Could "Feedback" kill your business?
We're all conditioned to solicit a broad base of opinions about our offerings, and to incorporate that feedback into adaptations. After all, we need to ensure that our product has vast, broad appeal, right?
And business owners often use a similar approach with their business strategy. They "bounce it off" employees, professional advisors, board members and family / friends.
That's not a bad idea, per se. Direct feedback from intelligent, capable folks and the resulting vigorous exchange of ideas and perspectives can often identify holes in a plan; uncover opportunities that were overlooked; and help to more tightly weave the fabric of the strategy. That's all good.
The problem is that we tend to live in an echo chamber. We're surrounded by people with similar perspectives and experiences. And that means the feedback is self-limiting.
Your buyers, not your 'friends'
A higher priority ought to be gathering feedback from buyers - not from your close circle of friends, acquaintances and advisors.
The right buyers, not generic ones
And the real objective should be to solicit opinions from ideal buyers.
But before we go further - some feedback from you. Have you really built a profile of an ideal buyer? I don't mean retrospectively profiling customers with whom you've been successful in the past. Rather looking forward and considering various factors including:
- length of sell cycle
- lifetime value (repeat purchases)
- ability to leverage you into other customers
- existing / scalable resources for selling & servicing
- market environment (situated in growing, stagnant or declining geographical and vertical markets)
- where products on your road map will fit
Experience tells me that there are better than even odds that you haven't done this. Many times in my discussions with even very expertly managed companies, the understanding of potential customers is predicated on a very shallow and cursory reflexive analysis of past customers.
So get this done - and get outside assistance to facilitate the process and provide perspective and clarity.
Then, armed with necessary insight, you'll know which buyers' opinions will be particularly relevant.
Innovators in strategy & execution
Then take it further.
So obvious it barely merits saying, is the need to identify and emulate innovators. I assume you closely follow technical innovations in your product space. That's a given. In this context, though, I mean the companies and business people that are defying the common wisdom - turning the "that won't work for our industry because...." crap on it's head.
Find the B2B manufacturing company that grew international sales to 50% of it's revenue in 5 years and learn how they did it.
Follow industry blogs and groups to learn what techniques and methods of B2B marketing are creating engagement.
(And in case you're wondering, those aren't two random examples. In today's world you have two viable approaches to growth. Leverage the incredible opportunity of digital marketing to attract, engage and convert new B2B prospects, and select appropriate global markets where you can profitably build diverse revenue. It's simple - #SellMoreHere and / or #SellMoreThere!)
Don't fear the 'haters' - embrace their confirmation!
That nagging voice in the back of your head is right. As a business owner you've learned to balance gut feeling against common "wisdom." And many of your "wise" advisors are going to suggest you're veering off the rails. You'll hear:
- that won't work for your industry
- you don't have the resources
- social media doesn't work
- blogs are for B2C companies
- global is too risky - it's only for the F1000
- you can't guarantee payment by international customers
- content marketing doesn't work for manufacturing sectors
- if you don't speak a foreign language you can't sell internationally
You'll probably even hear more extreme versions - that your ignorance will doom your business.
Ultimately the choices are yours. You'll enjoy the fruits or bear the burdens of the positive or negative outcome. Just keep in mind that most of your close circle have a strongly vested interest in the status quo. You know the same status quo that has you schlepping to work each day with that knot in your stomach. You sense that things have changed and know intellectually that your business development approach must as well. But emotionally, you haven't made that leap yet....maybe the 'haters' are holding you back?
So here's an idea. Start to log the warnings. Note the essence and the source. Don't discount the 'haters' out of hand (the crackpots for sure, but not those close to you) but observe the trends while you explore the options.
My guess? You'll quickly find an inverse relationship between your innovation/success/progress and the pace and pitch of the 'haters' messages.
Add your 'hater' index to your standard management dashboard and track it. Monitor it....but don't fear it.
Want to learn how you really can adapt your B2B business development to today's market environment? Here's more info.
image - nytimes Evolutionary Marketing & New Markets Blog
But is it right for YOUR business?
Intrigued? Want to know more about how to build an international sales
strategy? Wondering if maybe the time is right to explore global business development opportunities for your company? Here's our free eBook on picking the perfect time to start exporting
Evolutionary Marketing & New Markets Blog
Seize the opportunity or grasp at survival?
You read here often about the enormous opportunities which a strategically planned and properly executed global business development program unlocks.
And other frequent topics include patience and appropriate expectations in implementing a global business development initiative. It takes time and resources - even if you pursue optimal markets for your product and don't blithely chase the BRICs
If you want to minimize the runway and maximize the value, you need to plan and implement from a position of strength - in other words while your domestic business is vibrant.
Don't wait until you're drowning, grasping at straws and hoping for a miracle!
Don't follow the military strategists at defense contractors
Want to dive in deeper, perhaps into a case study of how not to go about it? Check out the position in which the planners, strategists and tacticians of the nation's defense contractors find themselves. Apparently they so embraced the military industrial complex model that they assume wars would continue unabated.
Well, alert the media! There's going to be a reduction in defense spending. Regardless of where you stand on the topic politically, this was completely predictable. Nobody should be surprised.
And yet....in story
after story large and SMB defense contractors are lamenting the situation with surprise.
Turning the aircraft carrier on a dime
A year or more ago a few major global defense contractors began to speak publically about their strategic posturing in preparation for a planned drawdown. But many continued merrily on their way.
Sequestration created cash flow challenges for many small companies, but contracts were in place and revenue was expected to be consistent for the foreseeable future.
But then, of course, the reality of reduced budgets began to sink in.
So what options do they have? Apply their technology to commercial applications
and sell it globally on a B2B basis, and/or take their defense technology and market it to foreign governments
. Both options are subject to licensing restrictions in many cases, but also generally feasible.
The problem is doing this quickly, in parallel with running the business as it has traditionally operated. It's a major management, financial and operational trick to bring the vessel about.
Evolutionary Marketing & New Markets Blog
If you're in this jam...
If you're a defense contractor that's stuck in this position, the good news is that we have a niche practice
which works with security and defense contractors (a particular subset of our consulting for B2B manufacturers) to help them develop effective B2B sales & marketing, as well as help them select and grow targeted global markets. We do this in series or in parallel as appropriate.
If you're not there yet....
Then now's the time
to build on your current business strength and diversify into appropriate global markets. B2B manufacturers of products from simple to complex are selling profitably around the globe. They typically pay lower taxes on the profits, diversify country, political and currency risk (yes, you have all those even selling domestically!) and vastly expand their market opportunities.
Sometimes they even learn lessons
in overseas markets that make them sharper at home.
Bottom line? If you're a B2B manufacturer and you're not yet selling globally, start while business is strong. Don't wait until your back's against the wall as it is for many defense contractors now - but leverage the appealing markets proactively which they are only now recognizing.
image - kassambe
Me too...less 5%
Let's face it. Not every company innovates and creates value for their customers through their products. Many explicitly seek to simply reduce costs.
There are a lot of companies that have built a business model around not innovating. They focus on making common products a bit less expensively and taking small costs out of sales and distribution.
That's a viable model for sure. Many large businesses have been founded and grown on that approach.
But here's a recommendation. Don't waste time or money on great business development. It will likely be anathema to the management and ownership mindsets that refined the cost cutting model, and your crop of customers will neither "get it" nor care.
Price & product
Wonder which category you fit into? If you primarily define your offering in the context of your product specs, and/or the price, then my recommendation is to forget trying to adapt. Ride your current success as long as you can, and milk those shortsighted price driven customers for as long as they remain viable.
I know from experience that evolving your marketing will be something you might embrace intellectually but will resist emotionally to the core of your being - and find countless excuses (purportedly factual) for why the approach isn't quite right for your business.
And if you think you can out cheap foreign competition, you're wrong. (Certainly all the trends that support re-shoring, including a huge energy cost advantage due to shale gas, create opportunities for cost advantage in engineered products - but not replicas.) Even cheap manufacturing locations find that advantage is ephemeral. You'll never overcome relentless market forces.
Here's an important caveat. None of this means only "sexy" or "tech" products. Quite to the contrary, there are rather mundane sounding industrial products (and proactive, creative company management teams that make them) which are ideal candidates for great digital marketing and strategic global business development.
The distinction is often as simple as management mindset. If management believes they save a customer a couple bucks per item, the mindset is self limiting. If management, however, sees their product as a tool which a customer can use, with proper coaching and education, to unlock additional value in their internal processes or the products the deliver to customers, then there's an outline for a story.
And a story underlies great B2B marketing and global growth.
Do you believe in your story?
So if you look at the world through a cost prism, and take a "me too" market approach (not the business babble on your website, but your honest to goodness outlook) then you already know that evolving your business development would be not only frustrating, but simply counterproductive.
But if you have a story to tell...one that you believe deeply and know could materially impact others, then you've got one basic element. Call it the oxygen of business development.
If you recognize that you're not reaching all the buyers who would legitimately benefit and yearn to do so, then you've got the other basic element. The hydrogen of biz dev.
This doesn't mean that your story need be developed, articulated, focused on the ideal buyers, targeting the right markets or even fully appreciated within your company. In fact it likely isn't. Nor does it mean that the mere presence of H2O automatically lead to life in your business development.
But it does identify you and your company as ones which have the right environment to foster great growth. There will be obstacles, hurdles, frustration and mistakes. You'll have to overcome your 'lizard brain
' and the voice of resistance in the collective voice of your company's stakeholders.
Wondering if Consilium might be able to bring out the best in you, your company and products? Here's our guide to selective business dating.
Maybe we're a match?
image - gapingvoid Evolutionary Marketing & New Markets Blog
So your a small or medium size company...
“Small, medium-size, and larger employers all rate Massachusetts business conditions higher than national conditions, and expect conditions to improve over the next six months, but only larger firms are predominantly positive about state and national conditions. Those with more than a hundred employees are twice as likely as smaller ones to call current conditions for their companies 'good,' and half as likely to call them 'bad.' "AIM Business Insider - @AIMBusinessNews
Associated Industries of Massachusetts released survey results on Tuesday that indicate SMBs are singing the blues. In general they are not as optimistic as large companies (they used 100 employees as the demarcation) about overall economic conditions for the next six months.
That makes sense. The furry of regulatory requirements is relentless. Large companies are well positioned to respond. Sure there's a cost, but they can respond while many SMBs simply can't scale to do so. It's no secret that large companies use lobbying and regulation to create competitive barriers to growing competitors.
So? Be nimble!
You're not beholden to faceless shareholders. Silos and internal politics certainly exist, but as an inconvenience rather than a barrier to progress. The president/CEO/sr. management team can agree to a course of action and set it in motion.
And nowhere does this translate to an incredible business advantage as it does in the area of B2B marketing.
It's not unrealistic to expect that you can have nearly the same impact in generating sales qualified leads and targeting profitable new markets for an investment of $250K as you could for a couple million.
Are there differences? Of course. Will you have to improvise, economize and be creative? Sure. But use the right tools, the right way, toward an awesome strategy which has pan organizational buy-in and alignment, and you can do so.
There has never been such an incredible equalizer available to SMBs competing against large competitors.
"Inbound marketing is about the thickness of your brain, not the thickness of your wallet." Brian Halligan @bhalligan, CEO, HubSpot @HubSpot
Yet many small and medium size companies are wasting it because they don't have the vision or in house resources to pursue it.
A reasonable budget based on your goals
We recently offered some thoughts on how to measure your marketing budget against benchmarks. Read more here
- but the bottom line is simple. Most B2B manufacturing companies that are growing, are spending roughly 5% of revenue on marketing.
So a budget of $250K translates roughly to revenue of $5MM. Can you work with less? Sure. Do it right and your direct sales cost will shrink substantially as well - providing a savings offset.
The point is that small companies have an incredible opportunity to really hit B2B marketing homeruns - if they are committed and open to ideas and assistance.
Let someone else sing the blues - you get to work
But you're not going to get it done whining to a survey caller or to your golf buddy. In fact when you tell the latter that you're going to try something new, this gee whiz inbound marketing stuff, he will probably tell you you're wrong.
That's OK. You have an amazing competitive opportunity to seize.
Check out this complicated process....that we make simple for you by clicking here
image - fineartamerica Evolutionary Marketing & New Markets Blog
The curse of "the new normal"
"When the world changes, industrialists get stressed. That’s because the industrial system is optimized and polished and stretched to be good at maximizing profit." Seth Godin, The Icarus Deception
Every B2B business owner or senior exec with whom I speak offers a similar take on business. It's tough to grow.
The normal answer is something like "We're doing OK. You know we're holding our own and showing some growth." And there's always a 'but' implied by tone. Later in the conversation that 'but' becomes clear and is usually some form of "But growth isn't fast enough to:"
- create opportunity for family growing into the business
- maintain a wide comfort margin over loan covenants
- strengthen performance adequately in preparation for a planned liquidity event
- generate enough free cash to invest in the proactive programs to support future growth
"But your worldview, by its nature, keeps you from seeing the world as it is." Seth Godin, The Icarus Deception
The curse of your "lizard brain"
"Just because you have risen to a senior leadership position doesn’t necessarily mean it’s any easier to walk through your fear. Frankly it’s a hell of a lot easier to say “no” to a new venture than to risk being wrong or looking foolish. As leaders we can do better than defaulting to the least risky position, to letting our lizard brain win. If we are going to say “no” we need to know what a “yes” looks like. And we need to be able to communicate that to those we lead. And when they come back having addressed our concerns and resolved our doubts, then we owe them that “yes.” It takes guts to say yes, and you owe it to your team to be clear and consistent about what earns a “yes.” Your job is to use your guts, not to hide them." Seth Godin, The Icarus Deception
Fear (and it's siblings and cousins) live in our amygdala - the part of the brain that has been programmed over thousands of years to "play it safe."
That doesn't necessarily mean risk free - signing a personal guarantee isn't risk free, but doing so based on a traditional business plan reassures our amygdala that we're not taunting the dinosaur. We're playing the game the right way.
And often manufacturing and engineering minds are particularly attuned to this natural line of thinking. Working through a very linear analysis, plenty of rational facts are available to reinforce traditional approaches and support the emotional (and maybe outside investor and advisor) demand for conservative stability.
In other words we are programmed to approach today's challenges using tactics that are no longer suited to the environment. We're trying to play it safe....and safe no longer is. Maybe it's comfortable, but they say that the final moments of life while drowning or freezing are oddly peaceful and comfortable as well.
"As the power and impact of the industrial age peak and inevitably shrink, safe isn’t helpful. We can be as safe as possible and it’s not going to generate growth, it’s not going to take advantage of the myriad connections we can now make, and it’s certainly not going to benefit you." Seth Godin, The Icarus Deception
And that impacts our growth how?
OK - nothing remarkable thus far. We all know the world has changed.
But that's precisely the problem. The world has changed and you know it. It has changed for your company; for your customers, and for their customers. And what has evolved in your business development to substantively embrace those changes?
NOTHING. Seriously. A little fiddling with SEO here or a press release there isn't going to do it. Neither will a new rep or a tradeshow in Canada. Your casting about within your comfort zone to find solutions to challenges that have moved well ahead of your comfort. In other words you're banging away with your hammer - but the business development challenges you face today are no longer nails.
The techniques with which you are comfortable aren't going to create growth. Period. It's trite...but true. You will have to take a leap of faith - with eyes open and vision forward.
Until you do, you'll bear the stress of looming covenants and trepidation about your impending liquidity event. But once you adjust your business development approach, growth will become natural and engaging.
"The safety zone has changed, but your comfort zone has not. Those places that felt safe—the corner office, the famous college, the secure job—aren’t. You’re holding back, betting on a return to normal, but in the new normal, your resistance to change is no longer helpful." Seth Godin, The Icarus Deception
The blessing of amazing resources
The great news is that while we labor under curses (that we've heard repeatedly are justifiable hesitations) we also have tremendous resources available today that weren't - even just a few years ago.
The internet, to state the obvious, really has changed everything including the way you buy, and the way each of your customers buys. And for companies interested in business growth (rather than just lamenting the difficulty) it provides a platform for new approaches to B2B sales & marketing which are remarkable.
"The extraordinary thing about our revolution is that it is turning most business into show business. Even nonbusiness projects, from school to fund-raising, feel more like show business than we’ve seen before." Seth Godin, The Icarus Deception
The internet also will convey the value that your business offers to every corner of the globe. International sales were once the domain of multinationals - but are now well within the profitable reach of even micro businesses. For B2B manufacturing companies, global business development should be a pillar of corporate strategy.
You were once bold - are you still?
You've lived the somber reality of reactive business development. Perhaps you've glimpsed the opportunity of proactive, parallel efforts in B2B digital marketing
and global business development
The real question for business owners today, therefore, is whether they can recapture the bold vision which empowered them to create products and launch a company - and apply that bold approach to today's environment and opportunities. Or will they wilt - unable to summon the energy to dynamically pursue the opportunities.
"Unfortunately for those considering a timid step...the odds of external success start small and grow slowly. So we can’t just commit to one act of kamiwaza, one bold emotional risk, and be done with it. We have to commit to a lifetime of them. It’s a process, not an event. You don’t do a little...and then go back to work. Your work is your art (and vice versa)." Seth Godin, The Icarus Deception
Make no mistake. It's scary & exhausting. It takes a ton of work and a commitment to persevere despite the naysayers (internal and external!) This is about CHANGE, and will impact every corner of your business.But the alternative sucks!
Want some insight into how B2B Sales & Marketing is evolving? Download our free book here.
images - Life, Psychology, and a lot more
& lonelyplanet Evolutionary Marketing & New Markets Blog
Video & visual content
If you follow trends in content marketing you are well aware that great B2B marketing, even for manufacturers of industrial products, increasingly incorporates various visual content.
Why would such "artsy" content be important to successful digital marketing for manufacturers? Great question. And the answer is four fold (in case it wasn't just a rhetorical question!)
- Not everyone consumes content or digests information the same way. Some folks want to sit down with a dense whitepaper and a bud (OK - maybe a cup of coffee) while others want a snapshot from a well-designed infographic and/or a couple quick video clips that simultaneously entertain and inform.
- Content performs two key roles for your marketing. It provides the broad base that helps lots of folks find you. And then it educates them and helps build a virtual dialog. So point one above is about the comfortable dialog, but to make it easy to be found, you need to feed the search engine beast with a variety of content distributed across channels. Simply put variety will drive better results.
- Video content gives you special opportunities for optimized indexing. Post a video and the search engines won't necessarily (at least yet) know quite what to do with it. Include appropriate optimization in the script that you post with it, and voila - awesome optimization.
- Visual content, and particularly video, allow you to convey your company's character that can't be as richly presented through documents.
Even eons ago (2010) Forbes Insights
found that C-suite executives were more likely to share video with colleagues, and 60% were more likely to watch a 3 minute video than to read an entire webpage.
But NOT the product
Seriously. Nobody cares about your product per se. They don't. This is a fundamental tenet of good B2B marketing. Even engineers that clamor for all sorts of stats really want their problems fixed and their business improved. The stats and specs are merely tools to ensure the solution is legitimate.
So it stands to reason that your videos shouldn't be about product either then - at least directly. After all, motor oil isn't about slippery liquid, rather it's about extending the life of your substantial automobile investment.
And if folks are looking for solutions to vexing business challenges with which you can help them - then you actually do them a disservice just yammering on about your product and leaving it to them to serendipitously extrapolate how your product might help them. Don't leave it to chance.
Your videos need to give prospects insight into you and your company. This doesn't mean to babble about the company - rather to allow your tone & demeanor to convey the culture. And your videos must speak to their business challenges - the specific circumstances and conditions which will compel them to seek your solution.
Think....but don't overthink
You need a script (unless you are prepared to waste people's time....once) to help concisely convey the message of the 'pain' you alleviate and the value you provide. But make it conversational. Imagine chatting over a cup of coffee with a prospect visiting your office - and distill that conversation into a series of video vignettes of 2 minutes each.
The risk of 'paralysis by analysis' far outweighs the small risk of mediocre content. If you overthink it you'll find countless reasons to put it off, research it a bit more, wait until you upgrade the camera, search for a microphone or even wait until the light is Ken Burns perfect.
If you wouldn't waste a prospects time chatting in person - you won't here. Be as helpful and friendly to the camera as the prospect sitting in front of you.
And make sure you actually get it done!
And whatever you do, don't overproduce
Skip the lame corporate overview video. Nobody cares. (Just like they don't care about your listing of factory machinery, year you moved into your current building or what local civic organization your CEO has chaired!)
Use a digital video camera, a digital SLR or even your iPhone or iPad. Make sure you have a good microphone and some decent lighting. (The folks at Wistia have lots of great resources on technical tips and tricks here
.) And capture several takes until it flows conversationally.
Slice it and dice it a bit, add some music, maybe toss in a couple titles and images, and if you want to hit it out of the park, drop in a Call to Action at the end.
And then get it up on YouTube, embed it on your site and share it!
This is about points 1-4 above. You're not auditioning to be a 60 Minutes producer. You're trying to have a conversation with lots of people about how your product can help solve a problem they have or improve their situation. Authenticity is far more powerful that super slick production. Authentic brief video is something you can crate prolifically in house - so you'll actually use video appropriately and effectively. Overproduction, on the other hand, compromises authenticity and makes each video such a huge project that you'll simply give up.
Need some examples?
Not sure of possible topics for your video (besides the proforma corporate overview and the deadly product demo)? How about 2 minute bits featuring:
- the most creative application of your product that you've ever seen
- the two biggest problems people have told you it solves - which you never even sold it to do
- (series of 10) Ten most common questions folks ask as they learn about your product
- the quick story of how your product was invented
- 3 things that would surprise most people about how your product is made
- 2 applications that your product should never be used for
- 5 applications where your product is a natural fit
- the biggest value most users find in using your product
- the most flattering testimonial your product has ever received, and why it did
So you see, they are all about the "product"...but only tangentially. And with you and your colleagues (from all departments) sharing the dialog prospects will come to appreciate the value you provide.
But please promise that you'll never just set up a tripod and focus on your product.
Want to see a couple great, creative examples? Check out the sensible, engaging, brief piece on marketing to engineers, and the wise ass/satire which sells briefcases while entertaining (and flaying the frauds!)
Want to learn more about how you can leverage digital marketing for your B2B business development?
Check out our guide here
image - diginomicaEvolutionary Marketing & New Markets Blog
"L/Cs are too complicated for us. We're just a small company"
I'm convinced that bankers don't like dealing with letters of credit for international payments any more than you do. After all, L/Cs are complicated, boring, and full of risk. Small mistakes can have big (and unhappy consequences.) Of course bankers make quite a bit of money writing L/Cs - so there's some appeal to them financially.
In my experience there's a common distribution of L/C familiarity among business people and bankers. The vast majority are ignorant of what an L/C is. A minority knows enough "to be dangerous" but not to really advise with any expertise (and tosses the lexicon around for maximum effect!) And then a precious few are really conversant and expert in the science and art of letters of credit.
It doesn't need to be a business root canal!
Do L/Cs serve a specific market requirement? For sure. But they are neither the first nor last answer for general B2B business growth initiatives in export markets.
Most companies considering global sales obsess over the detail
of getting paid. I get it. They aren't doing this for entertainment only - and getting paid is fundamental to their business objectives.
But getting paid by international customers is hardly a problem for which only a single fix exists. L/Cs may be a traditional solution; they may be a profitable solution for banks; and many may refer to them from force of habit. But other options include:
- other bank centric products such as documentary collections
- wire payment directly against invoices (in advance, upon shipment, upon delivery, according to open account terms, or some combination)
- credit card
These can be substantially less complicated than L/Cs, and depending on the details, much less expensive.
And importantly, the guarantee element of the L/C is not without risk for the seller. So the commonly accepted trade off of hassle and expense for risk mitigation isn't a sure thing.
For buyers an L/C will typically be deducted from their borrowing base and therefore costs them the funds well in advance of delivery.
For regular business transactions - not just eBay
Many companies dismiss PayPal as a viable vehicle for receiving substantial international B2B payments. It's expensive
(2.9-3.9% + transaction fee + 2.5% on the currency conversion as of this writing) but it's widespread
(193 countries & 26 currencies.) And it allows both parties to work with their currency of choice. While it's convenient there are transactional limits
which vary by currency but roughly equate to USD $10,000.
So for B2B transactions of up to approx $20K (assume a portion due with order and a portion at shipment) this is a viable solution.
Wire payment is often the easiest and least expensive solution. Depending on the relationship between seller and buyer, and the size of the transaction, the timing can be negotiated. Naturally everyone wants to cover their exposure. The seller wants to have guarantee of payment and the buyer wants guarantee of receipt of satisfactory products.
Some industries (capital equipment) have standard expectations for progress payments that both ensure the commitment of the buyer and provide working capital for sellers of products with long lead-times and custom design/manufacturing.
Therefore the biggest challenge is often agreeing on the schedule for wire payments - prior to shipment or after. Generally, recognized American companies don't experience too much push back on requirement of payment in full prior to shipment.
Taking care of customers
But remember, this isn't some sterile transaction. This is part of your effort to grow your business profitably, globally. If you are serious about reaching some portion of the 95% of the world's consumers that lie outside the US, you should consider your policies in the context of customer friendly practices.
And in that light, neither L/Cs (hassle and expense for you and the buyer) nor wire payment in advance is particularly 'friendly.'
Getting really crazy...or not
Here's where you may decide I'm nuts. How about selling internationally on open account terms? OK, not to every buyer that stumbles onto your website, but how about channel partners with whom you are building mutually beneficial business relationships?
How about selling your channel partners on open account terms? 'Nuts!' you say? Not really. Here's the trick.Foreign receivables credit insurance
Seriously. You may have heard of Ex/Im Bank's insurance policy. It's a good offering - but not the most friendly for your finance folks to administer. There are other great options which have low thresholds for reporting, small deductibles, low premiums and ease of policy administration. And what they provide is awesome:
- payment on formal default
- payment on practical default (90 days past due)
- coverage for non-convertibility of currency (imagine having an invoice outstanding when Greece leaves the EU and your customer can't send new drachmas and can't access euros!)
- and protection against other mind bending scenarios
And a policy of this sort could actually be written to include your domestic receivables too (probably more risk there than you assume
) and render your accounts receivable (even international) substantially available as an asset against which you can borrow.The point is that whether your company is $2MM or $70MM Letters of Credit are an expensive hassle. There are other solutions that will satisfy your need for payment security and your customers' desire for an agreeable business partner.Don't discourage business because you dread L/Cs!
In whose currency
And then there's this question....more will follow in another blog post, but...this isn't the huge complication many fear. In fact it could be an interesting way to bump your margin a bit - and for the risk averse, there are simple and inexpensive ways to lock your margin in against any potential fluctuation.
Want to dive deeper into the FX question for B2B exports in the meantime? Download our free eBook here.
image - Jurnal PerkuliahanEvolutionary Marketing & New Markets Blog
An innocuous sounding name for the device
We all dance around topics. Things that are particularly unpleasant, barbaric or personal often have euphemisms applied and are described in innocuous terms.
"Callicrate loops" is a great one. Unless you're the product of a farm this may not ring a bell for you. Have a budding bull but want a steer
? Some anatomical adjustments are in order. And wouldn't you know it, there's a special rubber band made just for that - and a handy applicator. Wait a couple weeks and you're all done - unless you've got some Rocky Mountain Oyster fans in the crowd, then maybe you'd prefer the surgical alternative. But we digress.
There's a similar treatment for sales forces. And just as with cattle there's an innocuous sounding name for the device that will rob your sales effort of any virility.
It's called a "line card." If you're not in an industry where these are common, briefly it's a sales handout traditionally used by B2B industrial sales reps. The idea is to provide a digest of all the product lines someone sells in hopes that one might resonate with a buyer and trigger a conversation. (Some condescendingly maintain that line cards build credibility.)
A twofer of sales crippling approaches
There are two critical sales shortcomings inherent in use of a line card. Either is enough to render a sales force inefective - together they're disastrous.
First, is the implication to sales process. In short there is none! It's a version of spray and pray; a completely passive approach to sales; basically vomiting a bunch of stuff up on someone's desk and hoping that something sparks a conversation.
Second, it's implicitly product (or in a more sophisticated version perhaps brand) focused. There's nothing that really speaks to business problems and value which a company solves, nor any particular insight or expertise that they bring to customer challenges. Instead they bring a list....of products.
Wow! And guess what, there's an even bigger more up to date list of products out there now - it's called the internet.
A line card is really the antithesis of proactive, engaged, value creating sales.
The bottom line? Sales management which condones line cards is negligent. And sales people who use them are clerks.
But that's only your problem if you decide to make it
If you're reading a blog about business development through global expansion and superb digital marketing then it's safe to assume that your sales force doesn't wander around handing out line cards. You have recruited and trained sales professionals. You've built a superb B2B inbound marketing program that generates marketing qualified leads and nurtures them through today's extended buying cycles until they are sales qualified.
But you probably sell through sales channel - maybe in some vertical markets or some regions domestically, and probably in some international markets. And if you've engaged channel partners who's reps use line cards....you've compromised your sales effort with the same mediocrity by proxy that it would represent in your own internal sales force.
So stop! When you evaluate potential channel partners don't just ask about how many reps and offices they have, along with all the other proforma survey questions. But understand how they sell. Do they proactively identify opportunities to creatively integrate the products they sell into their customers/prospects business to create value? Or do they fling line cards around the countryside?
And beware - there are line card proxies too. Sending a pdf equivalent by email is as futile as dropping off a printed version with a business card staple to it at a reception desk.
When seeking global channel, don't fall for a "cultural" excuse. Certainly cultural norms and business practices vary. Tone, timeliness, business process and sales approaches differ between markets. But no culture values wasting time on aimless sales handouts. Intelligent, creative, capable sales skills that create value for customers through effective application of solutions is valued globally.
Want to learn more about how to find the right global channel partners? We've got lots of information here (including a handy checklist)
and a free whitepaper for download below.
images - DeepEndDining
& gapingvoidEvolutionary Marketing & New Markets Blog
But after the Feb. 5 workshop, which included a rapid-fire, dizzying array of banking terms and scenarios that exporters could one day find themselves in, he smiled reassuringly. “What you really need to know is who to talk to,” said the longtime sales executive who now serves as one of the SBDC’s coaches. “In this case, your banker.”
Cringing while reading this...it prompted a thought. How often do well meaning "experts" doom a global sales initiative for their clients. And which experts are perhaps least qualified to offer international sales growth advice?
Here's our list of the 7 worst sources
- Hair Stylist
- Doggie Day Care
- Maytag Man
Notice a trend in the list? In most cases all seven are equally qualified to offer global sales growth recommendations. But four of them won't pretend to be. Your hair stylist, doggie day care provider, Maytag man and bartender may be envious of your travel (the shine hasn't come off that apple for them yet) and intrigued by some of your adventures - but they won't opine on what you need to focus on for export success. And if they did you would probably be polite but pay them little regard. They capable professionals in their area of expertise and don't presume to "outdrive their headlights."
In contrast though, the "experts" will cause you fits. You'll assume you need to heed their advice. DON'T!! At least not first.
Strategy vs. Transactional details
Now don't misunderstand. This is not advice to ignore your professional advisors, or even to presumptively discount their advice. But let's be serious about where/when it's productive.
For a global sales growth program to flourish it must be built on sensible planning, proper market selection, reasonable expectations, patience, superb channel management
, effectively localized global marketing, appropriate financial infrastructure, government relations
and some risk management.
Which of those will your bartender provide? Which of those will your attorney provide? Both are a pretty short list.McGladrey did some great research a couple years ago
around early stage export initiatives of companies. They found that while companies that export are generally stronger and more profitable and resilient, most actually only begin to export when existing domestic customers push for global support. And then the disproportionate focus is on "transactional" issues (FX
& logistics) at the expense of strategy and broader business planning.
Those are simply details which appear complex to the uninitiated, but can be dealt with quickly and efficiently by niche experts who work in those areas routinely.
They've got hammers, but those may not be nails
All of us face the challenge of "unknown unknowns." But we naturally assume that the blind spots are only ours - that our professional advisors, the experts, are omniscient. News flash! They're not.
Your corporate counsel who advises expertly on navigating a customer bankruptcy or handling an employee dismissal has gaps in her experience. She will likely suggest a standard boilerplate distribution agreement that doesn't include FCPA stipulations or address "employee" categorizations in specific markets. And she might not automatically explain the importance of local trademark registration
There's more than even odds that your trusty accountant
isn't familiar with the enormous tax savings you could realize with a DISC, nor savvy to potential FATCA reporting requirements or even how you can insure foreign receivables inexpensively to boost the value of that asset in negotiating lending base calculations with your commercial lender.
And that banker.....please, please, please don't ask them for export advice. They will either be completely clueless about international transactions; focused on selling you expensive and convoluted foreign exchange solutions; or focused on convincing you to use their expensive and complicated L/C (Letter of Credit) services. If they're really sharp and are Ex/Im and SBA lenders - and have a business management and finance background - they might provide some proactive recommendations. But there aren't many that have those qualifications.
Should those folks be part of your business planning? Absolutely. You should never exclude them. But the detailed advice that you will require will flow from business strategy and objectives - not what your accountant happens to know. As you decide what and where your business should grow, experts with the proper niche expertise can be tapped as one resource for advice on the 'how.'
These are business questions first
So start from a business perspective. And find someone who has the scars and bruises from undertaking this. Maybe it's another business owner you know through a forum like Vistage. Perhaps your accountant has a client who has been quite successful growing globally to whom they will introduce you. But maybe having an experienced business person who has the broad perspective of a business owner, personal experience and a track record of providing insight to other businesses is a better option.
Wondering about going global? Check out our guide to selecting the best advisor
images - noleashneeded
& ke-eEvolutionary Marketing & New Markets Blog