The True Meaning of B2B Sales

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  Zilmar10/01/08 Report as spam
  1

  RE: The True Meaning of B2B Sales

  Those five points are certainly good targets to be aimed at when developing a B2B approach to a new prospect. I have instead used a three-word support, derived from a definition by P. Drucker of what are the sole concerns of top management: profitability, image and innovation. Working on each of these we may come to where our product fit. The procedure has produced some serious investigation on client's possible needs from the evidence that can be collected including through cold calling, advertising, public statements of growth policies, etc.

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  Geoffrey James, Sales Machine10/01/08 Report as spam
  2

  RE: The True Meaning of B2B Sales

  QUOTE: the sole concerns of top management: profitability, image and innovation
  
  
  I agree that top management thinks image is important, but I often think they're more concerned with their own image than the image of the company.
  
  
  
  Image and innovation are only of value if they increase revenues and decrease sales costs. You innovate to come up with new products that your company can sell. Your corporate image decreases the cost of sales by removing the "who the heck are you" objection from the sales cycle.
  
  
  
  Most CEO-types, on the other hand, are concerned about their OWN image, which never generated a single sale. The worst example of this is Carly Fiorina at HP, who apparently thought she was some kind of rock star.

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  DonDuguid10/01/08 Report as spam
  3

  RE: The True Meaning of B2B Sales

  You state: "To repeat, there are only two (2) things
  important in a company: 1) increasing sales revenue
  and 2) decreasing cost of sales."
  
  Challenge: Sales revenue without profit is investment.
  Profit is not just Revenue minus Cost of Sales as you
  seem to be saying.
  
  Depending on the phase of the business development
  cycle, there are times when it is appropriate to invest.
  
  If the business is static, not going anywhere, not
  looking to the future, then your model works: increase
  revenue and reduce costs. If your customer is looking
  at their future, where they need to be in 5 to 10 years,
  then it may be appropriate to look at other factors
  within ones ???solution??? rather than just enhancing the
  status quo.
  
  In your repost to ???Ray892244??? you say:
  
  "1. Sales. Nobody wants to decrease their sales, so this
  element is simply a restatement of the goal to increase
  sales revenue."
  
  This is oversimplified and also the root cause of low
  margins. Constant reviews of the true profitability of
  each transaction, each customer and each market
  segment allow you to detect when cost of sales (COGS)
  plus sales expense plus collection exceed unit or
  transaction prices. I had a sales guy working for me
  who was the highest PC sales revenue generator in the
  region. He was measured, and rewarded on revenue,
  not margin. I showed him with simple mathematics
  that he was losing $50 per PC and that the best thing
  he could do for the company was to STOP SELLING.
  Clearly we had to renegotiate the prices, but he was
  oblivious to the problem. If you are selling at a TRUE
  loss increasing sales revenue is the worst thing to do.
  Very few companies actually calculate True
  Contribution Margin at the transactional level. Those
  that do, and I have enables many of them to do so,
  often find it is not worth sending out an invoice. The
  postage cost turns a Revenue-COGS profit into a
  Revenue-COGS-Cost of Selling-Cost of Collecting into
  a loss.
  
  You see this in so many companies. Every sales person
  is making target as is every sales manager, but the
  company is not profitable.
  
  Similarly, if your limited resources are in a market
  segment that is becoming non-profitable, get them
  out and move them to a profitable new segment. This
  will reduce sales revenue short-term, but will save
  your a**e in the future.
  
  "2. Employee/Process Productivity. Increased
  productivity decreases the cost of doing business,
  thereby decreasing the cost of sales. If you increase
  productivity somewhere in a company in such a way
  that it increases the cost of sales, you???re decreasing
  profitability, which is stupid."
  
  If you include selling costs in the cost of doing
  business, not technically part of Cost of Sales, then, for
  example, adding more sales professionals increases
  the cost of selling and can reduce profitability in the
  short term, but can increase profitability and sales in
  the long term. I don???t call that stupid.
  
  "3. Profits. Increased revenue and decreased
  profitability means more profit, by definition."
  
  I???ll give you that one ??? in fact that is the ONLY one
  that really counts, this is the Purpose, everything else
  is the Process. What is not stated here is the
  timeframe.
  
  I???ll stop here ??? enough said.
  
  My summary is that in selling B2B, the best advantage
  is to have a full understanding of your
  customer/client???s total sales process from Marketing
  through R&D through sourcing through manufacturing
  etc right up to collecting their customer???s money and
  putting it in the bank. If you can make that profitable
  or faster, then you have the right to charge them for
  whatever you are offering. On top of that if you can
  enable them to move from their Current State to their
  Desired State, you add even more value.

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  Geoffrey James, Sales Machine10/01/08 Report as spam
  4

  RE: The True Meaning of B2B Sales

  QUOTE: Depending on the phase of the business development cycle, there are times when it is appropriate to invest.
  
  
  I'm not sure whether it's a good idea to consider selling at a loss as an investment, even if selling at a loss has a strategic purpose.
  
  An good investment either grows in value or pays a dividend, without any intervention on your part. That's not true of strategic accounts and selling at a loss in order to grow market share.
  
  
  
  There's nothing automatic at all about turning such things to your ultimate profit. Quite the contrary, it's often quite difficult. So I think that characterizing them as an "investment" sets up a company to fail. They are an expense and need an accompanying plan to recover that cost.
  
  
  
  Overall, I admit that I've conflated the cost of sales with the cost of goods sold. However, I consider COGS as simply another type of COS, since if you didn't have goods to sell you couldn't sell them. I realize that they fall into different lines in the 10K, but I think that the separation is artificial.
  
  
  
  I may be seeing the situation through "sales-colored" glasses, though.

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  DonDuguid10/01/08 Report as spam
  5

  RE: The True Meaning of B2B Sales

  Okay, it's a language thing. My view is that any
  'money out' from a company even if called an expense,
  must be seen as an investment and have as you say a
  plan to recover that cost. Through our :sales-coloured"
  glasses (the UK English is revealed!) any time we ask
  the customer to give us money, it must be an
  investment not a cost and therefore have a plan to
  recover and exceed.
  
  Our earlier correspondent focused on ROI - well he's
  right - and I agree with you that some of his 'factors'
  are redundant or so connected as to be duplicated.
  
  That said, the essence of true B2B selling is to
  understand HOW the decision makers will evaluate
  your proposal - and present the return on investment
  in their terms. It will vary per company and per
  individual - the CFO will have different criteria than the
  VP of Sales - both may have a yes/no flag on the
  decision.
  
  To follow one method of justification limits the seller
  to one type of customer - now that is stupid!

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  Geoffrey James, Sales Machine10/02/08 Report as spam
  6

  RE: The True Meaning of B2B Sales

  QUOTE: To follow one method of justification limits the seller
  to one type of customer - now that is stupid!
  
  You make an important point here. While the only important things in a company are increasing revenue and decreasing costs, that doesn't mean that your customer realizes this. The customer may actually think "innovation" has value, in and of itself (silly!) and divorced from its actual purpose (to make it easier to sell future products.)
  
  
  
  In that case, your sales approach might lead with "innovation" and then segue to the REASON FOR innovation, which is increasing revenue and decreasing costs, an observation that will probably strike the "innovation-happy" customer like a bolt of wisdom from on high.

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  DonDuguid10/02/08 Report as spam
  7

  RE: The True Meaning of B2B Sales

  "The customer isn't always right - but they have the right
  to be wrong!"