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Hey folks,

As promised at both Ariba Live in Las Vegas and in Barcelona, I'm posting the first of two eCommerce Value Calculators.   This is the simplified, high-level value calculator.  It should be used to help you determine where your greatest opportunity to impact your business in the areas of:

  • Working Capital Improvement
  • Increased Wallet Share
  • Efficiency Benefits
    • Invoice Efficiency Improvement
    • Purchase Order Error Reduction
    • Invoice Error Reduction

 

You can find localized calculators in the following locations. 

 

http://www.ariba.com/go/econcalc/High-Level-Directional-eCommerce-Value-Calculator-British-English.xlsx
  http://www.ariba.com/go/econcalc/High-Level-Directional-eCommerce-Value-Calculator-English.xlsx
  http://www.ariba.com/go/econcalc/High-Level-Directional-eCommerce-Value-Calculator-French.xlsx
  http://www.ariba.com/go/econcalc/High-Level-Directional-eCommerce-Value-Calculator-German.xlsx
  http://www.ariba.com/go/econcalc/High-Level-Directional-eCommerce-Value-Calculator-Spanish.xlsx

 

 

Stay tuned for the more detailed eCommerce Value Calculator that I showed at Ariba Live Las Vegas.  I'm doing some final validations and consultations with customers. 

When it comes to winning business, many sellers believe it’s all about price – but in B2B sales, that’s really not the case, says Sean Geehan, CEO and founder of the Geehan Group and author of The B2B Executive Playbook: The Ultimate Weapon for Achieving Sustainable, Predictable and Profitable Growth. During a session at Ariba LIVE 2014, Geehan outlined the unique characteristics of successful B2B sales organizations, why they need to strategize differently than B2C companies, and steps they must take to gain customer loyalty and drive lasting growth.

 


What makes B2B so different?

Strategies for B2B Success graphic 1.png

 

 

While B2B and B2C companies share many similarities, they differ in several key ways. First, B2B companies typically have far fewer customers than B2Cs—so when you apply the 80-20 rule to a B2B, 80% of revenue may come from just a handful of key accounts. And because of B2B’s high concentration of revenue, Geehan says, success “is going to be won or lost at the top: how we treat our major accounts, how we engage them, and how we design our future with them.”

 

Accordingly, best practices for B2B also differ markedly from B2C. “How you drive this difference within your B2B is what separates the decent companies from the great ones,” Geehan says. He recommends a proven, market-focused approach that engages customer decision makers in long-term strategic planning. The result? Retention rates improve by 25% and account growth triples. Here are 10 tips to help get you there.

 

 

 

 

 

 

 

Sell smarter, not harder: Maximizing ROI


Tip #1: Focus on retention and growth, especially at the top tier. While sales organizations typically spend about 60% of their budget on acquiring new customers, they could achieve much better ROI by growing existing accounts – with twice the margin, half the hassle, and no onboarding costs. “VMware grew from zero to about $6 billion in 14 years, and 80% of their marketing and sales efforts are going into current customers,” Geehan points out. “They know they can get to $10 billion by cross-selling and up-selling their current customer base.” Nurturing current customers – and paying extra attention to the profitable, top-tier accounts – makes more sense, especially when the cost of new acquisitions can be five to seven times greater than retention and renewal.

 

Tip #2: Capitalize on technology to maximize value from lower-tier customers. You can increase profitability with smaller customers by taking advantage of technology platforms like the Ariba® Network, which makes it easy to drive transaction efficiency and capture recurring revenue streams.

 

 

Use branding and positioning to drive margin opportunity


Tip #3: Avoid margin compression. Winning B2B sellers focus on margin more than price. “Make no mistake, the game is about getting a premium at the margin level,” Geehan says. You want maximum margin—more than anyone in your category—so you can continue to reinvest for the future, add value, and beat the competition.

 

Strategies for B2B Success graphic 2.png

 

Tip #4: Learn how customers see you, and align perceptions with reality. The way your top clients view you is pivotal to sustaining growth. In their minds, where does your company fall on this continuum?

Commodity supplier: These firms have achieved a level of operational efficiency.

Reliable supplier: At crunch time, you can really depend on these sellers to get the job done.

Problem solver: These event-driven thought leaders can help you figure things out and create best practices after a major change (e.g., technology disruptions or new regulatory requirements like Sarbanes-Oxley).

Trusted advisor: Without these really smart sellers, you’re likely to miss something essential and lose a competitive advantage.

Independent: A symbiotic relationship where if one partner isn’t successful, neither is the other.

Any mismatch between their perception and your capabilities is a lost opportunity to maximize margin—the Holy Grail. “This is where branding counts,” Geehan notes. For example, positioning your company as a problem-solving thought leader will make top customers more likely to want you to have margin, because they need you to stay in business.

 

 

 


Planning the future together


Tip #5: Educate customers about reinvestment and long-term value. By positioning yourself accurately with customers, you open the door to a new level of discussion – one that focuses on the best ways to bring them value. For example, you might say, “‘I’d love to do this for your company, but if I do, I’m not going to have the margin to reinvest,’” Geehan explains. “’So do you want to think of the short-term partnership, or do you want to think of the long-term partnership?’” When you engage customers for the long term, they stay with you “because they’ve got skin in the game, they’ve got emotional equity,” Geehan says. “They’re an extended part of your organization at that point in time.”

 

Tip #6: Adopt a forward-looking perspective. No more than a quarter of your time in customer meetings should be about what’s happened. “SLAs being met, on-time delivery? Send it in a report,” Geehan says. Instead, focus on what’s important to them right now and how you can help them get to a better place. “The only reason you’re going to be invited back to that executive meeting is because you’re forward-thinking, you understand their issues, and you’re going to help them think through that and enable that process,” he notes. “And it needs to be systemic across your company, and not just ‘we need these two gurus that fly around the country all the time.’”

 

Tip #7: Base your plans on customer and market input. “Listen to your customers at an intimate level, and plan accordingly,” Geehan advises. “But the plan needs to go through them.” And instead of letting a few heavyweights drive your direction, engage the market in the aggregate. For example, you can bring together an advisory council of 20-100 people who represent a sampling of the markets you serve. You need to understand what they want to do and why, what the payback is, and how it can differentiate them. This approach delivers:


  • Industry insight and direction
  • Sales, margin, retention, and account growth
  • Ideas for relevant innovation
  • Internal buy-in and external advocacy

Strategies for B2B Success graphic 4.png

 

Strategies for B2B Success graphic 3.png

 

Tip #8: Engage effectively with decision makers. Connecting directly with the appropriate decision makers on your customer side – purchasing, users, middle management, and/or top-tier executives – is essential to enable critical big-

picture conversations. If your sales team isn’t quite ready to have complex strategic discussions with their customers, they can:

 

  • Arrange expert presentations or offer consultations to give customers confidence in their ability to help them think things through
  • Suggest assessments, share research results, or walk customers through intelligent questions to spark future-oriented conversations and show market awareness

 

Tip 9: Follow the leaders. Successful B2B sellers make acquisitions and investments that directly align with the direction their main customers are going—but first, they ensure that those customers are outpacing their peers in both sales and margins. “It’s not just about doing innovations, but innovation that adds absolute value to the customer environment,” Geehan says. If customers don’t know what they want, you can reverse engineer by looking at their pains to determine the best ways to support them. “Maybe they’re not going to tell you ‘Go buy this company,’ but what they can say is, ‘Here’s a category we need help in.’”

 

 

Tip #10: Assess before you invest. Mitigate risk by carefully vetting the customers you partner with. “There’s bad business you need to walk away from; don’t sign for the dollars,” Geehan advises. Instead, make sure you align with customers on 1) feature and function, 2) trust and credibility (can they do what they say they’ll do?), and 3) whether their culture fits with yours. “You’ve got to make sure that the people you’re getting in bed with are going to be somebody you want to be in bed with for a long time, if they’re going to be 10-20% of your revenue,” Geehan notes. “If I’m going to invest in their company as a supplier, I don’t want to take on the business unless I know they’re going to be successful, and we have a long-term relationship that’s built in.”

 

Learn more

For more information on B2B success strategies you can use in your business, watch the full session on the Ariba Slideshare site.

Though your customers will frequently be the key driver in determining what type of e-catalog you implement, understanding the distinctions can help you manage the process more effectively. Here are a few guidelines to help.

 

CIF Catalogs

What are CIF catalogs? CIF (catalog interchange format) catalogs are static catalogs hosted and maintained by either you or your customer. Creating a CIF catalog is relatively simple, requiring you to set up your product or service data in a comma-separated value file (such as Excel) following a basic file header, line data, and file trailer format.

 

Who should use CIF catalogs? Because they must be manually revised in a flat file and then re-uploaded whenever updates are required, CIF catalogs are more resource-intensive to maintain than PunchOut catalogs. This means that CIF catalogs are generally the better choice if you sell smaller numbers of products that don’t require frequent pricing, availability, or other changes. CIF catalogs also don’t enable you to provide actual copies of product specifications, bills of materials, and similar decision-support resources, nor do they easily accommodate configuration rules, so they’re not effective if what you sell requires complex configuration.

 

That said, many buyers prefer CIF catalogs for the higher degree of control they provide over any revisions that need to be made, and despite the extra work involved, some companies maintain very large CIF catalogs. What’s more, a growing number of buyers are investing extensive resources to customize their CIF catalogs and add features that provide a positive user experience—a clear testament to the value they see in e-catalogs generally and CIF catalogs in particular.

 

PunchOut Catalogs

 

What are PunchOut catalogs? PunchOut catalogs let your customer’s procurement solution access content from your e-commerce website via cXML so users can search for, compare, and select what they want to buy, then return shopping cart items to their procurement application for approval and purchase. Because PunchOut catalogs are dynamic, they offer various advantages over CIF catalogs, including the ability to provide real-time pricing and availability (since updates can be made quickly and easily through your website), extensive configuration capabilities, accommodation for almost limitless documentation and other decision-support information, and enhanced customer service via faster order fulfillment and a very high-tech user experience. Level 2 PunchOut catalogs provide additional benefits, enabling customers to search for products right within their own procurement application and then be brought directly to specific “aisle,” “shelf,” or “product” level of catalogs that arise during their search.

 

Who should use PunchOut catalogs? Generally speaking, PunchOut catalogs are the better choice if you sell complex, service-oriented, or highly configurable product offerings; have large catalogs with many SKUs and line items; sell goods that require constant updates on price, description, and content; or have a high number of transactions.

 

Keep in mind, however, that implementing a PunchOut catalog typically requires greater IT resources and means more work up front, since you’ll either need to build an e-commerce website—requiring you to organize and populate a master catalog with categories, descriptions, specifications, pricing, images, and more—or retrofit your existing site to support PunchOut. Finally, you’ll also have to test your catalog to make sure it works with your customer’s e-procurement system.

 

 

In The Next Blog: Getting Started: What You’ll Need to Implement Your E-Catalog

If you don't want to wait until tomorrow to learn more, then go to A Guide to Business Commerce Integrationhttp://exchange.ariba.com/groups/supplylines/blog/2013/03/26/which-online-catalog-is-right-for-you to read the full article.

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