Is our product B2B or B2C?

The question “is our product B2B or B2C ?” seems to be bewildering to anyone who has not actually been a field salesperson for B2B. The simple answer is that something is B2B or B2G (Business to Government) if that product or service is purchased by the organization not for personal use but for achieving the mission and goals of the organization.

What about the working lunch that an administrative  office orders for the entire staff during an internal conference? That’s B2B because although individuals might be eating the lunch but the purpose is to have a good conference and ordering lunch perhaps saves some time, particularly if the group is large.

A Cafeteria Contractor as B2B-StratoServe

Just extend the above lunch example to a factory cafeteria contractor and it’s easy to understand  B2B is and how it is different from B2C. A cafeteria contract is a long process for both the buying and selling parties from invitation to bid, tenders, proposals,  negotiations and a contract- that is for a year or more.

A Cafeteria contractor once installed, is not easy to remove, no matter how bad  the food is sometimes! Here are some reasons that goes to B2B marketing thinking:

  • Cafeteria is inside: The cafeteria manager gets to hear about complaints sooner because he or she is right there (the cafeteria is inside the organization) as people eat. Responsiveness that can be in real time  includes (a) fixing what is wrong (b) making sure that at least influential people are treated better (c) concerns are addressed right away.
  • Contract and the “used to” factor: This one is from the point of view of a contractor who wants to displace the existing contractor because they believe that they have better equipment, more qualified chefs and a committed serving staff and most importantly better prices. The organization might be just “used to” the existing contractor and when it comes to decision time, buying center members will invariably favor renewal unless the performance of the existing contractor is awful and more than one member of the buying center believes so.
  • So how does a “new” supplier get in ? The word “new” here is the challenge for a supplier trying to get in. The buying organization is set in its ways, people complain about the food  sometimes, the present contractor makes some amends and life goes on.
  • Innovation is the answer? For a new supplier, innovation is the answer because if you are similar in most ways, including price, to the existing supplier there is no incentive for the buying organization to shift suppliers. Something innovative like a “healthy weight loss menu” for a cafeteria supplier might give you a chance but here too the organization is very likely to ask the existing contractor to match your “healthy menu” proposal- and then make a decision.

Just understanding which parts of your market are B2B – can help your marketing and growth. About Stratoserve.

Blogging with Typepad has been like a gym membership for the mind

TypePad Birthday-StratoServeTypepad, the blogging service we use for the StratoServe blog is celebrating its tenth birthday and here is Happy 10th Birthday to Typepad!

Blogging for me, has been like a gym membership for the mind for the last 8 years. Here is how:

Gym membership vs. Treadmill at home: Talk about the cost of a gym membership and there will be some folks who will tell you that a good treadmill costs less than two or even one year of a gym membership. Hey, if you did not have a gym membership for ten years you could buy 5 (!) treadmills or the entire gym equipment for yourself. The trouble is that a majority of folks seem to use the home treadmill as a clothes hanger. More so if the treadmill is anywhere near the washer-dryer or iron board. On the other hand, if you get a gym membership, you do tend to exercise more- particularly if you see the gym charge popping up in your monthly credit card statement. And the best part is that once you are able to arrive at the gym, you get motivated to exercise simply seeing other folks exercising.

  • Free Blogging vs. Typepad: Free blogging platforms are available and I am frequently asked why we do not use a free platform. Somehow, we think of the "free blogging platforms" as being similar to the "treadmill at home" situation. The affordable Typepad fee, coupled with highly responsive customer service makes Typepad membership worthwhile as well. Just like getting to the gym – if you open the Typepad "Compose New Post" you tend to get started on whatever is your passion. There is no real rush because you can save the post as a draft and come back to it again.
  • Blogging as a Gym membership for the mind:  Just as consistent gym workouts helps the body,  consistent blogging about your passion just exercises your mind muscles and you literally see your mind getting better.Unlike only the weighing  scale in the gym, there are Typepad metrics and Google Analytics metrics that give you feedback.

The StratoServe passion is about innovation,digital marketing and supply chain and it is humbling to see our  posts appear in top organic search positions in Google, Yahoo or Bing searches when we look at the connected Google Analytics data.

As a blogger, when you see the search queries and your top ranked blog post, you feel responsible to your audience for explaining some more in a new post and  perhaps start a new category.You suddenly realize that your blog has put your website into a great SEO (Search Engine Optimization) position and search engine ranking.

Believe me,there is a lot of interest in your expertise in the world and you will be encouraged by the number of people who read your blog, the search terms they use and how many additional pages and minutes they spend reading and learning from your posts. So once again Happy Tenth Birthday Typepad, and keep up the good work. Contact StratoServe.

Product protocol: why it matters in innovation

Product Protocol-StratoServe

[ Note: Thanks to the interest of our dear readers we updated the post in January 2021}

Product protocol also called product definition, product requirements or product deliverables is critical to innovation. A product protocol is necessary after you have chosen a new product concept, completed concept testing and done some preliminary sales forecasting of what numbers you expect to sell and at what margins. Steps of NPD (New Product Development) are part of the Stage Gate NPD process created by Robert Cooper. Let us consider each in turn:

  1. Deciding a product concept: from concept generation is the first step of the innovation process that is based on your estimates of market and consumer need. Once you have a concept test that you feel will be liked by your target market (B2B or B2C) you move to the next step.
  2. Concept Testing: is the step where the new product concept is tested with target market customers. The feedback obtained is used to modify the concept.
  3. Sales forecasting: is where initial sales are projected along with estimates of advertising and marketing expenditure to get the new product launched. The estimate of cost of production is the key ingredient that informs the product protocol.

In fact, the cost of production estimates in the sales and profitability forecast give the target cost to provide to the product design  & development team.

Organizations are sadly great at losing sight of the purpose of innovation: To meet customer and market needs. The product protocol helps everyone stay focussed on the end goal of satisfied and happy customers.

Functional areas like marketing, product design and  production are frequently not on the same page. If marketing is talking about the voice of the customer for a particular feature that is considered valuable by customers, production and design folks can be really wrapped up in their own production constraints. Ideally though, everyone in the organization needs to just focus on customer requirements and innovate within their own specialties to deliver requirements within the time and costs specified in the product protocol.

Among the different tools out there, the House of Quality (HOQ) is a good tool to try and keep everyone marketing oriented and customer focused and can be used as a part of the product protocol.

Also see From the Product Innovation Charter to the Product Protocol.

About StratoServe.

.

Can you really start advertising at 1$/day ?


Can you really advertise 1$Given the significant interest among
businesses about how much to spend on Google AdWords or other PPC here
is a quick answer: you can really decide to spend as little as $1 a day
and see how you go. Sounds like a "pennies a day" magazine
subscription pitch but the fact is that you can stop anytime. You really do not
sign up for the whole year month or even week. Here are some points to remember
about PPC advertising budgets:

  • Cap your budget at $1/day: Only PPC like Google AdWords allows you to cap the budget.
    OK you might not get a lot of clicks but you'll know exactly what is
    happening. Like which keywords resulted in which Ads being shown and
    clicked. What exactly did your web visitors do after they landed on your
    web page giving you clues about how to modify your landing page, navigation,
    SEO etc.
  • Focus geographically: You must focus
    geographically on the areas that you can serve. If you are a
    landscaper/lawn care company, you cannot serve areas beyond say 20-30
    miles. So what's the point in advertising where you cannot service customers?
  • Measure,Measure,Measure: As noted in earlier posts – the best thing about PPC
    is that you can measure results right up to what orders you get.

And what if you have a large overall
advertising budget? In that case you do not spend all your advertising money on
PPC but do put in the measurement processes in place for PPC as well as for the
off line advertising as best as you can.  A simple way to do this is to
ask when someone calls you – "How did you hear about us?" People will
normally tell you the last piece of advertising that encouraged them to call
you and it’s useful to know if it was your direct mail coupon which helped.

To summarize, we do not advocate that
you spend only on PPC but we do suggest that if you want either awareness,
enquiries or orders it's both useful and affordable to start advertising PPC
like Google AdWords.  Contact StratoServe .

AdWords PPC resolves: “Half the money I spend on advertising is wasted”

AdWords PPC Resolves wasted money in advertising- StratoServe

John Wanamaker (1838-1922) is credited with the saying “Half the money I spend on advertising is wasted; the trouble is I don’t know which half”.  PPC (Pay per click) programs like Google AdWords resolves the Wanamaker dilemma. 

[Note : Last updated January 2021 due to interest of our dear readers}

The Wanamaker dilemma being that traditional advertising of the time like newspapers, billboards yielded positive sales results but it was never clear as to which particular ads and media outlets and times worked best. In other words, it was hard to precisely find out if  your Ad in the weekday newspaper was more effective compared to the weekend newspaper to get customers to visit your store. Sure, you could ask every visitor to your store and they would tell you as well as they could remember where they had seen your ad.

In the 20th century, carefully selected consumer panels provide data about ad viewership and fairly good estimates of actual retail sales that you could attribute to offline advertising campaigns. However, if you had several campaigns going across different media you would be paying for the advertising and be stuck with the Wanamaker problem of not knowing which media or ads were working. In addition, the newspaper, radio or TV station asked for payment for putting your ad in and offered you solace by way of estimates of audience. Once again you paid up and hoped that your marketing thinking was in order and you had nailed the target markets correctly and your media choice, ad agency creative were all in perfect alignment. If half the advertising spend worked it was fine…. you reasoned.

When it comes to PPC (Pay per click) programs like Google AdWords…. this fundamental problem of traditional advertising is resolved. Watch the first 2 minutes of the Google AdWordsvideo on YouTube to get a sense of the program.Here is how the Wanamaker dilemma is resolved: 

  • You pay for only those ads that customers click on. You do not pay for impressions or views which is how traditional offline advertising works.
  • If you connect your Google Analytics and Google AdWords you know exactly which Ads resulted in which visits and how long visitors stayed on your site. You also get to know which pages they saw and if they “converted”. Conversion being defined as either placing e-Commerce orders or filling up a contact form.

One can only imagine the enthusiasm that pioneers of advertising and modern marketing like John Wanamaker would feel with the “Pay per click” model. Particularly when analytic data platforms like Google Analytics lets you know exactly what happens after the click. About StratoServe.

Better times for B2B? US Consumer expectations highest in 5 years

Today the Conference Board announced that US Consumer
Confidence is at a 5 year high- so B2B should be in for better times. But first
some details of the methodology and measure of the consumer confidence index.

The Consumer Confidence Index is made up of five
measures two of which relate to consumer perceptions of the current situation
and three measures that relate to expectations about the future. Through a
random mail survey consumers are asked to respond in three categories (a)
positive (b) negative and (c) neutral to the five questions. The survey was
started in 1967 on a bimonthly basis and now is done on a monthly basis since
1977 and more details are available in a technical note of the
Conference Board. The questions, paraphrased from the technical note, are:

  • Consumer Present Situation Index:
    • Do you think that the current business
      conditions are positive, negative or neutral?
    • Do you think that the current employment conditions
      are positive, negative or neutral? 
  • Consumer Expectations Index:
    • Do you think business conditions six months
      from today will be positive, negative or neutral?
    • Do you think employment conditions six
      months from today will be positive, negative or neutral?
    • Do you think your total family income
      six months from today will be positive, negative or neutral?


Expectations Index-StratoServeInterestingly, the Expectations
Index in May 2013 rose to 82.4 from 74.3  in April 2013 or a rise of 
8.1 points compared to the Present Situation
Index that rose to 66.7 in May from 61 in April or a rise of only 5.7 points.
In other words, consumers are upbeat for the holiday season six months from
now.

As retailers take notice of the consumer sentiment
and expectations, we can expect that in a whole range of consumer goods the
supply chain will start getting revved up and more orders should flow to brand
suppliers.

One might ask: what about capital equipment and
technology spending?….well when consumer demand goes up as the consumer
confidence index is predicting that more production is needed. More production
and faster moving sales will surely spike technology demand as well. For all
B2B is ultimately driven by consumer demand of which the consumer confidence
index is a leading indicator.

Happy days might be here for B2B in the US. This is
the time for B2B companies to step up their digital marketing and sales
efforts.  Contact StratoServe.

Conversion occurs when customers finally visit your website on their own

Conversion occurs when consumers start visiting your website on their own. Before that happens a common concern among online advertisers is that “we don’t see orders.”  Part of the reason is that advertising and web analytics is not linked together as discussed
in a previous post. The bigger reason is the lack of understanding of the consumer journey.

Here is a diagram that the folks at Google Think Insights have put out (about 2013) that shares data about how the consumer is influenced before she/he places an order. Using a variation of the AIDA (Awareness, Interest, Desire, Action) model Google describes how overall consumers move the buying journey and actually place an E-Commerce order.

The image was accessed from Way Back Engine, Dec 2020. Note that things have changed since 2013 but the general pattern still holds.

The graphic above presents data (Google Analytics, Q4 2012. N = US: 130M conversions (12K profiles) Note that the purchase paths in this report are each based on interactions with a single ecommerce advertiser) and lets understand them in context of the AIDA model. Here is how the AIDA model plays out in digital markets:

  1. Awareness:Think of a prospect that is not aware of your brand or offering. To create awareness the data suggests that display advertising like banners help substantially.
  2. Interest: (Consideration in graphic above) is helped by Social media. In other words, a social media presence like a Facebook page or Facebook advertising helps to move the prospect along- when awareness exists. 
  3. Desire: (or Intent above) is solidified with email campaigns and paid search
    advertising like Google AdWords. 
  4. Action:(or Decision in diagram above) is helped with paid referral and organic
    search. The important point is that today once you vaguely remember a website or idea you simply search online for it. In other words you are aware, have interest and desire playing at the back of your mind.  While steps 1-3 are the  pre-conversion “assist” stage the conversion occurs when prospects realize that buying your offering is just right for them.

The Google Think Insights article clarifies the real nature of the sales funnel which is that at the buying stage prospects are already primed to consider you and buy your product or service. At that point if you show up through referrals or organic search you
have a huge chance of converting prospects. Probably you have prospects at each
part of the AIDA chain and different campaigns/vehicles will help convert them.
Before customers are ready to buy, they should be able and willing to find you
online.

About StratoServe.

Buying center concept: there are several people involved

The buying center concept is a tough concept to understand particularly if you have not actually worked for several years in B2B sales and faced numerous lost deals! Simply put- – there are several people involved in the buying center as explained in an earlier post.

Here is a way to get a sense of the buying center concept for both B2B marketers and non B2B Marketers.

  • B2B Marketers will find the buying center concept easy to understand if they think back to the deals that they did not close! Most good B2B marketers think back for reasons they lost the deal and as they trace back they are likely to find a buying center person who they did not reckon. Typical reasons for losing deals and corresponding buying center folks are evident in the reasons you hear after not winning the contract:
    • We ‘ll stay with our existing vendor says your purchasing/supply contact. Read that the user of your product in the company did not want to change even when your product involved only minor changes in the user’s process and was actually cheaper. If you ask the buyer might tell you – just to make you feel better.
    • We don’t have budget is a common one after you have gone through the bidding process. Either nothing is happening – if it is a new product that you are supplying which means that the initiator in your buying center has lost steam. Or the incumbent supplier woke up and matched your offering in case of ongoing supplies.
  • Non-B2B marketers need to imagine how they would sell say furniture to hospitals. Ask this question and even experienced managers seem to have a narrow view with answers like “speak to a doctor or nurse”. Sure the doctors and nurses might have input and you won’t get through if these important folks just hate your furniture! A more inclusive view of the buying center is to think of the purchasing department, facilities and understanding replacement plans and budgets for furniture at the hospital. It could be critical to find out if there is an interior design consultant involved who might be a complete outsider and who might have a major input in vendor selection. 

To summarize, if you are a B2B marketer think of a deal you missed and the people who might have played a role and you get a sense of the buying center.

On a more positive note, B2B marketers should learn and summarize buying center member profiles in their target markets from every deal -whether win or lose. Although each organization is different, most industries and professions have similar play books and targeted digital marketing campaigns are possible to make B2B marketing to the buying center easier. About StratoServe.

Ten takeaways from 2013 Yale Consumer Insights Conference

The
2013 Yale Consumer Insights Conference  over the weekend challenged
thought boundaries for marketing and big data in quite an overwhelming way.
Alternating between leading marketing practitioners and leading marketing
academics- 25 speakers delivered their message in 20 minutes followed
by 5 minutes of questions and answers. Since the format of the conference was
in one room and participants stayed together, conversations continued during
the breaks. Here are ten takeaways from the leading marketers at the
conference that resonates with this blog:

1.     
Design is iterative was one message
from IDEO's speakers Annette Diefenthaler Senior
Design Researcher and Ashlea Powell, Project Lead at IDEO. It sort of
challenges the notion that test marketing is old as Innovation text books will
tell you, partly because they were written before the social media revolution.
It's perfectly fine to iterate your innovation based on what you learn from
observing users up close.

2.     
The visual web
is about human connection according to Abigail Posner, Head of Strategic Planning,
and Agency Development at Google. The reason people share funny videos is that
they want their friends to smile and not because they want to show off!

3.     
90% of the world's data was created in the last
two years said Stephen Gold ,VP Worldwide Marketing of IBM Watson
Solutions, who was explaining about the artificially
intelligent Watson that might help deal with the data deluge.

4.     
85% of retail is cash/check in the
world according to Carlos Fonseca SVP/Group Head Strategy, Operations and
Analytics of MasterCard. Obviously a long way to go for the card and electronic
payment companies!

5.     
Analyze Big Data for low hanging fruit first
was a compelling message from Tamara Gruzbarg, Senior Director of
Analytics and Research, Gilt. Analysts should continue finer data
mining but the first cut recommendations should allow for quick action.

6.     
A deep
qualitative understanding of the human spirit of customers is a mission at
Starbucks. According to Pam Greer, VP of Consumer Insights at Starbucks this is
achieved by anthropological and sociological techniques.

7.      Reaching sports fans across platforms
involves a “surround” strategy according to Barbara Singer VP Advertiser
Insights & Strategy at ESPN. Advertisers need to understand sports fan
behavior across TV, magazines, smartphones and tablets and appropriately design
communications.

8.     
Articulating the Advertising Agency Brief i.e.
the fight the marketer wants to win is critical to campaign success
said David Terry, Director of  Strategic Planning of Wieden+Kennedy
known for great campaigns like
Old Spice that was covered in an earlier post. Typical problems in the
client-agency brief process include briefs that are not real, not true, not
simple and not BIG. 

9.     
Millenials worldwide are about "Pride and
Tolerance" according to Christian Kurz VP Research, Insights and
Reporting  of Viacom
International Media Networks based on their global study of millenials in 24
countries. In other words young people are far more tolerant worldwide today
than ever before due to technology and globalization.

10.  Focus
groups will be extinct and neuroscience will replace much marketing research
was the prediction of Stan Sthanunathan, VP of Marketing Strategy &Insights
at Coca Cola– the Keynote Speaker. Indeed
with improvements in neuroscience, traditional market research methods
will change in unprecedented ways.

Overall a great conference  Contact StratoServe.

Does Internet Sales Tax really level the playing field between clicks and bricks?

Does Internet Sales Tax really level the playing field between clicks and bricks? The US Senate has passed the Internet Sales Tax law that will force online
retailers to collect sales tax for the shipping destination state. Initial
plans are to have Internet retailers with over  $1 Million sales to collect the state sales tax for all transactions. The sales tax for each state is different 
and   five states viz. Alaska, Delaware, Montana, New Hampshire and Oregon  do not have Sales Tax.

In the second half of the video alongside a
brick retailer representative is arguing that "no sales tax" gives an advantage to
the online retailer.  She mentions the phenomena of "showrooming" 
that adds insult to injury for the brick businesses as customers come in to
understand the product, touch and feel it -and then search online for a better
price!

The question of whether adding the burden of sales tax will slow down online
retailers is a matter that will be addressed
at the House of Representatives where the bill is now headed. If passed,
the new law will over ride a 1992 US
Supreme Court decision that a business without a presence in a State will not
be required to collect sales tax.In other words, businesses will be required to collect sales tax for whichever state your customer is within the US.

States and city tax revenue lost due to online sales is estimated at $23
billion for 2012. Brick retailers are in the community and provide
employment at the local level which makes them really important for main street America. 

But the question from this blog's point of view is whether an average tax of
9% really deter online competition for brick businesses? Will customers stop
"showrooming"  because the  9% price difference and shipping will be  an avoidable no brainer for online shopping?  Or will lower overheads  and better
inventory and logistics by online retailers continue to keep pure brick businesses in trouble.

A better
option for the brick businesses is to perhaps open their own online division
because they have deep knowledge of (1) customers (2) products and (3) supply
sources and they should be able to serve both domestic and international
markets. Staying pure bricks is no longer an option for businesses of any size. And  opening an online global branch of an existing local  bricks business is rather simple today. Contact StratoServe.