Monthly Archives: July 2014

The relevance of B2B branding

Is branding required in the B2B context? In the B2C context companies like Coca-cola and Pepsi persuaded consumers that sugar water with some acids and coloring was better than water, and the in-thing to keep sipping all the time. If branding worked for them, it must have some relevance in the B2B context as well. At the same time, surveys have shown that most industrial brands are just labels and do not really have strong correlation with the qualitative attributes of the product.
Studies show that Business buyers are not necessarily value driven, but individuals in the Decision making units who aim to reduce risk and simplify evaluation by going in for brands that they resonate with. B2B decisions entail personal risk to the Decision maker. If things go wrong, their credentials in the company are at stake, and they could even suffer job loss. Hence a B2B brand not only needs to demonstrate business values, but also personal values. Hence the marketing message must have a rational as well as an emotive appeal. In fact, very few industrial buyers will change suppliers for small price differences. They would rather buy peace of mind. They may rationalize externally, quoting price, performance and features as important. But if we dig deep, they are actually buying trust, comfort. For example, when a corporate signs up with Taj Group of hotels, the decision makers in the administration department have a comfort that their top management will be taken care of at the hotels where they stay, and that there will be no reason for complaint.
Brands help as a means of communication of benefits and value. They help to set expectation on the product or service. The SERVICE QUALITY MODEL is of great importance here. Perceived quality of a branded product is higher than an unbranded product. In the B2B context, a brand achieves greater information efficiency and risk reduction, while in the B2C context there may be more of image value benefits.
However, B2B Branding approach needs to be holistic. There are two broad principles B2B must adhere to. Firstly, alignment. It has to message the right values to the customer as well as incorporate internal values and needs to be marketed within the organization, so that all are in sync. The spirit of the brand has to come across all functions in an organization and very importantly in marketing and sales functions. Consistent and effective marketing to build the brand on functional (like features, benefits), economic (price, time etc) and emotional parameters (like trust, peace of mind, solidity) has to happen.
Secondly, consistency. Often companies talk past their customers, and there is divergence between the core messages companies communicate and the brand characteristics that customers value the most. While companies may project a social responsibility angle, customers may be valuing efficiency or reliability. Hence a disciplined communication of values and messages is important.
When industrial companies benefit from business to business branding, it is often by accident rather than design. However, with a little extra effort and cost, the effect could be much improved loyalty, greater profitability and higher valuation of the firm. Finally, the most successful B2B brands have always kept it simple and stupid (KISS).

RM Sanjay, Director(Sales & Mktg Practice)

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Making your sales effective!!!

Many a times, the sales of a firm  starts off from the founder’s personal contacts and then expands into newer territories. As firms grow and expand, there is  need to diversify and derisk customer base, both in terms of revenue from a particular segment and percentage of contribution from a the top few customers. However, most companies find this desired state alluding, for many reasons. Sales structure, team reporting, carving of markets and sales measurements are the major roadblocks that hold back the company’s sales achievement. Many firms do not get the required ROI despite hiring more direct sales people, training them, and arming them with heavy technology & gadgets.  

How do you get your sales engine firing and delivering the expected results? Start with the basics of your sales strategy, what is the product or service, what would be the best channel to sell, is push or pull the right approach, commercial policies etc. Once your sales strategy is clear, evaluate the structure to see whether it is aligned to deliver the results. Do not just follow the herd by putting more direct costly sales resources, often a good combination of low cost backend and high touch direct sales force is not only useful but cost effective.  Identify systems that cane be deployed without much hoopla!. You do not need Bazooka’s to kill a fly. Do not buy overkill sales systems if you can keep your process simple and stupid.  Importantly, your systems must be able to allocate activities to resources, make them own and drive outcomes. Systems that require less monitoring and less control always work best. Keep away the burecarutic multi-report systems, they are just too much of file pushing, but no juice at the end of tunnel.  

The size and structure of the sales team is also important. The right account and territory assignments, the type of sales resources that you have, their effectiveness, the number of each type of resource, coverage of territory are issues to be kept in mind here.  Most companies make a cardinal mistake of allocating geographic regions interspersed with named accounts. This is a classical “falling between two stools” folly that one must avoid. Follow a simple principle – either geographic or account wise dedication, and stick to it for some time. Intelligent sales managers often rotate sales resources between the geographies to break the monotony and avoid the “familiarity breeds contempt” effect.

Most crucial, but often got wrong, is the issue of talent. Account mining is different from opening, hence characteristics of KAM is different from hunter. Having the right mix of hunters and harvesters is key to effective sales management.  Recruitment and selection of the right candidates, putting in place appropriate development and training plans for their sustained success is also a key component. There also has to be clarity on the sales culture that one needs to build and strengthen. If you want to create a group of interdependent collaborative sales teams, ensure the mining and acquisitions teams appreciate this aspect and are culturally attuned to this joint outcomes. Do not fall into the trap of aligning culture using incentives, it seldom works, especially in sales.  When high standards, clarity, transparency, teamwork and commitment are part of the culture and are followed diligently and imbibed in our systems, success is closer then imagined.

Finally sales can be only effective if it is fortified as a continuous and learning system. Systems to gather competitive intelligence, sales support, performance management, rewards & recognition and IT systems such as CRM, KM, BI etc., are all typical support systems that need to be aligned. Hence, building a high performance sales organization is not just about hiring more sales people, or using technology. It is about putting in place all the inter-dependant components in the system that will fire in unison. While the above list is by no means exhaustive, they are just some of the inter-dependencies that need to be built and aligned to have a reliable, consistent and effective sales organization.

 R. M Sanjay, Director (Sales and Marketing Practice)

 

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Stemming the flow of tech start ups???

With new government in town, industry associations and clubs are vigorously raising the ante on many issues of significance to technology start ups. The most recent one being that of Indian origin tech start up’s of Indian origin registering in USA or Singapore or other markets. Are Indian start ups reaching out to these countries because they are endowed with quality research-intensive universities and institutes and availability of highly skilled manpower?. Or it the “country of origin” effect that tilts the scale in favour of developed countries, especially in enterprise application space?. Or is it the special tax exemptions, tax holidays, export and import based incentives, losses against future profits and accelerated capital depreciation as claimed by VC clubs and industry associations?. Is it the exuberating wait of two weeks to register a firm (which is a very insignificant activity considering the host of activities and challenges the start up has to face later) compared to two hours that tilts the decision?. Are these good enough reasons for a product start up to move lock stock and barrel from India and move to these far away shores. Proponents of global trade and one with knowledge of how VC’s cohorts work recognize this has got nothing to do the efficiencies of these regional market but more with how perception of valuation and network work in their favour.
Industry groups and clubs have are recommending government to create a large corpus and invest along with VC’s in the start up, a very laudable “Le Las Vegas Model”. Sherlock would have wanted industry leaders and association representatives who probably had a ring side view of the lacunae and lopsided policies seek more elementary logic. What do Indian technology start ups suffer from, access to high quality infrastructure or access to funds or access to scale up?.
Infrastructure policies including SEZ (often in far flung areas from CBD) can be great vehicle to attract service companies, they have seldom looked at access to high quality infrastructure meeting the requirements of small teams. In many national level institutes, while there is large tracts of space available, ease of access for not so well connected entrepreneur is a challenge. Unscientific spread of costly tax payer money into duplicate incubation facilities has impacted scale of available infrastructure. As often many successful start up’s find their relative flats in Residency Road or small office in Basavanagudi coming to their rescue. Fortunately, infrastructure is a surmountable problem and does not limit the innovative output of technology start up’s, at least not the software products.
On the access to funds front, there are many prizes and awards available for technology start ups, a back of the envelope calculations indicate close to 1400 Crores across several Central and state government schemes. Many are lost in the myriad of departmental allocations and silos, and thus unable to support world class interdisciplinary technology start ups. There are also collateral free schemes like CGSTME which are supposed to fill in the viability gap for an early start up without encumbering the entrepreneur. Unfortunately, most CGSTME loans in reality require collateral and the limit of Rs 1 Crore may not be enough to support the start up beyond 9 months. Another reality check, most bankers would be happy to allocate CGSTME loans only if a VC has already blessed the start up with some investment!. Financial additionality (FA) referring to availability of funds to start ups that would not have been available in the absence of the scheme needs a relook. Many of member lending institutions (MLI) of the scheme including SBI, Canara Bank or RRB have disbursed less that 40% of their budgeted allocations. Over 50% of the disbursement of the funds is for less than 2 lakhs!. Imagine building world class software products with such a large sum. Fortunately, most find raising money from wife, extended family or friends easier to start and hope they waddle trough service revenues to sustain their technology product dream.
Even when technology start ups survive the harsh infrastructure and funding conditions, what really breaks the bone of these businesses is the limits to scale. In most of these “start up destinations”, a major push for domestic technology companies comes from their respective government. E-governance, defence and education sectors are where their respective government not only set-aside markets for their domestic technology start ups, but actively protect this turf from any encroachment. The generous act of their governments helps these companies to assiduously gain scale and build robust products. These government also extensively use their export-import mechanisms including lending institutions to actively promote these technologies in other countries. Many such generous acts carry Singapore or USA products into Middle East or African markets. Imagine what would happen if there are 10-15 domestic technology products that could be used in accelerated power programme or public health or government distribution, all enjoying an adoption of 3 -20 million users per year. That scale is sure to salivate whichever coast VC. Imagine if 5-10 Tally’s could be taught at the government colleges and the exalted institutes of excellence, all gaining a user base of 5 Million per year. If Microsoft has found more enthusiastic raiders in India, it is not for any other reason, but its marketing muscle and reach. Do you wish the stems of technology start ups grow stronger and emerge as trunks, then Watson, it is very elementary support them to grow. Give them space, nurture them and prune them to spread. Very elementary.

Dr TR Madan Mohan

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