B-B Marketing for Advanced Tech Firms - LaserLight … Marketing for Advanced...B-B Marketing for Advanced Tech Firms ... Marketing Sherpa, New B-to-B Research; ... Rank, Select Tech

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]

mailto:[email protected]

Outline

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Overview + Definition of Marketing Phases

Strategy

Segmentation

Forecasting

Tactics

Pricing

Operations

Distribution & Sales

Buyer-Seller Response

E-Mail

WEB 1.0 vs. 2.0

Social Media

LATEST PROBLEMS

& TRENDS

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 start-up selling B-B 90% of fastest growing private businesses sell B-B Higher prices Higher growth areas New, Unique, and Different products

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STAT Source: Scott Shane, The Illusions of Entrepreneurship, Yale Univ., 2008

© 2009 Dennis Wonica LaserLight Networks Inc.

Adopting “Bigs” Best

Practices MythBigs

Hierarchies to handle processes

Economy of advertising scale = high fixed costs, lower marginal costs

Resources for distribution, sales, customer mgmt.

Brand recognition

Testing capabilities

Smalls

Hierarchies; different structures, bus. models

High advertising cost per unit item

Limited resources -processes inefficient, ineffective, or non-existent

Build Brand from zero –takes time

Very limited testing capability

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Determine strategy first, then adopt/adapt


Typical M&S Numbers

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Typical Costs for Industrial Products via Direct Sales

Established

Firms

Lead

Generation

Percent of

Revenue

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


Marketing in Company Context


Technology Selection

Product

Launch

$

$

$Strategic Marketing

Tactical Marketing

Operational Marketing

Technology

PortfolioNPD

SUSTAINING

ENG.

ResourcesDebt & Equity

Debt & Equity STOP

MARKET

COMMERCIALIZATION

OPEN MARKET

DISTRIBUTION

SALES

FINISHED

PRODUCT

REVENUE

PROTOTYPE

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GOALS

Definition of Marketing Phases

STRATEGYIdeate, define,

develop,

evaluate &

select

projects for

Commercialization

TACTICSSupport design,

development of

specific product,

prepare for

Commercialization

OPERATIONSDistribution, 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

© 2009 Dennis Wonica LaserLight Networks Inc. 7 of 43

Which Matters Most?

Marketing vs. Sales

Strategy Tactics Operations

Answer: A Continuum

No Strategy

No Tactics

No Operations

No Customer

No Sellable Product

No Revenue


Founders

CTO, CFO, CMO

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

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

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

Product Director

Marketing Director

Phase Processes vs. Personnel

Strategy Tactics Operations


STRATEGY

“You‟ve got to be careful if you don‟t know where you‟re going „cause you might not get there!”

--- Yogi Berra

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 suggestsinnovators have

10% chance ofstarting with rightstrategy

Source: C. Chistensen and S.Anthony, “How to be aDisrupter,” Forbes, Jan 2007


Segmentation

Market Driven RISK Technology Driven

Incremental Evolutionary Revolutionary


Market Driven

Geography Industry Dimension Behavior Benefits EconomicStage/

TimingOrganization

SELECT CRITERIACommon for B-B

State

National

Regional

World

Sector Number factories, employees,

users

Direct, distributor VAR, OEM;

Tech or

non-tech, brand loyalty

Cost

Performance

“ilities”

Turnover, production process, Type/size of customers, Buying cycle, Patterns

Product Life Cycle

Procedures;

Centralized decentralized;

Profiles of decision makers


Revolutionary: Create A MarketHigh Risk Problem: 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

Validate Assumptions, Reduce Risks thru

Experiments

• Use Prototypes

• Simulate Market Locally

• Examine External Data

• Research Market at Grassroots Level

• Test, Test, Test

Assess, Shape Strategy for Best

Chance of Success

• Change as Necessary

• Enhance Understanding

• Constantly Reduce Risks

• Verify or Refute Assumptions

Iterate, Continue Risk Reduction

Solution Outline:

Poke It with a Stick

Observe Reactions

Learn as You Go for Little Expense

Develop Strategy from Responses


Perform Customer Ethnography

Personal Interviews With

Potential Customers

Talk to VCs, Consultants,

Sector Experts

Delphi Method

Examine Non-mainstream

Fringes

Study Lead Users

Talk to Sales People &

Distributors

Create A Market - MethodsExternal Focus - Triangulate


Evaluate Segments—Filters

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

SEGMENTS

1. IDENTIFIABLE

2. DIFFERENT

3. ACTIONABLE

4. MEASURABLE

5. ACCESSIBLE

6. SIZEABLE

7. STABLE


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: Diffusion of Innovation Product Substitution Trends Complementary Disruption Changing Market Environment – Politics, Legal,

Economic, etc


3 Sales Computation Methods

Sales = [# Buyers x Quantity Purchased] x Market Share x Price

Top Down

Market Based

Bottom Up

Customer Based

Bound & Converge

Scenario Based

Most Likely

Optimistic

Pessimistic

Chain Ratio (akaChinese Market

Method);

Judgments

Direct Sales

Must estimate Separately for New

Market

Could Estimate Separately for

Existing Market

You Vs.

Competitors

Your Goal: 100%

Your Price per Unit


Competitor Analysis

Rank Ordered Methods Other

Competitors’ sales people Speeches

Customers Reverse engineering

Competitors’ reports Company Insiders

Business publications

Prof. reports (white papers)

10 K Reports

Distributors & dealers

Trade shows

Government publications


Check Point

Sufficient Target Size

Revenue > Costs

Niche Low Competition

Timing

STOP

If the numbers don‟t add up +

timing is off, there is no point in proceeding


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, E-

mail, panels, telephone, et al

Useful as Bulk filter: 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

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Source: L. Lodish, Pricing and Positioning for Entrepreneurial Marketers, March 30, 2005in Knowledge@Wharton


Pricing Impacts Profit more

than Cost or Volume

Price factors 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


Pricing Methods

Market Based

Value in Use

Price by Feature

Price as Whole

Product

CompetitionTarget Price = Target Cost + Target Profit

Cost & Technology

Based

Technology, SOA, or Complex Product

Cost + Acceptable

Markup

Total Product Cost

Lifetime Cost


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


OPERATIONS

Direct Sales vs. Distributors

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

Direct Sales

Founders at Start;

Your own employees

Reseller –Distributor

Sells your product as is

Value Added Reseller or Distributor

Sells your product and bundles other products together to solve customer problems

Value Added = Relationships +

Integrated Solutions or Systems

May become a customer

Sales Reps

Commission/Contracts

Bear own sales expenses


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 Track Survey customers regularly Interact Survey after critical interaction Monitor Examine e-mails, calls, Blogs Update Obtain future needs Immerse Interact, visit


LATEST PROBLEMS& TRENDS

Begin at the End—Sales

Even for established, Best Practice firms selling B-B:

Increase your odds: Create unique product revolutionary if possible Find select customers target Focus on customer needs niche

Statistic Source: Marketing Sherpa, New B-to-B Research: Business Technology Marketing Trends, July 2007

12% Inquiries

to Qualified Leads

40% Qualified

Leads to Prospects

20% Prospects

to Sales

Lead Conversion Rate 1%!!!


Top Problems

TOP PROBLEMS

RANK ORDERED

M&S to Committees, Groups

Competing for leads in rich media environment

Generating PR

Creating perceived value

Long sales cycles

Budget

New marketing methods

Source: Marketing Sherpa, New B-to-B Research: Business Technology Marketing Trends, July 2007

Company Size

Avg. # Participants

100-500 7

501-1000 14

> 1000 21

“Decider” involved

@ $25K Threshold!


Buyer Finds Seller 80% of Time

And only when Buyer is ready to act

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

Message

SUPPLIER BUYERPUSH

Now I’m

ready to

purchase


Sales Reality

Match Message to Buyer Cycle

BUYER TIME

3-18 Months

THRESHOLD

7-21 People

Celebrate

Evaluate & Decide

Buy

Consider

SearchAware

!Problem

Retain

Advocate

Company Data

Website

White Papers

E-Mails

Webcast

Demo

Bid/Quote

Follow Up


MOSTLY TACTICS…..

E-Mail Opening Rates Decreasing

Use consistent address - most recipients report spam based on From field

Get to the point—summarize or use short sentence—link to Web Site

Include contact info as appropriate

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

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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

RegularESPs provide reporting capabilities; request subscribers place your e-mail

address onto their ―safe list‖

Certified(Goodmail Systems, et al)

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

Certified Email Paper

Suppression(Goodmail Systems)

Provides electronic proof that e-mails were delivered and received; takes

digital signature; $0.03 per message; available only to senders with good e-

mail reputations


Specific Modern Tactics


Modern Tactics Decision Makers

White Papers Vendor Sales Reps

Webinars/Webcasts Online User Community

Telemarketing (includes cold call)

Vendor Trade Shows, Conferences

Web Sites–Search Engines

Webcasts from Vendor

Podcasts Webcasts from B2B Source

Blogs & RSS feeds B2B Trade Shows, ConferencesE-Mails (includes mobile)

Source: Marketing Sherpa

New B-to-B Research: Business Technology Marketing Trends, July 2007 and Business Content Study, March 2008

Eng

inee

rs

RANK

ORDERED

Web 1.0 vs. 2.0 Tactics1.0 2.0

1-way Communications 2-way Communications

Standard E-Mail campaign Social networking

Web page Wikis

Basic info material, downloads

Collaborative sites

Search engine optimizationBlogs, videos

Webinar

For 2.0 Tactics:

Sales process shared by buyer & seller, more personal + more collaboration

Connect through narratives, not benefit statements & feature lists


Media Shift

On-Line Formats Increase As Print Decreases


Social Media

Favorites for B-B sales: #1 = LinkedIn; managed data

#2 = Hoover’s

Twitter – mixed signals 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: Sampling Surveys Data mining Specific real time data

MediumPaid (P)

or

Free (F)

Targeted

for

Business?

Jigsaw Both

LinkedIn Both

Twitter F Mixed

Yammer F

Facebook

MySpaceF X

Plaxo F

Hoover’s or

OneSourceP

ZoomInfo F/Other

Sim

ilar


Quick TakesTACTIC 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


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

Consultative Sales: Buyer trusts seller

OLD

NEW


Documents

B-B Marketing for Advanced Tech Firms - LaserLight … Marketing for Advanced...B-B Marketing for Advanced Tech Firms ... Marketing Sherpa, New B-to-B Research; ... Rank, Select Tech