Branding and Positioning in the B2B World

One of the biggest differences between B2B and B2C is branding or positioning your company.  Many extremely successful marketing leaders in B2C have a difficult time making the much needed adjustments to be successful.  In my book, The B2B Executive Playbook, I referred to Michael Jordan’s dominance in basketball and being labeled “World’s Greatest Athlete.”  But, the world’s greatest athlete failed miserably when he tried professional baseball.

He may still be the greatest athlete, but he needed to apply his skills much differently to be successful in baseball.  What he also lacked was experience in baseball.  I’ve witnessed dozens of successful B2C marketing executives who have been met with the same results as Jordan did when they crossed over to B2B marketing. 

Commonly, I run into high-profile executives much like the one I worked with who came over from a major soft drink company.  He is a great individual.  He amassed all kinds of accolades and had great success at his former company as a brand leader of its flagship product. His honors included national advertising and marketing awards as well as several industry awards.  The financials were incredible too…market share gains, profitable growth, etc.  Then he jumped to a B2B and became the CMO in an industry which he had no experience.  The CEO was so excited to land him and even made him over product development as well.  He applied the B2C formula that made him a huge success at his old company.

Well, his new company had about 10,000 customers, but their top 50 customers were 50% and the top 200 were around 75% of the revenue of this $5 billion company.   He didn’t fully understand the impact of this and violated nearly every B2B success principle outlined in the book.  Most of what he did was in the name of branding, (new look, logo, tagline, positioning, etc.).  He committed millions to what made him wildly successful at his B2C Company…updated look and feel of logo, tagline, entertainment/event sponsorship and a broad ad campaign. 

The results were brutal:  sales went down, market share slid, margins tumbled, and because he also oversaw and shifted R&D dollars to marketing, their product started falling behind because they weren’t reinvesting like the competition.  In addition, many of their top customers were leaving them, signing exclusive long-term deals with the competition…never to return.  The only thing that collapsed more than the financial results during his tenure was the company morale. 

That CMO lasted three years. He has been gone for about three years now, and they still haven’t recovered from the damage that the B2C approaches caused to this great B2B Company.  It was like wearing a basketball uniform to a football game.  It was ugly. 

While there is no universal agreement on the definition of brand, the core is simply how the market views your company - your reputation.  It includes aspects like what your firm is known for, where the market believes you have value or have credibility, and your company’s personality and culture.

In the B2C world, the brand position is achieved much differently.  Let’s take the world’s most valuable brand, Coke.  I drink more Diet Cokes than I do anything else.  I have it stocked in my home fridge, in my work fridge and order it every lunch, etc…

The image of the Coke brand, for me as the customer, is contained to the advertising, the package design, others’ perceptions and my experience.  Think about it. Even if the package is damaged, in my head I assume my local grocer dropped it while putting it out on the shelf.  If it tastes bad when I order it at a restaurant, I put it on the restaurant for not have the right mix (syrup and water).  I actually do not know a single person who works for Coke! My touch points and interactions with Coke, as well as all my other brand goods, are similar to this (Crest, Nike, Sony, Tommy Bahama).

All of these B2C companies invest millions into understanding the various personas, segments, demographics, geographical nuances, etc. to determine how to position and manage these brands.  The same is true about all respected B2C CPG (Consumer Packaged Goods) brands.

There are two additional elements in the other major B2C category: Retailers.  For  retailers such as Starbucks, Disney, McDonalds, Target and others, the brand is also impacted by the store (look, experience, etc.) and the people (knowledge, culture, interactions, etc.).

In the B2B world, the brand position is also established with all of the above-mentioned brand-building components.  The difference, however, is the priority and weighting these elements are assigned, as well as the impact that a very few customers can have.  And while it’s only one element, that impact can be the difference between Branding Nirvana and losing your job (CMOs have the shortest tenure of all C-level positions and functions). 

Why are the customers more important in branding a B2B?

Because in the B2B world, the people you are selling to are industry veterans and most are also subject matter experts.  Simply put, they are living what you are selling.  They live and breathe in the industry you are supplying.  When GE Aviation sells jet engines to Boeing, the people that are evaluating and making the decision are engineers that have been in the Aviation industry for 15-25 years on average.  When Harris Broadcast sells content distribution solutions to Disney, the people evaluating and making the decisions are have 15-10+ years in the media industry.  The expertise, level of complexity, layers of customer contacts and overall sophistication of the prospect is exponentially different.    

In the B2C world, in a blind taste, 90% of the population can’t tell a $10 bottle of wine from a $100 bottle.  Nor can they tell the difference from free tap water and a $5 bottled water of Fiji.   But a sophisticated and highly emotional marketing and branding program can yield premium dollars for something which the buyer honestly can’t tell the difference. 

In the B2B world, it’s just the opposite.  While they may not know your specific offering, they usually know their industry better than those who supply it and how they will uniquely apply your product, solution or service.  They will scrutinize, compare, benchmark, test, and go to third parties and associations for references and validation. 

Think about the CIO who has worked in the financial services industry for 22 years. If you have IT solutions to serve this market, your company better know his needs, priorities, his environment and requirements…and most of all, you better have peers (fellow CIOs) he can talk to about working with your firm.  If you don’t have this, a well-designed logo, powerful tagline, slick campaign, elaborate brochure or PPT presentation will not overcome the lack of credibility to support a premium position.  Too much is at risk in his world: security of the bank assets, privacy issues, government compliance, the customer experience and the CIO’s reputation and career.   In fact, in a recent meeting, CIOs rated peer input as the #1 credible and trusted source for supplier selection.

In the B2B world, the most effective way to build or reposition a strong credible brand is through your current customers.  It’s how they describe their experience working with your company; it’s what they say you successfully delivered to them (or fell short of).  And the higher level they are, they more impact they will have.

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Is the Revenue Decline at Oracle a Blip or a Sign of Major Industry Shift?

What’s happening at Oracle isn’t isolated.  It is a symptom of what looms largely ahead for the information technology industry.

According to the Wall Street Journal's Don Clark and Steve D. Jones in WSJ's CIO Journal, Oracle blames its sales force for the decrease in sales…WOW!  But, it’s true. Oracle, and the other technology companies who have been kicking everyone else around, have made their bread and butter selling to IT leaders.  These IT leaders are also by definition, "leaders in IT."  As buyers, they understand and can translate the bits and bytes of technology offerings. They make the final purchase decisions and oversee implementation and support.  They also get to be their own judge and jury by defining their own success criteria, which are typically the factors most relevant to IT (uptime, response rates, etc.).

With technology solutions migrating from in-house applications which are purchased and managed by the IT department, to cloud and other delivery platforms outside the data center, purchase and evaluation decisions are being made by the business unit leaders the IT leaders have traditionally supported.  And also by definition, "leaders in business" have a completely different way of analyzing, managing, and buying the services that support their business.  My favorite quote so far which highlights the difference between IT and the new untraditional buyers of technology comes from Michael Hickins, the Editor of The Wall Street Journal's Morning Download, “Indeed, many of them are heads of marketing who used a credit card to pay for cloud based marketing automation or reputation management applications."  According to Nucleus Research Inc. analyst Rebecca Wettemann, "Among that customer set, 'there’s some trepidation' about dealing with Oracle."  Again, WOW!

Change of this magnitude and pace may rewrite the entire IT ecosystem and power structure.  Oracle out, Workday in?  Not yet sure where to place the bets, but the opportunity couldn’t be bigger for those who can translate the facts and figures of technology services into a vision that inspires the hearts, souls, and ROI targets of business (versus IT) buyers.  As such, I will be sure to use my AMEX to pay for our new IT system and make sure I get all my Delta Frequent Flier miles too.

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On-Line CABs Great for Users, Limited for Executives

Recently, a great question surfaced on LinkedIn about CABs: “Has anyone here implemented a successful online CAB group? If yes, how successful has it been?”

I find that online CABs can work well in certain areas, but have limited effectiveness in others.  For instance, with user groups and focus groups where you’re seeking incremental insight, online collaboration can be a great tool for getting input on feature/functionality or refining a product/service. 

On the other hand, if your CAB is more strategic in nature, and your members are the level of Senior Director or above, a face-to-face environment is more appropriate.  When seeking advice on your strategic direction, the conversations progress into deeper discussions – about business challenges and understanding your customers’ priorities, industry trends and sharing of market insights.  Face-to-face engagements build a certain degree of trust and provide a safe environment for sharing and networking, which we find results in a genuine “bonding” of the group.  Members appreciate the professional accomplishments and relish the personal relationships they develop.  Council meetings feel like “reunions” and customer members become advocates. 

Having said this, once these types of relationships and trust are built in a face to face meeting, online meetings can be effective supplement for small working groups between the face-to-face engagements. 

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Should Your B2B Organization Consumerize Marketing Efforts?

I recently read an article over on the Software Advice website that discussed whether or not B2B Organizations should Consumerize their Marketing Efforts.  While there are many practices that are transportable between B2B and B2C, (and some of these marketing tactics should be applied to the B2B world aggressively), the suggestions cited in this article are limited to simple and low price point offerings. For typical complex B2B offerings that require many stages of conversations and levels of signoff, these simply won’t work.

In addition, points and “gamification” may in fact represent a conflict of interest and forbidden by the purchasing organization. This is a strong case for why these two worlds must be approached so differently. All marketing isn’t the same. Some B2B marketing is similar to B2C especially when the user is the decision maker, but it can also be very different.

Business-to-business (B2B) companies are fundamentally different from business-to-consumer (B2C) companies. But far too often B2B leaders try to apply B2C strategies and tactics in their companies with disappointing, even disastrous results. B2B success requires a completely different playbook.

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Strategic Planning with Marketing and Sales

In my book, B2B Executive Playbook, I describe four steps that can simplify strategic planning, focus product development and sales and marketing efforts, and, most importantly, create a clear path to market leadership.  If implemented properly, it will also add sustainability and predictability to a B2B company’s top and bottom lines. 

As with any corporate initiative, however, success can be sidetracked if problematic modes of operating and behavior creep in.  Over my next four blogs, I’ll cover each of the top four common pitfalls that prevent B2B firms from succeeding; Inside-Only Thinking, Limiting Input to End-Users, Following a single Customer, Chasing the Competition.   Be aware of them, and act quickly if they surface in your company.

Pitfall #1: Inside-Only Thinking

The first pitfall is a mindset among the leadership team that goes something like this: “Hey, we’re smart and we’ve been in this industry for many years.  Let’s brainstorm among ourselves (internal off-site meetings) and come up with the next great solution that we can bring to market to change the game and win back our leadership position.”  The leadership teams of B2B companies do have deep stores of knowledge and creativity, but when they choose to go it alone, what they are really saying is, “We know better than our customers of what they want and need.”  And this is a prescription for failure or even disastrous results.

Far too often, the inside-only ideas and solutions that come out of these sessions are not created with current market conditions or even company resources, business models, and competencies in mind.  In fact, they are usually based on legacy customer needs, structures, business models, current competitor offerings, or misguided ideas about a problem that may not even exist in the customer’s mind.  This insular mindset and culture significantly contributes to the 60-70 percent product failure rate that continues to plague companies.

Case:  The leaders of a $1 billion company invested over $100 million in developing a single solution that they were convinced would revolutionize their market.  They did this without including of vetting the idea with a single customer.  The result was disasterous.  Virtually no customers wanted the solution because it couldn’t be integrated with their existing operations, and the few who did buy, demanded to return it for a full refund, plus damages.  The stock tumbled, the leadership team was fired, and the company was sold off at a major discount to a company one-fifth its size.

Successful B2B companies avoid inside-only thinking. At Henny Penny, for example, all innovation and planning initiatives begin with the needs of customers and the market.  “This is the backbone of our culture, strategic planning, and success,” explains Rob Connelly, CEO of $148 million Henny Penny Corporation, a family-owned manufacturer of food service equipment.  “It has enabled us to hold on to and grow our biggest customers for decades, because our plans help them serve their customers more effectively.  We work extremely closely with our top customers.  Our design and engineering teams share ideas, collaborating to provide new solutions, solve problems, or change the game.” 

One of the home runs at Henny Penny was the development of revolutionary low oil volume (LOV) fryer for McDonald’s Corporation.  “We’d been studying innovative ways of improving and shortening usage in the frying process for quite awhile,” recalls Connelly.  “Together with McDonald’s, we developed a breakthrough product, which not only yields significant cost savings, but is also easy to operate and minimizes environmental impact."

The LOV fryer earned Henny Penny the prestigious McDonald’s Global Innovation Award in 2008.  In 2009, MacDonald’s named it Worldwide Equipment Supplier of the Year and in 2010, Worldwide Equipment Partner of the Year.  That’s the kind of market clout and credibility that can’t be bought – and it led to even more sales.  In addition to sales opportunities at McDonald’s 30,000 restaurants worldwide, Henny Penny applied these innovations to stock models that were successfully rolled out to the small and mid-sized restaurant marketplace.  

Bottom Line:  With so many strategic and development alternatives to chose from, you must tap your top customers to prioritize, justify, and focus on the opportunities that will deliver the most impact.  Leveraging their industry knowledge through collaborative “outside-inside” thinking is the only way to secure true market alignment that drives Sustainable, Predictable and Profitable Growth.

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Mom’s Almond Sheet Cake and World-Class CABs

Every time my mom makes her famous Almond Sheet Cake, it wins the crowd over.  Everyone loves it (especially me and my dad)…and everyone wants to know, “How can I get this recipe?” 

Many people ask how their Customer Advisory Board (CAB) compares to others…or, how do they know if they are maximizing their CAB initiative.  So here’s a quick litmus test I came up with for Executives and CAB leaders alike to see if their CABs have the right ingredients to blow people away, like my Moms sheet cake.

 

 

  1. Ongoing vs. Event – many companies treat the CAB like a customer event.  We did it – it was a valuable 2 days!  The customers had a great time, etc.  Ongoing means that issues discussed will be evaluated, explored, and tested, and results reported back.  In addition the CAB members will be involved between meetings to assist, validate, test, etc.  There are usually email updates, member team calls and even sub-committees which advance specific and important issues.
  2. Strategic vs. Tactical – what areas of the business do the CAB discussions address?  If it’s feature/function, short-term, tactical, Executives rarely stay committed or engaged and begin to question long-term benefits.  If it’s viewed as part of the strategic planning process – identifying game changing acquisitions or transforming business models which provide the organization a competitive advantage – then you have something special.
  3.  P&L owner vs. sales or marketing sponsored – in order to achieve world-class, CABs must be sponsored and driven by a P&L leader (CEO, BU head, Geo President).  These are the ones whose net is cast wide enough to drive cross-functional change.  This makes integration into all go-to-market functions much more realistic.
  4. Decision Makers vs. Users – this is the final and most important ingredient to a world-class CAB.  They must have true decision makers (DMs) actively participating, engaging, and contributing.  These in-depth discussions provide rich insight, context to how DMs think, act, evaluate, etc.  Let’s face it, how many DMs take time to complete VOC surveys, satisfaction polls, etc.?  Without this viewpoint and sounding board, organizations are left to extrapolate from the user viewpoint, plan in a vacuum or simply follow the competition.  

These key ingredients are the recipe to a World-Class CAB.  For the sprinkle, dashes and timing of these CAB ingredients, read the blogs my colleagues at Geehan Group have put together.  As for my mom’s almond sheet cake recipe, send me an email and I’ll send it to you.     

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When Marketers Can Sound Like Charlie Brown’s Teacher

 

Charlie Brown and Snoopy contiplating life

"In the book of life, the answers aren't in the back."

~Charlie Brown


One of the things that I think is hilarious about Charlie Brown is the voices of all the adults (Teachers and Parents). When they speak, you can’t understand what they are saying. Now that’s great for a cartoon, but when you’re among your peers in other parts of the organization, it can be very frustrating.  This is a common complaint I hear from functional heads as well as Presidents and CEOs about the marketing department.

Let’s face it: Marketers invent words to describe things that could be expressed simply. The only group that invents more words than marketers are consultants. (Oh yes, we consultants have acronyms and buzz words for everything. Now that’s a self-inflicted wound.) While inventing and propagating novel phrases gives you street credibility in the marketing circles, industry and in the web 2.0 world, if you want to be taken seriously by your CEO and peers across the organization, markets need to speak in common-language business terminology.

Sound familiar: “We can drive share by leveraging our value proposition downstream to maximize our brand equity in the cloud. This will provide a boost in RSS and incentivized traffic and ultimately new logo acquisitions. We’ll supplement this all with virtual eZine programs. We can also engage power bloggers that follow netiquette protocols to boost our CTRs.”

I guarantee that most of the heads of sales, service, strategy, finance, IT, and development do not - and have no desire to - translate, interpret or decipher jargon like this. It’s like when you visit a foreign country. Everyone appreciates it when you make the effort to speak their language. The more you communicate in common business terminology, the more you’ll be accepted and respected by your peers and your boss.

Bottom line: The great thing about this last critical success factor is that it’s so simple to implement. Speak in a language that your colleagues and customers will understand and it will be easier to bring them on board with your initiatives. You’ll be in a much better position to have real and effective conversations.
 

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Love the Ones You're With

Everyone gets excited when a major new customer is secured. There's a celebration, bells are ringing, and lots of recognition and rewards are doled out. This event may even merit a personal call or note from the president.

 

Yet, how much celebration happens when a long-standing customer renews for the sixth straight year? Forget that they haven't bid out the work in three years (no competition=greater margin) and they are already in your system (low cost of support, faster payment= greater cash flow).  What is marketing doing to celebrate and sustain these key wins?

 

It costs 3-5 times more to acquire a new account than it does to retain an existing customer. Getting your current customers to buy more of your stuff means it's harder for them to leave you (increased switching cost), and current customers are much less likely to bid out your work (increasing profitability).

 market spend

In 2009, the IT industry was hit hard by the economic downturn. Indian Exercycle managed a 24% growth rate that year. Only one of their competitors grew during the same period (4% growth), and the rest of their competition were flat or fell below their previous year's sales. Over 70% of HCL's sales growth came from their current customers. The out performers like HCL, Oracle, Wells Fargo, and Intersource invest more marketing dollars into existing account growth than new customer acquisition.

 

Marketing can help sales increase account penetration by funding aggressive marketing programs targeted at current customers.  Too many companies miss this tremendous revenue opportunity. How many times have your customers said, "I wish knew your company did that...I would have purchased from you.?"  Marketing can change that.

 

By monitoring key metrics, you will increase your chances for success:

 

  • Retention rates
  • Percentage of penetration by offering, by account
  • ROI of the offerings your customers are buying
  • Level of awareness of each of your offerings
  • Level of awareness with regard to company acquisitions and/or partnerships

 

Once you have this key information, it is important for your business to focus on and evaluate the marketing spend necessary to maintain your current customers. At the aforementioned growth companies, this is a priority for their marketing team.

 

It quickly becomes apparent that your biggest opportunities lie within a few accounts.  This is true for most B2B companies like $3 billion HCL, where 70%of their revenue comes from just 70 customers, or $20 billion GE Aviation, where 80% of their revenue comes from 50 customers, or even a firm under $50 million like Intesource,where 80% of revenue comes from only 12 customers.

 

Start all your marketing and sales efforts plans with the few customers who control your fate.  It's where the greatest returns on investments are made.

 

 

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Series on building World-Class Customer Advisory Boards

At the CustomerAdvisoryBoard.org 2011 Conference in Boston I recently presented “Eight Building blocks of World-Class Customer Advisory Boards.” We received many follow-up questions about various aspects of these eigh8t areas:

  1. Executive Involvement
  2. Connection to Strategy
  3. Membership Design
  4. Member Recruiting/Commitment
  5. Content Design
  6. Meeting Experience
  7. Follow Up Actions
  8. Results

So, over the next few months, my team will be posting a series of articles addressing the best practices and key elements for each of these building blocks that lead to world-class customer advisory boards.
 
If you have any specific questions or situations you’d like addressed, simply post here or shoot me an email (sean@geehangroup.com) and we’ll be sure we respond. Who knows, we may even write an article about it.

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Hey! You! Get Off of My Cloud!

I recently posted a tweet “Apple unveils iCloud storage, new operating systems...let the games begin”. I received this tweet back from a Finance leader at a F500 firm:

"OK, Sean for us finance dorks - what does this mean to my bottom line and those of my customers?" - John H.

Here’s what’s happening:  Apple is trying to cut off Microsoft and Google before they make serious headway at the device level (phone and tablet), and drive up switching costs before the equilibrium in the device occurs (which will happen). This will also help differentiate them against Amazon. WhileRolling Sones - Get off of my Cloud! Amazon can provide cloud storage, there isn’t much to store at this point that consumers would actually buy from Amazon so it will simply drive the cost of doing business without driving much incremental revenue (little or no music, photos, videos, etc).
 
These four companies are colliding in a huge way. And in almost every market, only two major players can last profitably. It will be an interesting war, especially since all are too large for one to actually acquire one of the others.  And the battleground will be in the cloud, at your device (tablet and Smartphone…RIP laptops) and the offerings (apps, services, etc). Of course the first casualty has been Blackberry. While mine is not yet a Beast of Burden, sadly, its days as a leader are fading quickly as its market share has been cut in half over the last two years. Every day they wait to make a bold move will move them from tattered to shattered.

Here’s what it means to you and all consumers:  Accelerated innovation, heightened customer experience, stable technology, choice, flexibility, accessibility, and simplicity all for less money. This will be a really fun time for the consumer. Once people try it, wild horses couldn’t drag them away.

What does the cloud mean for your company and its customers?  This innovation will provide small, mid and large customers the same benefits along with agility, operating efficiencies, easier collaboration between suppliers, partners and customers if you are quick to adopt and apply a point of differentiation. I was recently in a meeting with CIOs discussing the cloud – two companies in the same space. One company is launching a three-year plan to move to a cloud configuration. This will drive 40% of the cost out of the IT organization, and they are re-investing this back into new offerings (development and acquisitions). The other company is simply trying to improve short-term cost and only yielding 8-10% savings. Most of this saving is being pushed to the bottom line (shareholders). It’s a pure low-risk, short-term return. All other things being equal, in three years a clear point of separation will occur. That should give finance leaders some satisfaction.

And while you finance dorks can’t always get what you want, I hope this time, you get what you need.

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