Download BB Marketing for Advanced Tech Firms

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
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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
LaserLight Networks Inc.
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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
© 2009 Dennis Wonica
LaserLight Networks Inc.
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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
© 2009 Dennis Wonica
LaserLight Networks Inc.
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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
© 2009 Dennis Wonica
Operational
Marketing
Product
Launch
LaserLight Networks Inc.
DISTRIBUTION
REVENUE
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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
© 2009 Dennis Wonica
LaserLight Networks Inc.
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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
© 2009 Dennis Wonica
LaserLight Networks Inc.
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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
© 2009 Dennis Wonica
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
LaserLight Networks Inc.
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."
© 2009 Dennis Wonica
?
LaserLight Networks Inc.
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
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Segmentation
Market Driven
Incremental
© 2009 Dennis Wonica
RISK
Technology Driven
Evolutionary
LaserLight Networks Inc.
Revolutionary
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Market Driven
SELECT CRITERIA
Common for B-B
Geography Industry Dimension Behavior Benefits Economic
State
National
Sector
Regional
World
© 2009 Dennis Wonica
Direct,
distributor Cost
VAR,
Number
OEM;
factories,
Performance
Tech
or
employees,
non-tech, “ilities”
users
brand
loyalty
LaserLight Networks Inc.
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
© 2009 Dennis Wonica
LaserLight Networks Inc.
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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
© 2009 Dennis Wonica
Personal
Interviews With
Potential
Customers
Delphi Method
LaserLight Networks Inc.
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Evaluate Segments—Filters
SEGMENTS
1. IDENTIFIABLE
2. DIFFERENT
3. ACTIONABLE
4. MEASURABLE
5. ACCESSIBLE
6. SIZEABLE
7. STABLE
© 2009 Dennis Wonica
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
LaserLight Networks Inc.
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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
© 2009 Dennis Wonica
LaserLight Networks Inc.
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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
© 2009 Dennis Wonica
LaserLight Networks Inc.
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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
© 2009 Dennis Wonica
LaserLight Networks Inc.
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Check Point
If the numbers
don‟t add up +
timing is off, there
is no point in
proceeding
STOP
© 2009 Dennis Wonica
 Sufficient Target Size
 Revenue > Costs
 Niche  Low
Competition
 Timing
LaserLight Networks Inc.
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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
© 2009 Dennis Wonica
LaserLight Networks Inc.
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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
© 2009 Dennis Wonica
LaserLight Networks Inc.
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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
© 2009 Dennis Wonica
LaserLight Networks Inc.
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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
© 2009 Dennis Wonica
LaserLight Networks Inc.
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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
© 2009 Dennis Wonica
 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
LaserLight Networks Inc.
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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
Interact
Monitor
Update
Immerse
© 2009 Dennis Wonica
Survey customers regularly
Survey after critical interaction
Examine e-mails, calls, Blogs
Obtain future needs
Interact, visit
LaserLight Networks Inc.
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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
© 2009 Dennis Wonica
LaserLight Networks Inc.
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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
© 2009 Dennis Wonica
LaserLight Networks Inc.
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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
© 2009 Dennis Wonica
LaserLight Networks Inc.
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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
© 2009 Dennis Wonica
Advocate
Retain
Consider
7-21 People
Aware
Search
LaserLight Networks Inc.
BUYER TIME
3-18 Months
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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
© 2009 Dennis Wonica
Get to the point—summarize or use
short sentence—link to Web Site
LaserLight Networks Inc.
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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
Regular
Certified
(Goodmail Systems, et al)
Certified Email Paper
Suppression
(Goodmail Systems)
© 2009 Dennis Wonica
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
LaserLight Networks Inc.
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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
© 2009 Dennis Wonica
LaserLight Networks Inc.
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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
© 2009 Dennis Wonica
LaserLight Networks Inc.
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Media Shift
On-Line Formats Increase
© 2009 Dennis Wonica
As Print Decreases
LaserLight Networks Inc.
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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
© 2009 Dennis Wonica
#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
LaserLight Networks Inc.
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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
© 2009 Dennis Wonica
LaserLight Networks Inc.
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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
© 2009 Dennis Wonica
Buyer trusts seller
LaserLight Networks Inc.
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