition
 Timing
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TACTICS
Concept Testing
 Expose customer to single concept, get direct
response (monadic testing)
 Accurate 80% of time within 20% range

Data from: personal interviews, Web surveys, Email, panels, telephone, et al
 Useful as Bulk filter:


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Establish features before starting costly product dev.
Level of interest, rough price vs. volume demand
Execute at low cost, change rapidly, repeat
 Use Prototypes - evaluate fit vs. needs
Source: L. Lodish, Pricing and Positioning for Entrepreneurial Marketers, March 30, 2005
in Knowledge@Wharton
23 of 43
Pricing Impacts Profit more
than Cost or Volume
 Price factors
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
Company Strategy
Sales execution
People Mgmt.
Metrics, Records
Gov’t Regulations
Source:
Profiting from Tough Times
Ways Transactional Price Management can be used to create
a competitive advantage during a recession
Deloitte Consulting LLP September 2008
24 of 43
Pricing Methods
Price by
Feature
Value in Use
Market
Based
Competition
Price as
Whole
Product
Target Price =
Target Cost +
Target Profit
Technology, SOA, or
Complex Product
Cost &
Technology
Based
Total Product
Cost
Cost +
Acceptable
Markup
Lifetime Cost
25 of 43
Pricing
 Most new products + ALL revolutionary products use
Market Based pricing
 Substitute product - know price range of competitor
products + compare to your costs
 Plan to lower costs in future as commoditization sets in
 Unless you sell in sector with increasing returns (e.g.,
software) pricing depends on perceived differences in
value


Differences = benefits which come from features
Aim for differentiation, price premium
 You sell benefits not features
26 of 43
OPERATIONS
Direct Sales vs. Distributors
Direct
Sales
Founders at Start;
Your own employees
Reseller –
Distributor
Sells your product as is
Sells your product and
bundles other products
together to solve
Value
customer problems
Added
Value Added =
Reseller or Relationships +
Distributor
Integrated Solutions or
Systems
May become a customer
Sales
Reps
Commission/Contracts
Bear own sales expenses
 Majority of high-tech +
almost all firms selling B-B
use own direct sales force


Limited customers + technical
nature of product
Complex product dictates
multiple customer contacts
 Use Distributors depending
on:




Market size + locations
Cost efficiency - fixed lower
cost, higher variable costs
Standard product
CRM or O&M Needs
 Quality of distributor staff,
capabilities in complementary
areas
28 of 43
Customer Relationship Mgmt.
 New CRM = Customer Accountability


Treat best customers well
Fire worst customers
 Focus on Market Drivers – do not let:



First big customer define your market direction and
force you to over extend capacity
Customers force you to a one off product
Competitors force you to me too products
 Voice of Customer


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

Track
Interact
Monitor
Update
Immerse
Survey customers regularly
Survey after critical interaction
Examine e-mails, calls, Blogs
Obtain future needs
Interact, visit
29 of 43
LATEST PROBLEMS
& TRENDS
Qualified
Leads to
Prospects
20%
Inquiries
to
Qualified
Leads
40%
12%
Begin at the End—Sales
Prospects
to Sales
 Even for established, Best Practice firms selling B-B:
Lead Conversion Rate
1%!!!
 Increase your odds:



Create unique product
Find select customers
Focus on customer needs
revolutionary if possible
target
niche
Statistic Source: Marketing Sherpa, New B-to-B Research: Business Technology Marketing Trends, July 2007
31 of 43
Top Problems
TOP PROBLEMS
RANK ORDERED
M&S to Committees, Groups
Competing for leads in rich media
environment
Company
Size
Avg. #
Participants
100-500
501-1000
> 1000
7
14
21
Generating PR
Creating perceived value
Long sales cycles
“Decider” involved
@ $25K Threshold!
Budget
New marketing methods
Source: Marketing Sherpa, New B-to-B Research: Business Technology Marketing Trends, July 2007
32 of 43
Buyer Finds Seller 80% of Time
PUSH
SUPPLIER
BUYER
Now I’m
ready to
purchase
 And only when Buyer is ready to act
Message SELLER NEEDS TO BE CONSTANTLY VISIBLE
 Smaller constant activity better than burst activity


Traditional Direct Methods still important
Brand helps visibility – but only a start
 Nurture prospective Buyers – keep educated & aware
 Operations (Sales) closes on Buyers ready to act,
converts to Revenue
33 of 43
Sales Reality
Match Message to Buyer Cycle
Celebrate
Follow Up
Demo
Webcast Bid/Quote
E-Mails
Buy
THRESHOLD
White
Papers
Evaluate &
Decide
Company
Data
Website
!
Problem
Advocate
Retain
Consider
7-21 People
Aware
Search
BUYER TIME
3-18 Months
34 of 43
MOSTLY TACTICS…..
E-Mail Opening Rates Decreasing
Use consistent address - most
recipients report spam based
on From field
Design for common E-Mail
Programs
• Most B-B recipients use either
Microsoft Outlook or Lotus Notes
• For marketing messages, some
use Yahoo = 25%; Hotmail = 20%;
AOL = 18%
Most decide to read message
depending on Subject Line; skim
contents of 4”x4” reading pane
Include contact
info as appropriate
Get to the point—summarize or use
short sentence—link to Web Site
36 of 43
Monitor E-Mail Delivery
 Yahoo blocked both spam + legitimate e-mails from bulk senders
on March 11 when it changed its inbound mail service
 Separate Transactional messages from Marketing messages

Use dedicated IP address for Transactional messages
 Fed CAN SPAM Act: commercial E-mail must have opt out clause

Does not apply to Transactional & Relationship E-Mail
 Authentication helps but don’t send too many messages
 Mail servers use rules looking for excessive bounced e-mails –
clean your list
Regular
Certified
(Goodmail Systems, et al)
Certified Email Paper
Suppression
(Goodmail Systems)
ESPs provide reporting capabilities; request subscribers place your e-mail
address onto their ―safe list‖
Provides services/tools to help your message get to inbox intact; software
embedded into commercial spam filters used by large corporations; only
accepts 10%-20% of applicants; $2.50 per thousand messages + $399
accreditation fee; need static IP address
Provides electronic proof that e-mails were delivered and received; takes
digital signature; $0.03 per message; available only to senders with good email reputations
37 of 43
Specific Modern Tactics
Modern Tactics
Engineers
White Papers
Webinars/Webcasts
Telemarketing (includes
cold call)
Web Sites–Search
Engines
Podcasts
Blogs & RSS feeds
E-Mails (includes mobile)
Decision Makers
R
A
N
K
Vendor Sales Reps
Online User Community
Vendor Trade Shows,
Conferences
O
Webcasts from Vendor
R
D
E Webcasts from B2B Source
R
E
B2B Trade Shows,
D
Conferences
Source: Marketing Sherpa
New B-to-B Research: Business Technology Marketing Trends, July 2007 and Business Content Study, March 2008
38 of 43
Web 1.0 vs. 2.0 Tactics
1.0
1-way Communications
2.0
2-way Communications
Standard E-Mail campaign Social networking
Web page
Basic info material,
downloads
Wikis
Collaborative sites
Search engine optimization
Blogs, videos
Webinar
 For 2.0 Tactics:
 Sales process shared by buyer & seller, more
personal + more collaboration
 Connect through narratives, not benefit statements &
feature lists
39 of 43
Media Shift
On-Line Formats Increase
As Print Decreases
40 of 43
Social Media
Similar
Medium
Paid (P)
or
Free (F)
Jigsaw
Both
LinkedIn
Both
Twitter
F
Yammer
F
Facebook
MySpace
F
Plaxo
F
 Favorites for B-B sales:


P
F/Other
#1 = LinkedIn; managed data
#2 = Hoover’s
 Twitter – mixed signals

Mixed

X
60% do not use after sign up
 Facebook - personal
 ZoomInfo

open sources data mining;
unmanaged data
IEEE uses it
 Social Media may be good
for:

Hoover’s or
OneSource
ZoomInfo
Targeted
for
Business?



Sampling
Surveys
Data mining
Specific real time data
41 of 43
Quick Takes
TACTIC
PRO
CON
E-Mail
Widespread; easy to use
Steadily decreasing opening rates: <25%
Your Web Site
Always available; basic info &
data replaces salesperson to
first order
Work to keep relevant, current; work to
gather lead & customer statistical data
Vertical Search Engines
(Ex: GlobalSpec)
Focused on one sector; faster
searches, more relevant to
Buyer
Google/Yahoo search algorithms better at
present
On Line Publications
(Ex: Aviation Week)
Quality pub highly useful for
getting good leads; webinars,
white papers, articles
Publication for Audience or for
Advertisers?
On-Line Video
(Ex: You-Tube)
Product demos; useful for
complex items or how to use;
easily accessed by Buyer and
Seller
Customer may not view; how to track
impact
Virtual Events
(Ex: Unisfair)
Greatly reduced marketing &
sales costs
Need high speed connectivity or pay to
get into Virtual Tradespace
42 of 43
Summary
 Phased Strategy-Tactics-Operations approach
 Numbers important


Forecasting
Pricing
 Determine your Seller—Buyer response curve
 Direct Sales is top priority—not advertising,
promotions, or distribution

Find first few customers who actually buy
 Handle all Buyer questions, objections, doubts

Transactional Sales: Buyer trusts product
OLD

Consultative Sales:
NEW
Buyer trusts seller
43 of 43

BB Marketing for Advanced Tech Firms

Transcription

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