3 Questions B2B Sales and Marketing Leaders Should Be Asking Themselves Today

By John Panaccione Posted on 5/6/16 1:30 PM

There’s a lot of buzz going around about how changes in buying habits are forcing changes in selling habits. It’s a pretty basic concept and it goes like this: as consumers, whenever we make a major purchase, most of us start by Googling it.  We learn about what options are out there – we do our own research.  We narrow the field of choices for where to buy – the local store if we want it right now, Amazon, or a favorite retailer online. 

So when we get asked to solve a problem at work, we do the same thing.  Why not?  For millennials, there is no “change” in behavior – that’s the way it’s always been for them.  Us older folks have a bunch of “I remember when…” stories.  “I remember when you had to go to a store to rent a movie.”  “I remember it was cool to have a calling card so I could use any pay phone to call anyone.”  If you’re over 30, it’s a change in buying behavior.  If not, that’s the way it’s always been.  You don’t have as many “I remember when” stories.  Sorry. 

changes-in-b2b-buying-behavior-IROC-Z.jpg

(There she is! Keep reading, you'll understand...)

 

So what’s the big deal?  Well, there are some industries where the vendor/supplier/manufacturer still believes that the primary way of selling is to rely on sales partners to do the local marketing and selling for you. 

So what does this mean for manufacturers?

In 1986, my buddy Eric and I were about to graduate college.  We had common interests, including our desire to reward ourselves with a cool new car.  Our priorities were different back then, and we were both about to go into the Army so that was justification enough for our decision.  Since we were fresh out of college and thought we were so smart, we figured that if we bought two of the same car from the same dealer we’d each get a better deal.  So off we went to visit dealers to learn all about Camaros and Firebirds.  We went to multiple dealers in the area, grabbing the glossy brochures for each type of car.  Salespeople answered our questions.  They knew more details about the cars than we did.  After quite a few trips to a bunch of local dealers, we decided to buy two Camaros from the dealer that gave us the best price.  Ok, I admit it.  They were IROC-Zs.  I was that guy back then.  It was the 80s.  I have changed. 

The point of the story is that we did what most car buyers did 30 years ago.  We relied primarily on the local sales guy’s information, glossy brochures, and technical information that only the dealers seemed to have to make our decision.  We also had Consumer Reports which if we were lucky did a recent review of cars in our category, and a few car magazines at our disposal but that was about it.     

Fast forward to today.  GMC rolled out their Shop Click Drive program as an example.   The online process allows people who are looking to buy a GMC vehicle to use the site to shop the current inventory at a local dealer.   GMC built and maintains the site for the benefit of its dealers.  They sold around 29,000 cars this way since they rolled out the program.  They report that 43% of the buyers are first-time GMC buyers and one-third of the leads that come in through the program result in a sale.  Participation in the program is optional for their 4,300 dealers.  Last year, about half the dealers participated in the program.  GMC rolled out what early indications suggest is a successful example of a great marketing strategy that conforms to how people shop for a car today.  These same buyers can also just as easily go to a third-party sites like Autotrader.com, cars.com, and others like it and search for the same type of car not only from GMC but from their competitors too.  However, GMC took the initiative to create a similar site just for their cars.  Brilliant.   

Tesla doesn’t even have dealers.  They sell their cars directly to customers over the internet.  In early 2016, they accepted over 200,000 orders online for their Model 3 within 24 hours!  The auto industry’s distribution model has certainly evolved in response to how we shop for cars.  Manufacturers like GMC and Tesla are adapting proactively.  Others aren’t.

 

SEE ALSO: CMO's 2016 Guide to Managing Sales Channel Partners

 

How about in the B2B space?

Most companies’ IT models have recently evolved in three distinct phases.  They went from predominately owning and managing their own IT infrastructure in-house, to co-locating their infrastructure at shared co-location facility, to now buying the IT infrastructure they need on demand like a utility.

IT manufacturers like Dell and HP used to sell their hardware either directly or through VARs to the end customer then they managed their own IT infrastructure whether it was kept in-house or more recently at third-party colocation facilities.  VARs added a lot of value by designing, installing, configuring, testing and monitoring these private IT infrastructures. 

Then came Amazon.  Amazon Web Services (AWS) was launched in 2006.  In less than 10 years (2015) it’s grown into a $7.5 Billion business for Amazon.  Today, AWS, Microsoft Azure, Google, Rackspace, IBM and others have become the dominant providers in this market – not the hardware manufacturers.  AWS, Microsoft, and Google data center managers buy huge amounts of IT equipment today.  The end user or the IT managers in the companies that use these services don’t have a say in what equipment is bought from which supplier like they used to (nor do they usually care).  

How do you think the industry’s traditional sales channel that includes not only the hardware manufacturers but also the Value-Added-Resellers (VARs) and co-location facilities are faring?   

In many ways, AWS, Azure and Google’s offering have become loosely analogous to Autotrader in the car industry and Zillow in the real estate industry. 

Entrepreneurs almost always aggregate information and capacity to deliver value for the end user in a supplier-agnostic way.  

It’s notable that the provider of AWS started as an online bookseller (Amazon), and Azure and Google are primarily software companies - historically. In fact, recently Amazon announced it plans on building its own IT equipment

So, what’s the point? 

We see common patterns that have implications for any industry – particularly ones that sell complex products.  Here they are:

  1. Shifts in buyer behavior are an opportunity to open up new markets and buyers, not necessarily a threat. As we see with Shop-Click-Drive, 43% of the buyers that use the site are first-time GMC buyers.  AWS makes it easy for a startup to buy IT infrastructure, opening up the marketing to thousands of startups, or traditional IT departments that need to surge their IT capacity temporarily.  Zillow.com and similar sites make it easy for a potential home buyer in Boston to shop for a home in Dallas as easily as shopping for one down the street.  They open up new markets and don’t necessarily cannibalize today’s.
  2. Third party aggregators and innovators almost always emerge. They eventually will in your industry.  There’s value in packaging information in such a way that it’s unbiased and valuable to people that use it.  Consumer Reports is a good pre-internet example of this.  Today, it’s easy for an entrepreneur to create an industry-specific resource that aggregates publicly available information and capacity from the industry’s suppliers into a single resource.  Zillow, Autotrader, and the cloud service providers like AWS are all examples.  They all make money by offering capacity differently or giving information or capacity away for free and making money through advertising or complementary services. 
  3. Manufacturers have a first-mover advantage. Tesla came out of nowhere and has flipped the car distribution system on its head.  The challenge for manufacturers is to assume that it’s going to happen in your industry eventually.  Like GMC and Tesla have done in the car industry, it’s possible for manufacturers to take the lead for dealers and create a capability at their level that dealers can leverage.  In fact, recently GMC announced a partnership with LYFT such that LYFT drivers can rent GMC vehicles in order to make money as an LYFT driver with a nice new car from GMC.  That’s marketing innovation!  Have a plan or you’ll end up part of someone else’s.  We should put ourselves in a position so that our companies are a meaningful part of innovation, and a key supplier/component part of it as well.

As we apply this repeatable model to our industry, let’s ask ourselves some key questions:

  1. How is buyer behavior changing in my industry? To what degree is our end buyer doing their own research before they engage with the sales partners we have today?  What data-driven trends are there in our current distribution channel?  Do they support any indication of changing buyer behavior?
  2. How would we fare today? Are we set up to be buyer-driven behavior friendly today?  If a potential buyer out there was doing their own research on a problem that our company can solve, what would they find?  Go ahead – do a generic search as if you’re a potential buyer for something relevant to your product or service right now.  What do you get back?  Even if that buyer found us and we had something of value to offer, how would we turn that into a lead?  How would we quickly get that lead to the right sales partner who can start working it as a sales opportunity (or should we?)?
  3. Who should get it done? Does it make sense for our channel partners to try to create these sites all themselves independently since historically they’re supposed to do all the marketing?   Or should we the manufacturer/vendor do the heavy lifting for the benefit of our dealers and do it right the first time for the benefit of the entire sales channel? 

These trends and questions associated with them may make us uncomfortable.  Lots of us are invested in our legacy sales channels and in the relationships that are the backbone of them.  However, our future buyers have a vote too.  How these behaviors are impacting or will impact the future in our respective industries is not a topic that should wait. 

CSO's 2016 Guide: How to Increase Channel Partner Sales

 

Sources:

https://www.auction.com/blog/how-the-internet-changed-the-real-estate-industry-forever/#sthash.gCSc0anx.dpbs

https://www.kwsanantonio.com/news/how-the-internet-changed-real-estate/

http://crt.blogs.realtor.org/files/2014/05/IntelligentLeads.pdf

http://www.businessinsider.com/why-amazon-is-so-hard-to-topple-in-the-cloud-and-where-everybody-else-falls-2015-10

http://gmauthority.com/blog/2015/11/general-motors-ramping-up-shop-click-drive-efforts/

https://www.yahoo.com/autos/gm-adds-used-cars-online-shop-click-drive-164500246.html

 

Subscribe to Email Updates

Posts by Topic

see all