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tag:blogger.com,1999:blog-5713763011740981052023-12-07T12:48:55.384+02:00Successful business | Blog | Growth and renewal engineBest practises, information and views on business growth and renewal. Special focus on growth strategies, enhancing sales and marketing, internationalisation, new product and business model innovation as well as commercialisation. Raimo Malilahttp://firstname.lastname@example.com:blogger.com,1999:blog-571376301174098105.post-77092200357208433502015-03-23T11:30:00.000+02:002015-03-23T18:21:43.468+02:00Yesterday´s sales methods equal inferior resultsIf your B2B sales continuously moves brilliantly forward, do not waste your time reading this blog. But at least I, who started my B2B career by selling electronics to various industries and continued with mobile networks, sit constantly at school. Many of the traditional truths, such as importance of customer business and purchasing process understanding, are still valid. But many things have changed and are changing. Customers are looking for information on websites and social media, buyers are becoming better informed than sellers. Sales efficiency is going down, although costs go up.

 As a result, a straightforward addition of sales efforts seldom leads to company growth and profitability. Instead of just replicating old way-of-working, you should reconsider your sales methods and reinvent customer acquisition approach - also in the business world, winners take it all. This blog will focus on, in particular, why reducing sales complexity is vital for B2B firms and how this is done in practise. After reading you will have fresh ideas to boost your sales efficiency and tackle new customer segments.

 Sales methods

 Sales efforts required to get B2B deals vary enormously depending on sold products or services. Tens or even hundreds of selling company persons are involved in the selling process of nuclear power plants, mobile networks or luxury cruisers, the process will take months or years of calendar time and the cost can be easily millions or tens of millions of euros. Some products, again, can be sold online with self-service, without direct involvement of seller.

 Sales methods can be roughly divided into three categories, according to new customer acquisition costs (CAC):

Self-service: Customers are attracted to company's web sites, by making use of, for example, search engine marketing and optimisation, content marketing and e-mails. Deals will be closed automatically, seller personnel do not have to participate, because the product is easy to understand and the value for customers is clear. Customer acquisition costs are mainly digital marketing costs, typically 30 to 200 € per new customer.

Inside sales: This model is built on top of the self-service model. Customers are nurtured towards deals by responding to queries and questions by e-mail, telephone and video chats, as well as by showing demos over the network and by using other digital tools. Besides dedicated sales persons, also technical experts may be involved to clarify the details of the product or its use. Typical CAC is 600 to 6000 € per new customer.

Field Sales: Applied in case of the most complicated purchasing processes, where the decision-making process involves several or even dozens of buyer representatives. Customers are met face to face, often numerous times. Sales will involve technical and other experts, and various customer pilots and other tools decreasing buyers´ uncertainty are common. New customer acquisition costs are typically more than ten thousand euros, and there is actually no upper limit for them.

 Costs of selling through channel partners are between inside and field sales, but we are not going to discuss this further.

 Sales method applicability

 Organising and expansion of sales activities often fail, because it is forgotten that lifetime customer contribution need to exceed customer acquisition costs. And even this is not enough. The total contribution, i.e. total sales margin euros need to cover not only customer acquisition-related costs, but in addition R & D and administrative costs, depreciation, amortisation, interest expenses and income taxes - and, hopefully, there will be some profits left after that.

 At sufficient level of accuracy, it is possible to define for each of the three sales methods required minimum customer contribution in euros, see the picture above. In each method, the green area shows acceptable contribution per customer, in the red area operations are not profitable. The line between green and red area is not carved in stone, as illustrated by the yellow zone between green and red areas.

 At this stage, many people may raise their hands and say, that the above does not apply in their business, because the revenues are accumulated over a long period, and the first deal is only a spearhead. This is true, total customer contribution must include entire customer relationship lifecycle - in a similar manner as customer acquisition costs need to cover costs over the entire lifecycle. But in case of business logic, where the profitability of a company is not so important, you may be able to ignore these laws. This often happens, for example, in startups; the idea is to make potential takeover candidates, with different kind of monetisation logic, more interested.

 Sales development

 In developing its sales activities a company thus has two basic recipes for success: to get more revenues from customers or reduce sales complexity, see the picture on the right. It is possible to get more revenues from customers by bringing more value to their business, by differentiating from competition and by avoiding tough competitive tendering. Although getting more revenues from customers is the ultimate must for sustainable long-term competitiveness, growth and profitability, it will not be discussed on more detail in this post.

 By reducing sales complexity it is possible to switch to lower-cost ways to acquire customers; in practise face-to-face selling is replaced with inside selling, and self-service is used instead of inside sales. Some factors, however, make the simplification more challenging, e.g.:

Evaluating of the product or service is difficult and it involves a lot of buyer's representatives

The product or service is of vital importance; for example, if the selected product does not work, it may result in major economic or health loss

The product or service is expensive, requires major changes in buying company practises or other systems

The specification or contract of the product or service to be delivered is complex

 If a company does not constantly seek to simplify its sales, it is not able to take advantage of the entire sales potential and it faces a serious threat to be outpaced by competitors. There are, however, a number of ways how companies willing to grow and renew can aim for a better market position through simplification:

Building easiness to sell in product or service already in development phase: for example, by implementing product configuration so that it is supporting customers' processes

Creating a business model that makes selling easier: for example, free or very low-cost pilots, or more cost-effective execution of field sales through channel partners

Improvement of sales and marketing machinery: e.g. aggressively using digital marketing methods and tools for demand creation, utilisation of self-service and inside selling for deal-making, whenever possible

 Utilisation of various selling methods and tools is not a simple yes / no decision. In practise, you should consider using the available options by product or service, by various stages of sales process, by market segment or as an internationalisation tool. For example, when one of my cooperation partners made a transition from using field sales to self-service enriched by light inside sales, it was able to target also SMEs, besides earlier served major corporation accounts. Similarly, mental barriers to internationalise have several times been decreased by making the first steps through inside sales, instead of building immediately own local presence.

 Conclusions

 Many companies and industries have already taken the path of continuous sales renewal, at the forefront are ICT and such successful companies as Oracle. Also, necessary tools for change and successful references can be found in plenty. For example, for B2B inside sales, both dedicated service platforms for building own operations and special companies offering inside sales as a service are available.

 Because you've got this far, you might want to get better sales results. Do you find answers to your specific business situation by renewing your sales strategies or sales models, or do you have challenges with your sales process?Raimo Malilahttp://firstname.lastname@example.com 25.74815100000000747.677147999999988 -15.560442999999992 76.171072 67.056745tag:blogger.com,1999:blog-571376301174098105.post-62274543906814050662015-02-23T09:12:00.000+02:002015-02-23T09:54:36.858+02:00Try to avoid competitive tendering In business to business (B2B) trade companies are looking for - and, in most cases are also achieving - undeniable advantages through competitive tendering. It makes it possible to systematically choose suppliers, get information about the options available in the market, evaluate supplier candidates' ability to understand client's requirements and make estimates of potential cooperation fluency. And the icing on the cake, competitive tendering also provides a quite reliable picture of the value of various options in relation to their price.

 But ill-advised and performed tendering can be detrimental not only to the buyer and the selling company, but also to our entire economy.

 Buyers or sellers do not need to powerlessly follow the challenges of competitive tendering world - with the right strategies it is even possible to improve competitiveness of a firm.

 Buyer shall not get renewal impulses

 Narrow-minded tendering easily solidifies buyer's development activities to focus on marginal product improvements and extensions. Instead of keeping eyes and ears open for new external ideas and solutions to make bolder innovation leaps, strict requirement definitions reduce the role of supplier partners as an implementer of buyer´s prevailing worldview.

 A system integrator, for example, believed to know the future software needs so well that the implementation of major components could be effectively outsourced through competitive tendering. As a result, hourly charges of acquired work fell, but on the other hand, the life-cycle cost savings were not achieved. At the same time, the existing vendor partnerships, producing continuously new insights and innovations, were destroyed, affecting negatively company's competitiveness.

 In particular in Finland, there is a pressing need for cooperation with supplier companies, instead of the rigid tendering principles. According to a research paper, companies in the country rely too heavily on internal know how and resources in generating new product ideas. Similarly, the companies invest more lazily than their international benchmarks in projects, which generate new businesses or entirely new, genuine innovations. And since customer experience improvement and customer engagement often occur with new business models, achieving higher margins often remains a dream.

Seller's growth and profitability challenges

 In principle, competitive tendering gives a selling company an equal footing to compete with other sellers, and in general, competition makes tougher and stronger. The problem is that participation in competitive tendering is shaping a company in a way, that makes opportunities for profitable growth narrower and narrower:

Detailed definition of the solution to be acquired, to make a comparison of the proposals easy, leads to price emphasis on the selection criteria

For sellers, this means, in addition to thinning margins, also collapsing opportunities to stand out from the competition through innovation

In the longer term, the development of competitiveness thus focuses on marginal product improvements, increasing operational efficiency and continuous cost-hunt

 The company gets stuck, therefore, in the vicious cycle of competitive tendering, see the picture below.

Vicious cycle of competitive tendering will destroy company growth and profitability.

 There are many companies in this vicious cycle, just now, small to large. A story of a component supplier, based on my own experiences, is illustrative: Customers complained about the prices and through competitive tendering compared them and the characteristics of our products with those of the competitors. As a result, we focused on adding new features to our products based on customer requirements. The competitors did the same, so customers did not see big differences in the solutions, and prices came under increasing pressure. We had to shave our cost structures. The story did not have a happy end...

 Boost for the economy and companies

 The vitality of Finland's economy and its enterprises is dependent on the diversity, dynamism and innovation capabilities of the ecosystem. One of the main drivers are new products, services and business models. But this is not enough, innovations also need customers. Especially for SMEs and startups it may be difficult to acquire far-away reference customers. And if you can not find nearby customers, who have the courage to look over the tendering practices to new innovations, you are missing another important growth driver.

 But there are a lot of things that can be done to improve the situation:

Buyers can enhance the role of suppliers from being a mere implementer to becoming a true, active innovation partner

Sellers can, through their own actions, affect buyers´ views before decisions on competitive tendering have been made, thereby increasing the weight of their own strengths in purchasing decisions - or thus even been able to completely avoid competitive tendering

With targeted public incentives and measures in place in our domestic markets, there is a possibility to create more willingness to acquire and deploy innovations.

 Raimo Malilahttp://email@example.com 25.74815100000000747.677147999999988 -15.560442999999992 76.171072 67.056745tag:blogger.com,1999:blog-571376301174098105.post-94671750757769982014-10-29T20:51:00.000+02:002014-10-29T21:03:35.858+02:0010 sales acceleration cornerstonesVery few products sell without extra efforts. Well-oiled sales processes, on the other hand, understand customers´ thoughts and needs and help to significantly increase sales. Next we shall discuss ten sales process cornerstones. In addition, of course, you need to carefully craft sales strategies with implementation plans and resourcing, but without an effective sales process, a company will run short of what would be possible to achieve.

 Link customer buying process with your sales process

 The knowledge of customers' purchase process will help you to understand how they buy and what kind of steps they take to end up buying. When a company´s way to sell is adapted to purchase process, it ensures attention to the activities that customers deem valuable. For company salespeople, this provides a solid backrest to focus on the essentials that advance sales at all stages of the purchasing process. If, on the other hand, company sales are driven by the factors not related to customers, sales resources are not allocated in an optimal way and the focus is on the wrong things.

 Define sales process stages

 Definition of sales process stages creates a common language for the sales team. If this common language is missing, the results may be good in individual cases, but in the longer term execution is not satisfactory. And when it is time to grow sales muscles, a well-defined process effectively transfers sales know-how to new persons and thus brings more results more quickly.

 Criteria for the transition between the stages are the glue which makes the sales process ticking. The criteria must be based on customer behaviour. This ensures that customers will move a sale forward, instead of seller's pre-defined plans, hopes or dreams sitting on the driver´s bench. The seller's task is, of course, to affect customers so that they are continually advancing in their purchase process.

 Define buyer personas

 By identifying and defining key buyer personas that have major influence during the purchase process, a concrete direction for sales tool development is created. All personas have their own objectives, needs, desires and fears. On the basis of describing buyer personas, a successful business can focus on exactly the right measures that will increase customer confidence and remove the uncertainties. To secure that the sales process is advancing smoothly, the definition of personas needs to be made for each stage of the process.

 Specify major customer interactions

 In almost all successful customer cases - and also in less successful ones - it is retrospectively easy to identify those interactions that substantially contributed to the final result. When an effective sales process is in place, this is done in advance. By developing well-defined patterns to respond to customer interactions that are either advancing or stalling opportunities, sales persons will have a more professional approach and also sales cycles will become shorter.

 Harness all customer interface functions

 In a modern organisation, sales, marketing and other customer-facing teams work seamlessly together to provide value to customers. Thus the sales process can not be separated from other customer-related processes. Shared objectives will guide team operations, supported by coordinating processes, practises and tools to achieve the objectives.

 Typically, demand generation activities made by marketing people produce qualified leads that sales persons start to work with. When a deal is done, various other functions - depending on the type of business - will be involved in fulfilling the customer promise. And after this, the round starts again to retain the customer, make upselling and cross-selling, etc. If sales just sub-optimises its own operations, it also builds barriers to its long-term success.

 Make sales process an everyday tool

 If a sales process is merely a forgotten document in a file, it does not bring any results. The most important thing is to make the process a part of everyday way-of-working. This is easiest to achieve by embedding it into the customer relationship management system; the system of course, can be of any kind, implemented through modern service or through excel tables. Thus, for example, sales pipeline management as well as planning and forecasting activities are done as part of the sales process. This will force everybody involved in sales to adopt the process quickly.

 Focus on tools that bring value to customer interactions

 It is easy to find and develop new sales tools or methods that claim to enhance operational quality and results. However, you should be careful with this. Sellers' time is very limited. By far the most important criterion - and often the only one - is how well a new tool or method can assist sales persons to work more productively with clients. It is too often that new things only increase paper work and other routines, thus taking time from customer value-adding activities.

 By rapidly introducing right tools and methods, it is possible to create competitive advantages for the company, so even on this front you should do active development work. If a new tool or method that really improves customer operations is identified, it is vital that sales persons actively start to use it.

 Measure adherence to sales process

 Measuring adherence to sales process is a good way to ensure that results are achieved. In addition to measuring the development of sales pipeline, e.g. forecast accuracy, completion of key interactions in each stage of the sales process or use of sales tools are worth regular follow-up. The principle of using metrics also paves way to process, way-of-working, team and individual development.

 Coach sales persons

 Managers have a crucial role to play to secure sales process adoption. If managers do not show an example how the process generates excellent results, it will be considered only a top management gimmick with no value. Also, the acceleration of best practices sharing is an integral part of managers´ coaching role.

 Continuously develop your sales process

 When the world changes around us, also purchasing processes change. If we are not able to further develop our sales process and the way we respond to changes, we shall find ourselves using a typewriter in the age of the Internet. This has a devastating impact on the ability of our salespersons to successfully fight against competitors. Therefore, continuous development to respond change and learnings of current process weaknesses is the key to good future sales results.

 Start now

 Now is the right time to start sales development activities. If you know what to do, try to achieve first wins as quickly as possible. On the other hand, if you are unsure of your business performance and of where to start, a quick test on this page will help you to evaluate the health of your sales process and to prioritise your development efforts.Raimo Malilahttp://firstname.lastname@example.com 25.74815100000000747.677147999999988 -15.560442999999992 76.171072 67.056745tag:blogger.com,1999:blog-571376301174098105.post-73866722687623998252014-10-16T12:31:00.000+03:002014-10-16T12:31:24.711+03:00Find the most compelling export countriesOne of the best ways to stimulate growth is successful market entry to new, international markets. But first you need to identify the most compelling markets - and these decisions are better to be based on the facts. I have also in my own career come across with internationalisation cases, where the key motivations were, for example, the language and cultural knowledge of decision-makers, coincidences or emerging romances. It is of course possible to be successful just by counting on luck, but a more systematic approach will probably produce better results.

 Here we shall go through methods to identify the most lucrative markets, introduce a tool for Finnish companies to facilitate the first steps of the job and walk you through an example of the use of the tool. The methods are suitable not only for international market expansion, but also when evaluating country priorities in new product, service or business model commercialisation.

 Methods to identify the most compelling markets

 Both company internationalisation researchers and experts of the sector appear to have broad consensus on the priority-setting and choice of international markets:

First, select the markets worth taking a closer look, based on macro-economic variables of the markets

Secondly, study the market potential for company's products in selected countries, and

Thirdly, estimate the sales potential of company's products in relation to required investments

 The main factors affecting the market selection are thus:

Company related: e.g. the type of product or service, management characteristics, the size of the company, or experience in internationalisation issues

Target market related: e.g. the attractiveness of the country or market, marketing infrastructures or competition

Target market entry barrier related: e.g. country risk, customs and other barriers or physical and psychic distance

 According to the model set out above, the made plans are indeed systematic but also mechanistic. They often lead to substantial investments, without the possibility, if necessary, to change the plans.

 Of course, these things can be studied by means of desk studies, but a more in-depth view can only be found by having closer contacts with customers and markets. Traditionally, the tool has been own or outsourced market research, but its disadvantage is significant time, money and resources required. Globalisation of consumption and purchasing decisions, along with online methods, has created new, more cost-effective methods; international market selection can be made more iterative, avoiding too early choices that can easily lead to waste of resources.

 Internationalisation Heat Map

 Internationalisation Heat Map was developed as a tool for Finnish companies to easily and rapidly evaluate the attractiveness of entering various European markets. The tool encompasses all the European countries with the exception of mini countries, as well as some of the Balkan and Eastern European countries, where no reliable information is available.

 Six elements were selected as the key factors of the Heat Map, with a user giving weight to each of them:

Market size: measured by the population of a country

Purchasing power of the market: the measure is country's gross domestic product (GDP) per capita

Ease of doing business in a country: measured using a World Bank comparative study on barriers and incentives of doing business in different countries

Market openness: measured by using a comparative study by the International Chamber of Commerce on international trade openness in different countries

Physical distance from Finland: measured using distances of country capitals from Helsinki, Finland

Psychic distance from Finland: there are numerous, complex formulae developed to evaluate this, but here we use a good approximation of country's total trade (exports + imports) with Finland

 The tool is used so that a user will assess the significance of each of the factors 1 to 6 from his or her business and internationalisation point of view, giving each factor a number value between 0 and 100. If the number is zero, then the factor is not taken into account in assessing the attractiveness of the country. Similarly, the number one hundred means that the factor is extremely important. Each factor should be evaluated individually, but a user gives each factor a weight based on what is important in company business. Each country gets an end result between zero and one hundred: the higher it is, the more lucrative the country is for market entry.

 An example of Internationalisation Heat Map use

 As an example, the tool is applied to analyse internationalisation plans of Ludus Helsinki. I was heavily involved in the business operations of the consumer product company aiming for rapid international expansion. Its products inspired children and young people to move, using a gaming-based service concept consisting of the Internet, software and dedicated devices.

  The most important factors of Ludus Helsinki internationalisation plans were market's purchasing power, ease of doing business in the country and country's psychic distance from Finland. The basic reasons behind this were
 the facts that the product was quite expensive compared with its benchmarks and that it required a specific distribution and retail infrastructure. The size of the market and its openness were also important, but distance from Finland was not considered to be a very vital factor. The weighting of the various internationalisation factors is illustrated in the picture above.

 The factor weighting produced the results of the chart on the right side. The most interesting export destinations seemed to be Germany, Sweden, Norway, Russia, the United Kingdom, the Netherlands and Denmark. The only surprise was Russia ending up so high. The importance of Russia, however, decreased significantly, when other important points for the Ludus Helsinki business were taken into account:

Tablet and Smartphone penetration in the country

The importance of non-competing physical activity for children and young people in the country

Sophistication of using digital marketing methods and tools in the country

 The results were also very consistent with the conclusions of Ludus Helsinki digital marketing efforts: highly ranked countries generated more customer interest and the distributors and retailers in these countries were also the keenest to start to sell the product.

 The used tool can be found here.
 Raimo Malilahttp://firstname.lastname@example.com 25.74815100000000747.677147999999988 -15.560442999999992 76.171072 67.056745tag:blogger.com,1999:blog-571376301174098105.post-6056678891450826302014-10-05T19:45:00.003+03:002014-10-05T19:45:48.462+03:00Growth financing for Finnish SMB companies
 Lately I have been contacted by several SMB entrepreneurs for bank loan challenges. Indeed, access to finance is a key obstacle to the growth of many Finnish small and medium-sized enterprises. If you do not have deep enough pockets, or, for one reason or another, you do not want to rely solely on bank financing, you might want to look into what kinds of instruments public sector and private investors are able to provide. Bank financing, services offered by insurance companies or bonds for SMB companies with the First North provided marketplace, are not discussed here. If a company is in a startup phase or finds crowdfunding opportunities attractive, other potential funding sources are listed here.

 The focus is on company growth and, in particular, organic growth. Thus we are concentrating on situations, where a company aims to increase its product or service sales on existing markets, to grow revenues through international expansion, or to create more turnover by developing and bringing to market new products, services or business models. Growth paths that, for example, utilise acquisitions, ownership or industrial arrangements, are not discussed here.

 Financing sales growth

 Growing sales require financing for e.g. manufacturing and service delivery capacity, working capital or for marketing and sales machinery. On the other hand, significant new investments in product development are usually not required. From funding point of view, just boosting sales is, therefore, often not so sexy compared with internationalisation or innovation initiatives. This is not, of course, how it should be; if a company cannot reach its revenue potential with current products on its current markets, it will also fail with new products or on new markets. A good and credible plan on how to use the new funding and how it affects enterprise value, makes it considerably easier to secure financing.

 Company development grants by ELY centres are the basic public sector tool for financing sales growth. A grant may be used for investments, e.g. in land, buildings, machinery, equipment and furniture. In addition, it may also be used to finance development activities, for example, to hire external experts to develop company's strategy or sales and marketing. A small business may also apply for a grant for wage and salary expenditures required to create new jobs or for other expenditures relating to expanding business.

 European Regional Development Fund (ERDF) is running a programme that improves competitiveness of SMBs, granting funds for business development and job creation. ERDF also partially finances the company development grants of ELY centres.

 Finnvera may participate in the financing of investments and working capital with loans or guarantees. Depending on the amount of the grant requested, Finnvera can either be the sole financier, or funding requires co-financiers, or sufficient amount of the total financing must come from the company itself.

 Private investors like Bocap, Korona, Fenno Management, MB Rahastot and Noweco Partners are among the ones that offer equity, loans or other financing to grow company revenues. Besides credibility of the business plan, many funding players have preconditions for the size of the funded company, as well as for investment size and industry focus. Garantia is, in turn, guarantee insurance company that guarantees funding and other liabilities of Finnish companies, as well as insures risks associated with investments.

 Financing internationalisation

 International market expansion gets a lot of interest and attracts potential public and private financiers.

Company development grants of ELY centres and SMB competitiveness development programs of ERDF can be also used for internationalisation.

 Finnvera loans and guarantees can be used to cover the need for working capital arising from exports or to finance the international operations of a Finnish parent company. Export guarantees, export credit and interest equalisation services protect companies against the risks associated with export customers, banks and countries and help in the funding of export projects. Equity investments can be made together with private entities in technology-intensive or innovative service enterprises that have the potential for developing into international growth enterprises.

Suomen Teollisuussijoitus (Finnish Industry Investment) makes, together with other investors, own capital based investments to companies going international. Investments can be equity, capital loan, convertible bonds or mezzanine financing.

Tekes supports planning for global growth; it gives grants, for example, to test a new concept or product to potential clients, to develop marketing strategy and to make studies on intellectual property rights and their protection. Applicable until the end of 2014, Tekes Team Finland Explorer program gives loans to purchase professional services for e.g. target market expansion studies or new market business plans. Under Young Innovative Enterprises (NIY) business development framework, it is also possible to obtain a grant or a loan for internationalisation.

Finnfund finance companies that operate or plan to operate in developing countries or in Russia: the instruments are equity, investment loans, mezzanine financing or their combinations, as well as in exceptional cases, guarantees. Business partnership support by Finnpartnership includes grants for establishing operations in developing countries, which can be used in project planning, development and training phases.

In practise most of the private financiers require that a company is engaged in and is seeking to expand international business. For example, Conor Venture Partners, Folmer Management, Helmet Business Mentors, Innovestor and Tutor Invest underline their willingness to finance companies going international. Besides industry and size preferences, investors have - depending on their background - varying preferences on internationalisation directions.

 Financing innovation and commercialisation

 Tekes has traditionally been the cornerstone of developing new things: its research and development funding provides grants and loans for developing products, services, production methods, business models and competence. A mere development project does not, however, create company growth, and Tekes has rightly been criticised for supporting only technology exercises. For this reason, it is now offering also loans for demos, piloting and commercialisation, which can be used for, inter alia, machinery and equipment rent or depreciation, materials or supplies costs and for other commercialisation costs. Commercialisation costs can be also covered by NIY funding.

Company development grants of ELY centres can be used, for example, for patent rights of technology transfer initiatives, licenses, know-how or acquisition of unpatented technical knowledge. ELY can also cover raw material and semi-finished product costs related to product development, as well as salary and wage expenditures. In addition, also ERDF supports creation of new business activities in small and medium-sized enterprises.

EU Horizon 2020´s SME Instrument supports growth-oriented, innovative small and medium-sized enterprises. The program assists in the development of new concepts and solutions, in testing and commercialisation. The programme has identified certain priority areas, such as ICT, biotechnology and sustainable energy and transport.

Private investors are more interested in the results of innovation and commercialisation than just doing something new. Most of the investors, however, do appreciate new approaches and consider well functioning innovation and commercialisation machine as a precondition for funding. For example, Auratum, Folmer Management, GTW Group, Joy Group, Nordic Growth and Vision Plus emphasise the importance of innovation.

 More information on Finnish SMB funding

 All of the above mentioned financial instruments and sources require an application and negotiation process, with always uncertain end results. By pinpointing the right potential funding sources that have strategies matching with the business situation and objectives of the company, and by running the application process professionally, the odds of success can be significantly improved.

More information on the sources of funding for small and medium-sized Finnish enterprises can be found on the webpages of financiers and by contacting them directly. There is also a summary of financing sources available with more information on general conditions of funding, as well as on possible company and industry focus.

 Raimo Malilahttp://firstname.lastname@example.com 25.74815100000000747.677147999999988 -15.560442999999992 76.171072 67.056745tag:blogger.com,1999:blog-571376301174098105.post-62706228594283075422014-09-24T16:44:00.000+03:002014-10-04T14:27:26.469+03:00More growth with marketing automation
 Finnish small and medium-sized businesses have been slow to take advantage of marketing automation. The seriousness of the situation will become clearer when we notice that a company's growth and profitability strongly correlate with the use of the new digital methods and tools. The technology itself is not the solution, but as a part of systematic renewal, it will help the company to stand out from its competitors. This blog will discuss the benefits and utilisation of marketing automation, especially from business-to-business (B2B) SMEs point of view.

 Why marketing automation?

 B2B companies, small and large ones, are facing the disruption brought by digital channels: since customers´ purchase processes more and more rely on web based information, ignoring traditional discussions with sales persons, it's much harder than before to reach them at the right time and with the right messages. In addition, customers have adopted global approach, they are looking for products and services well beyond domestic markets.
 This will make room for marketing automation. It enables companies to get better visibility on what buyers really like and how they behave; thus it will be possible to boost the implementation of growth strategies, to increase sales by improving market share, to facilitate expansion to new international markets, to support the development of new products and business models or to enhance go-to-market programs and processes.

 How marketing automation creates growth?

 An American study found that 63% of the companies that are using marketing automation, grow faster than their competitors. Another research revealed that 79% of the top performers have utilised it for over 2 years. A study on Finnish B2B SMEs gave similar kind of results. Next chapters discuss in more detail how marketing automation supports some key growth strategy components.

 Sales growth

 Marketing automation increases sales, inter alia, through the following mechanisms:

The results of marketing campaigns can be accurately tracked and thus campaign effectiveness is better: it is possible to get more results for the same money or the same results for less money.

The number and quality of customer leads grow: there will be more closed deals.

Business relationships with customers will get tighter and it is possible to identify changes in customer behaviour and needs: cross-selling and upselling opportunities with existing customers can be realised.

Sales and marketing cooperation intensifies: sales persons also market products and marketing persons also sell products.

 There is plenty of backing for the above. For example, a Forrester research found that B2B companies utilising marketing automation get considerably better results in their marketing campaigns and also their sales and marketing functions have much tighter cooperation.

 International expansion
 When expanding business into new market areas, marketing automation can ease the process, for example, in the following ways:

It is possible to reliably assess already in the early stages of internationalisation planning, whether potential target country customers and distribution channels are really interested in the company's products: target country prioritisation and selection can be done faster, with lower costs, and the risks with selected alternatives are smaller.

Even before the business is launched, it is possible to get good insights on the needs and purchase processes of potential target country customers: necessary changes to offerings, as well as to marketing and sales channel processes can be done in a timely manner.

 To support this, a study on Finnish B2B SMEs revealed that digital marketing maturity clearly correlates with the relative size of international operations.

 Support development of new products and business models

 Marketing automation will bring more insights to new product and business model innovation and decrease uncertainties related to it. The corresponding mechanisms include e.g.:

At an early stage, it is possible to obtain customer feedback, whether there is enough demand for a planned product or business model: return on investment of the development projects is higher, because they can either be stopped in time or the changes appreciated by customers can be built in.

It is possible to see at a sufficiently early stage, what customers need in order to take a product or business model into use and to then use it actively: expanding the core product with customer valued extensions, either by the company itself or with partners, will bring greater yields.

 The agile new development model has brought good results in the domain of digital services and startups and now it is rapidly spreading also to more traditional sectors.

 Enhance go-to-market

 Go-to-market of products or business models can be enhanced with marketing automation e.g. through the following ways:

By finding the right ways to generate customer attention and interest, as well as by identifying the most suitable sales channels to customers: quantitatively and qualitatively enough customer leads, which results to more closed deals.

It is possible to find early enough marketing messages that resonate with customers and a positioning that stands out in the market: company products will get attention in the marketplace and the importance of price in purchase decisions will be reduced.

Marketing and sales functions cooperate effectively and aim at the same goals: sales revenues can be maximised.

 What companies should do?

 Utilisation of marketing automation is already in full speed also in European companies. The pioneers are technology, financial services, life sciences and energy, followed by, for example, telecommunications, manufacturing and professional services. In Finland, for example, the following small and medium-sized B2B companies are leading: Basware, Vaisala, Deltek, Metos, CRF Box, Nebula, Asiakastieto, Zeeland and SSH.

 The starting point for efficient exploitation of marketing automation is the definition of company strategy for the renewal and growth; in other words, from which direction, by what means and resources, the company is trying to find a new way to prosper. Overlapping with this are company personnel and development of their knowledge, skills and attitudes, as well as implementation of processes, required by the new strategy. Only then it is the time for marketing automation as the technology and the solution, which enables and glues together the strategy, the people and their competences, and the processes.

 When selecting a solution, the key is the vendor's ability to support the company's business; the key parameters include, for example, solution features, customer segments that a vendor is targeting, possible industry focus and pricing models. All these are compared in a review, which also lists Finnish company references that the key marketing automation vendors have.
 Raimo Malilahttp://firstname.lastname@example.com 25.74815100000000747.677147999999988 -15.560442999999992 76.171072 67.056745tag:blogger.com,1999:blog-571376301174098105.post-35150729666262173162014-09-15T10:20:00.000+03:002014-10-16T19:11:00.249+03:00Where to find assistance for Finnish SME internationalisation?
 Many Finnish SMEs have a good market position in their existing markets and the customers appreciate their products, but these companies are still reluctant to go international. The reasons are many. It may be missing courage, not understanding the opportunities and requirements of new markets, not having the necessary expertise in-house or missing funding or resources. There are, however, means to overcome all these obstacles. A company is not alone, when figuring out the challenges of internationalisation - there are a number of sources available that can give advice and assistance.

 Internationalisation assistance needed?

 Systematic internationalisation can be divided into four phases, each of which requires different skill sets:

Strategy: Why and in what way internationalisation serves company growth and other objectives

Direction and capabilities: Requirements and prioritisation of target markets, as well as identification and development of required own competences

Research and plans: Deeper investigation of target markets, creation of market entry plans

Implementation of market entry: Starting and developing operations in selected new markets

 In most cases, the steps are not taken in a serial manner, i.e. it is often necessary to return to the previous steps and iterate on the basis of the latest findings. It is therefore important that an internationally expanding company itself stays at the rider's bench whole time - enabled either through permanent staff or a temporary help closely integrated with the company's objectives.

 Digitalisation has brought an enormous amount of different kinds of information within reach of a company going international, but here we focus on four sources that can provide advice and help for the Finnish SME:

Finnish public sector agencies

Internationalisation consultants

Target country public agencies

Target country local consultants

 The role of the advisers at the various stages of the company internationalisation is assessed in the table below: the more pluses the cell house, the bigger the typical contribution in internationalisation activities. The estimate is based on the needs of the Finnish SME, but also startups and major companies can at least partially use this reasoning. This paper does not focus on the importance of external finance as an important potential enabler of internationalisation. Therefore, public sector financial aid for internationalisation is not reflected in the assessments of the table.

 Finnish public sector internationalisation agencies

 Internationalisation services of the Finnish public sector are centralised under Team Finland brand. A company can get help by contacting a regional contact person in Finland or a Team Finland coordinator in a target country. The network consists of 73 teams around the world and of 15 local teams in Finland. Individual services are produced by different units working for internationalisation, such as Finpro, Tekes, Finnvera, Finnfund, Finnpartnership, cultural and scientific institutes, MEK, ELY centres, the Finnish-Russian Chamber of Commerce and the Finnish-Swedish Chamber of Commerce. Services include, inter alia:

Business idea coaching: Finpro offers companies expertise in international business and its challenges. Service provides feedback on company's strengths, weaknesses, opportunities and threats, as well as support for internationalisation issues. Free Of Charge.

Internationalisation test: With Yritys-Suomi service of TEM, a company can assess and analyse its internationalisation capabilities. Free Of Charge.

Business opportunities: Concrete business opportunities throughout the world identified by the experts of Finpro. Free Of Charge.

Team Finland Future Watch: Reports on changes in the international markets, brought by Tekes. Free Of Charge.

Networking with business and public actors: Finpro will advise how to obtain information about target markets and helps to network with public target market actors and Finnish companies already present in these markets. Free Of Charge.

Export trade financing expertise: The objective of the Finnvera programme is to improve financing competences required by export activities. A basic programme is Free of Charge, Charges Are Applicable for extra sessions arranged by Finnvera training partners.

Shipping handbook: FinPro's document, contains information from 190 countries on free trade agreements, import restrictions, required documentation and legalisation of documents, special certificates, product packaging and labelling, provisions laying down special conditions governing sending of samples as well as other goods. Charges Are Applicable.

Advice to enter Russian market: Finnish-Russian Chamber of Commerce provides useful advice and concrete assistance to Russian business operations, at all stages of the planning. Charges Are Applicable.

Advice to enter Swedish market: Finnish-Swedish Chamber of Commerce can advise on all matters relating operating in the Swedish markets, as well as consult companies to start exporting to Sweden. Advice is Free Of Charge, in consulting Charges Are Applicable.

Advice to enter developing countries for the purpose of projects: Finnpartnership advices on issues related to developing country business activities. Free Of Charge.

 Many cities and regions also provide internationalisation services. For instance, EnterpriseHelsinki is active in Helsinki and BusinessOulu in Oulu. Organisation for regional development organisation in Finland, SEKES, has a listing of regional players on its website.

 These services are able to provide the basic knowledge both for planning internationalisation strategy and for analysing own capabilities, as well as for acquiring basic information on potential new markets. And because the services are, as a rule, free, they should also be used. On the other hand, public sector services provide little help for deeper, company-specific internationalisation activities, such as building a detailed strategy, closing the competence gaps or getting a deep understanding of new market opportunities. This is, of course, caused by the fact that the services provided are largely productised and generic, thus leaving very little time and resources for extensive company-specific assistance.

 In addition, the contributions provided by network experts vary in quality and quantity, depending on personal skills, experience and service attitude. For example, I have sometimes been able to make experts of the network as an integral and high value-adding part of the team, sometimes their help equalled results that half an hour of Internet browsing would have given.

 Internationalisation consultants

 In the name of internationalisation consulting, a variety of services are offered: training, compiling of reports for international organisations, research of new markets, starting operations in new market areas, opening up sales channels to certain customer segments, marketing communications, strategy work, etc. Both small and big domestic players as well as international companies with their Finnish offices are present.

 According to my experience, the big threat for SME is that a consultant focuses the project on his own areas of strength, not on the ones that would be the most important and useful for the paying company right now. It is, for example, dangerous to let consultant´s considerable target market experience lead to deep market studies, when internationalisation strategy and sufficiency of own competences are still in the making.

 Another important consideration is that many times an SME business needs only one versatile and seasoned professional, not a bunch of constantly-changing consultants with very narrow areas of expertise. This ensures that the consultant is a solid part of hiring company operations and the company can really lead the process of internationalisation. Certain nuances, related to the organisation of work, are then manageable: for example, whether it is about consultancy or interim management cooperation, or whether it is the consultant working hands-on in the project or primarily transferring his know how to company employees.

 The role of consultants is the largest in the creation of internationalisation strategy, in setting direction and in defining required capabilities, see the table above. Depending on the consultant's background, he can be - in parallel with local contributors - also an important factor in the thorough target market investigation and actual market entry.

 Target country public agencies

 Almost all countries have the desire to attract foreign companies to invest in the country. To this end, public sector all over the world have been busily setting up specialised agencies for this. In Finland, Invest in Finland is the name of the active public player, and the world association of agencies, Waipa, has produced a good listing of its counterparts in other countries.

 The agencies that are assisting market entering companies can usually provide useful information about the target country, its market and competitive situation, market entry alternatives and setting up operations in the country. For example, GTAI, German Trade and Invest, offers mainly free services in the following areas:

Information about Germany, its economy and business life

Industry information, including market situation and news about recent developments

Consulting services to create market entry strategies, to make evaluations in the country and to establish operations

Guidance on the different market entry questions

 An internationalising company should definitely check out, how target country public actors are able to assist. For the assessment and prioritisation of target markets, it is possible to get - and in most cases free of charge - important building blocks. Also, good advice on setting up local offices can be obtained. Depending on the country, more customised free advisory services may be available, in which case tailored information, contacts and services can be acquired. It should be noted, however, that willingness of agencies to help depends besides the abilities of individual experts also on the objectives of the market entering company. A big business always gets more personalised service, and planned product development or manufacturing activities always get a warmer reception than mere sales office ones.

 Target country local consultants

 When it's time to explore your potential target markets in greater depth, to set up a business in a new market or to expand an existing one, local consultants are often utilised. Local specialists, however, are not enough to get the business up and flying; the hiring company must ensure that the basis of internationalisation, including the role of international operations in the company´s growth strategy, initial prioritisation of target countries and trimming of the company for internationalisation, is solidly in place.

The scope of consultants´ work can vary, some examples given below:

Market research and competitor analysis

Establishment of a local company

Identification of potential clients and creation of contacts with them

Search of distribution channels and partners

Financial, legal or environmental issues, marketing or HR

 In most countries, you will find plenty of willing local companies to assist in market entry, see, e.g. an extensive overview of various Market entry consultants in European countries, with detailed information about the contacts, served markets, services offered and industry focus. The Association of Finnish Entrepreneurs, Suomen Yrittäjät, has also an international network with Finnish-speaking contacts.

 Probably the biggest pitfall for Finnish SMEs is the correct identification of local aid. For example, when I was once looking for a local consultant to tighten cooperation with potential customers, the selected person turned out to be the best in finding a suitable office space and in helping us to manoeuvre through local bureaucracies.
 Raimo Malilahttp://firstname.lastname@example.com 25.74815100000000747.677147999999988 -15.560442999999992 76.171072 67.056745tag:blogger.com,1999:blog-571376301174098105.post-47625894790381005752014-05-21T16:04:00.001+03:002014-05-21T16:04:51.359+03:00Digital marketing maturity equals success - case Finnish B2B SMEsSmall and medium-sized enterprises (SMEs) are suggested to have a significant role in the revitalisation of the Finnish economy. Their current actual business performance is, however, not as good as expected. Therefore, it is necessary to look more closely at how companies´ own actions affect on their success. This post shows that based on a study, Finnish B2B SMEs do not effectively utilise digital methods and tools in their customer interface. It also finds that digital marketing maturity strongly correlates with success.

 Changes in B2B business environment

 Competition in B2B markets is global, products and services are searched, compared and procured across the borders. Vendors have been forced to follow their customers, very few B2B companies can rely on domestic customers only. Local markets that used to be isolated with their own specific terms and conditions, are also changing: the same technologies, standards and processes are in place everywhere, making it easier to demonstrate and offer products by means of inside sales and marketing. Internationalisation also creates brutal cost pressure on all business operations.

 Face-to-face meetings have traditionally played a central role in B2B sales. But today, customers are ready to meet sellers very late. According to a survey, on average, as much as 57% of customers´ purchase process is already over, before they are willing to meet with vendors. To win customer orders, vendor companies need thus to be able to present their offerings, references and other competitive advantages before the first sales appointment.

 At the heart of the change is the Internet. It has become the first source of information for B2B buyers. And besides information search, the Internet significantly affects on all purchasing process stages. B2B company website and presence in social media are vital and indispensable anchors of Internet influence. The companies looking for information and solutions are then reached utilising inbound marketing techniques. Digital interaction with customers generates huge amount of data. Its utilisation will not only help to develop more competitive products, but also enables ever evolving customer operations. It is verified that B2B companies that effectively use digital methods and tools in their customer interface, are doing significantly better in acquiring customer leads, nurturing leads to paying customers and retaining their existing clients.

 Besides evaluating overall digital marketing effectiveness, utilisation of real-time and predictive analytics as well as marketing automation are good yardsticks when estimating digital marketing maturity.

 Real-time analytics (e.g. Google Analytics and Coremetrics) can be used, for instance, to follow how visitors will find company website and how they interact with it. This will improve, among other things, customer acquisition cost-effectiveness and understanding of clients' needs and priorities. In addition, it will sharpen marketing communications more relevant. Marketing Automation (for example Marketo and Pardot/Salesforce) automates communications and maintains customer interest in the marketer firm. It makes it possible to serve customers with higher quality and more cost-effectively – and thus get more sales. Studies show that B2B companies, utilising marketing automation, get more and higher-quality customer leads and grow faster than their competitors. Predictive analytics (e.g. Totango and Kissmetrics) with sensor-based customer listening capabilities can identify e.g. customers at risk of churn or intensify cross-selling and upselling.

 Status of SMEs in Finland

 Then, let us look at how digital tools and methods are used in Finland. A Finnish trade magazine, Kauppalehti,
 database was used to pick randomly 108 B2B companies whose turnover is between 10 and 200 M€. Almost all the major industries were represented. Some, e.g. consulting, and construction were excluded, though the analysis is highly relevant to them, too. The selected companies are the best among their peers, so the general situation is hardly better.

 To get an overview of digital marketing effectiveness, the companies were examined with algorithm based automatic tool, see also the box on the right. The results obtained can not in any way be regarded as an absolute truth, but anyway, the tool is accurate enough to analyse the situation.

 We should be very concerned. The best Finnish B2B SMEs are below average in digital marketing, and almost every fifth of them are even rated bad, see the graph on the left. Only about 5% of the companies are good or excellent.

 The situation by industry is uniformly poor, only software companies stand out better, see the graph below.

 To get a domestic benchmark for the results, also the biggest B2B companies in Finland were examined (Finland top 20 in the graph). These enterprises are considerably

 more advanced, even surpassing the software company results. Because there is a clear indication that the Finnish big ones are not at the utmost forefront of the global development, the SMEs sector is subject to a resounding wake-up call.

 Next we examined the use of real-time analytics (by using an automated tool, see also the box above). More than one fifth of the surveyed SMEs do not take an advantage of it. It means that they in practise wander around in the dark, not understanding outcomes and shortcomings of their digital world activities. In the control group, on the other hand, all big companies in Finland are using the analytics. The most commonly used analytics solution, by the way, is Google Analytics that is free to use. US companies are a great international benchmark for the Finnish findings. There the big companies and also the SME sector seem to have faster adopted the use of analytics in their business operations than their Finnish counterparts.

 Only 5.6 % of the selected Finnish small and medium-sized companies take advantage of marketing automation. There are no major differences across various industries, few pioneers are emerging in almost all sectors. Every fourth of the Finnish big corporation benchmarks are utilising automation. In the United States, it is estimated that 25 to 60 % of large B2B enterprises use marketing automation. Correspondingly, studies show that the penetration in US small and medium-sized enterprises is at least 10 to 25%. High-technology sectors, followed by consulting and manufacturing industries, are leading the pack in the United States.

 None of the studied Finnish companies, neither large companies nor SMEs, used predictive analytics. Because of international examples, it is expected that those companies that have digital service elements in their offering will take the lead in adoption.

 Lastly, we studied how digital awareness affects business performance. Business growth, profit, return on capital, as well as the size of international operations were picked up from the Kauppalehti database. The companies under investigation were divided into two categories, based on whether they are rated to be in the top half in digital marketing (> 50) or in the bottom (< 50), see the graph below. The conclusions are very clear: on average the digitally-leading companies are growing faster and their profitability is better than those of their lagging counterparts. In addition, the international operations' share of net sales was clearly correlated to the digital marketing maturity.

 Conclusions

 On average, even the best Finnish SMEs are not taking care of their digital marketing very well or even satisfactorily. This is reflected in comparisons with large Finnish enterprises as well as relative to international benchmarks. And because utilisation of digital methods and tools is a key lever to achieve business success, we are facing a similar kind of problem as the whole Finnish economy: though business premises are good, the SMEs are capable of delivering significantly less than available potential. As an outcome, a company might face e.g.:

Sales of existing products is smaller than possible opportunities available, the reasons being inefficiency in acquiring new customers and inability to maximise customer life cycle revenues

Renewal and innovation are built on less and thinner customer insights, resulting in more product- and technology -centric development

Commercialisation and go-to-market of new products and business models are limping, potential customers and profits are not achieved

There are unnecessary hurdles for internationalisation, because one of the cornerstones - customer operations - is not competitive

 The situation, however, can be improved. Change is in the hands of small and medium-sized enterprises: they need to re-tool their strategies, processes and competencies to embrace new methods and tools in customer-facing operations - and then implement technologies that are supporting the new approach.Raimo Malilahttp://email@example.com 25.74815100000000747.677147999999988 -15.560442999999992 76.171072 67.056745tag:blogger.com,1999:blog-571376301174098105.post-66976411579715129172014-02-21T10:48:00.000+02:002014-10-16T19:14:17.435+03:00Internationalisation - a solution to get your troubles far away?
 Internationalisation is often seen as a trick that drives company's troubles away. This is not the case, however. For example, if the choice of the first target countries, finding channel partners or optimum location for your own sales office are initially the key issues, essential homework has not been done. Then you need a lucky break. And although you need luck in the business world, you must make every effort to try to improve your odds.

 A structured approach to internationalisation is connected to the company's objectives, strategy, competences and resources. In this case, it is not a question of tricks, but of evaluation, if it makes sense – and in what way - to aim for international markets. This post tackles the following core questions of internationalisation:

Why to enter new international markets?

Which are the key issues when planning internationalisation?

How to build internationalisation in a systematic way?

 These questions are relevant, regardless of whether a company is small or large, whether it is already making business in some foreign countries or is purely a domestic market or startup business. The post focuses on issues that are directly linked to revenue-generating market operations. Thus, for example, manufacturing or R&D resource driven foreign operations are not discussed here.

 Why international markets

 In most cases market expansion is driven by the reasons related to objectives or a business idea of a company, its products or customer relationships.

 Probably the most common reason for internationalisation is the desire to grow. It might be too difficult to increase market share in the currently served markets, or extension of the product range is not considered lucrative enough. Operating across borders can also be a basic premise for the business; for example, many startups coming from smaller countries find their domestic markets far too small to support a profitable business.

 Especially growth companies seek to aggressively increase the value of the company: e.g. to improve access to financing or to have better financing terms. Bigger potential markets and initial success in these markets will significantly raise the value of the company and its prestige among important stakeholders.

 The most advanced and demanding customers greatly assist in creation of such product functionalities, which also a wider market and laggards will find useful later. So, for example, Swedish car manufacturers were for a long time deemed the pioneers in the area of security, so cooperating with them was good for success also elsewhere. Today, Germans are leaders in many vehicle technologies, so the market pulls keen supplier companies.

 Many businesses have found that they cannot find customers for their products on the domestic market. The reason may be would-be customers´ lack of courage to adopt new solutions or business models enabled by them, or simply conservatism of an industry and its players. For example, a Finnish machinery component supplier, Visedo, were forced to seek first clients in Germany, Austria and France, because domestic players were not forward-looking enough to take the new solution.

 Key issues in internationalisation planning

 By identifying the business drivers of internationalisation, we can also evaluate globalisation activities conducted so far. They may turn out to be either a great platform to scale the business considerably or it might be best to forget them, because their value is null and void, or they would put the company in the wrong direction.

 After this, we will look at how company business idea and strategy affect on global expansion. In a similar manner, we will study in more detail company's products and total offering to customers, its differentiation strategies on the market as well as its customer-facing strategies. This will be used to create an overview of the capabilities and resource gaps that need to be overcome before one can expect success in the new markets.

 Business concept and strategy

 A company's business idea defines the target customers, its offering and how the offerings are produced and made available for customers' use. If a company is customer-centric, its target segments and their needs also strongly influence offering properties. When globalising the key is to understand how well the new market customer segments and their needs correspond to the ones in the existing market. Many companies, however, have a technology or product based strategy. This emphasis the need to find in the new markets customer segments and customers that find company technology or product features compelling and value generating.

 As a result, any plans to internationalise raise the following questions:

Is the business model in today's market well-tested and can it be replicated to new, international markets?

Is there willingness and ability to change the current model and how much?

 Most of the incumbent companies will end up on the fact that the way of working of the home market cannot and should not be directly copied into new markets. On the other hand, if the business is created global from scratch, as in the case of, e.g. cloud service or application startups, the biggest challenges will again be product, differentiation and customer interface related ones.

 Product

 Absolute requirements of the market, customer preferences and total offering required by customers are the key product related dimensions. The Internet and social media tools have brought tremendous agility and cost efficiency to the understanding of these issues.

 The absolute requirements are usually easy to understand and find out. They include local government approvals and other compulsory localisations. The latter include, inter alia, translations of marketing and user documentation and support of local standards or practises. For example accounting programs require support of local regulations.

 More challenging is to evaluate new customer preferences in target countries and their influence on product properties. Of course, there are self-evident things, such as the need to adapt sizing of clothing company collections when moving from Northern Europe to Southern Europe or South East Asia. When we move from technical characteristics to emotional likes and dislikes, local preferences start to dominate. For example, a children's outdoor clothing manufacturer, Reima, has discovered that in Russia, consumers prefer different colours in children´s winter clothes compared to Finland. Increasing global uniformity of values, practises and consumption have created very homologous, international segments - in these cases the need for local preference modifications is small. E.g. many Internet consumer service companies take advantage of this.

 Also in new markets, customers usually expect to have a total solution. In many cases, it may significantly differ from the one in established markets. When complementing products or services require external partners, availability and access to them in target markets should be separately assessed.

 Differentiation

 It is important to be different from competitors, because without it, a company needs to typically compete on price. And because most of the competitors have the same customer value-adding product features, differentiation based on artificially created new product features will succeed rarely. Unless there is something new in the product or business model that clients really appreciate, the solution is to look at a company and product image - which again puts emphasis on company's positioning and branding.

 Differentiation formulae of the domestic market is not necessarily transferable to the new target countries. For example, a clothing and textile design house, Marimekko, have a strong brand in Finland supported by a long history, distinctive, locally-luminous leading figures and unique collections with locally well-known designers. When company activities have become more globalised, it has been noted that the domestic brand concept is not necessarily bringing success in other markets.

 It is essential to understand that a company and its products do not have to be widely known in the new market, as long as it is well-known in the target customer groups. Who, for example, knows Wärtsilä and its ship engines, if one is not belonging to their target customer groups? In addition to being able to create awareness of the product, it is important that the company's products have a reasonably good reputation and that the target customers are hungry for these products. When we go into a new market, a company usually starts from scratch: it is not known and the clients do not have a special longing for its products - on the other hand, it still has a very neutral reputation. It is worth considering how much, for example, current market references, globalised sourcing decisions and consumption habits, as well as international operations of existing clients could help in the development of the brand. And it is always possible to re-position the company completely, at least in the international markets.

 Customer acquisition and retention

 Although business idea and strategy, products and total offering as well as differentiation in the new markets would be okay, no success will come without being able to acquire and retain customers. Looking this another way: even the best systems, people and partnerships for demand creation, deal closing and customer loyalty do not bring results, if the previously discussed basics are not in good shape.

 The essential steps of the customer relationship cycle include creating awareness among potential customers, building interest and willingness to buy, deal closing and customer retention. If a company is capable of differentiating itself in the market, it is already a good start. A model that has been developed and tested in the domestic markets and that is capable of generating enough demand and revenues, is a good basis for developing activities in the new markets, too.

 The key is to understand to what extent the established market practises are suitable for the new markets: which of them can be utilised and what kind of capabilities and resources the company has to change the existing way of working. For example, use of media advertising, solution sales process renewal or web enabled customer service could be considered as corrective tools.

 Entering new markets will be most often done with thin investment and expense structure. Fortunately, different types of Internet and social media based marketing, sales and customer relationship management tools provide cost-effective ways to get ahead. A more traditional approach is to build partnerships based marketing and sales activities: the danger is loosing touch of customers and the market, which, at worst, will soon destroy company's competitiveness.

 Systematic internationalisation

 After own motives and capabilities in relation to the company´s business objectives have been studied, the decision can be either to go forward or to focus on other business initiatives that are more lucrative or urgent.

 If it is decided to continue, a preliminary assessment of capability and resource gaps in the internationalisation should be made. It is also important to determine whether the gaps should be filled with building the capabilities and resources in-house or whether partnerships would be the solution. For example, a company may decide to build sales, marketing and customer service capabilities in the new target countries by itself or it can rely on channel partners.

 When still known gaps in the market information have been filled in, a detailed plan for the internationalisation can be made with priorities, timings and budget. At this stage, the target market and channel partner selection issues are already relevant.
 Raimo Malilahttp://email@example.com 25.74815100000000747.676419999999993 -15.560442999999992 76.17179999999999 67.056745tag:blogger.com,1999:blog-571376301174098105.post-69929618935331912962014-02-06T09:39:00.000+02:002014-02-06T09:39:24.797+02:00Go-To-Market: more customer-centric, hungrier and more agile
 Turbulent market environment is constantly changing business and competitive conditions. New technologies blur industry boundaries, shorten product life cycles, change business models - and bring new competition through globalisation. In this environment, Go-To-Market (or GTM) success is becoming ever more important - competitive advantages are less and less sustainable; instead of technology and supply factors, demand and customer interface capabilities are becoming increasingly vital.

 Today, most companies already have functioning GTM processes. They are useful in commercialising a new product or business model, opening up new markets or even when a new company has been acquired.

 This paper will first introduce GTM process and its benefits. After that some of the pain points will be discussed, and we shall show, how a more customer-centric, hungrier and more agile approach will boost results.

 GTM process and its advantages

GTM activities make company's business strategy concrete by delivering its solutions and their value to target clients, see also a simplified picture below. In reality, however, GTM is a process, which covers activities from definition of a product to pricing, distribution, marketing, communications, sales and customer support.

 Benefits of a well thought and implemented GTM process include:

allocation of resources to the most lucrative business opportunities

prevention of organisational silos

cooperation between centralised and decentralised activities

sharing best practises and learning

 Metrics need to be created for GTM processes. The intent is to evaluate product and business profitability. Evaluation of project success already in product development and, respectively, GTM phases, ensures that resources are allocated only for the most lucrative opportunities. GTM thus acts as a tool to develop company's product portfolio.

 Secondly, GTM process and project objectives bring together different functions of an organisation, thus inhibiting silos. This will also ensure that all the necessary skills and knowledge is just in time and adequately available. In addition, it is easier to create new practises in domains, which are new or require very different types of knowledge-based inputs. Smoother cooperation between marketing and sales activities is often highlighted as a great example of GTM process benefits.

 When a company expands and becomes more globalised, it also needs to grow certain functions on a decentralised basis, in other words, close to customers locally. These include, for example, implementation of marketing and communications, sales and first level customer service. GTM process links centralised operations, such as specifying a product and planning of marketing and communications, seamlessly with distributed ones. Also GTM project objectives, strategies and other guidelines are centrally defined. In addition, prioritisation of regions and countries is usually centrally managed. By centralising selected GTM activities, duplicate work is avoided and local implementation gets adequate support.

 GTM also allows for sharing of best practises within a project and between projects. Thus the most successful ways of working of the best individuals and teams become an integral part of the entire company's expertise, which is then available and repeatable from a project to another.

 Improvement needs

 As such an existing GTM process does not guarantee success. Among other things, drastically changing customer purchasing behaviour, multichannel marketing driven by digitalisation and new business models are forcing GTM models for continuous improvement.

 More customer-centric GTM

 Company products need to resonate well with customer needs and market demands. Thus increased influence of both consumer and corporate customers in the various stages of purchase process calls for rethinking and adjustments in a way a company approaches market. It is also important to find unique customer segments, whose needs can be met better. To tackle all this, GTM activities need to be built to meet customer relationship objectives and strategies, giving possible internal legacy requirements second priority.

 Market studies conducted before product development start do not guarantee that products match with customer needs. Rapidly changing markets require that development activities are closer integrated with customers´ feedback on products. Customer development, which has its roots in the startup world, is playing a growing role to facilitate parallel product development and customer testing. Especially huge progress in the development of Internet and social media tools allows for market testing and possible corrective actions already in the early stages of product development. In a similar way it is possible to figure out target market prioritisation and GTM activities localisation needs.

 Hungrier GTM

 Overall effectiveness, quality and cycle time can be considered as baseline yardsticks of GTM process. However, this is not enough. Tougher business metrics should also be introduced: lead generation impact, sales increase and evaluation of GTM process on the basis of return on investment (ROI). By focusing on business outcomes, we can get rid of bureaucratic way of working, where checklists dominate over hunting for results.

 Digital marketing and sales methods have been at the forefront of bringing measurability. But technologies are not to be seen here as masters but slaves - or enablers at most. The key is to create GTM strategies and processes that focus on right things. Furthermore, we should not forget people, who run the process and who truly need to understand and know how to operate the new fact-based model.

 More agile GTM

 Although a company would have created the world's best client-centred and business metrics-driven GTM process, it does not insulate the company from changes in the operating environment. These challenges require adaptability, responding by foresight or by further developing own activities. The keywords are continuous improvement and best practise sharing.

 Activity and environmental data collection and analysis, as well as test and learn principle are the cornerstones of continuous improvement. Data insights lead us to the real issues and improvement options, which will be verified for operational scaling by testing. This makes it possible to avoid costly mistakes made with non-working or outdated GTM practises, and paves way for better results.
 Raimo Malilahttp://email@example.com 25.74815100000000747.676582499999995 -15.560442999999992 76.171637499999989 67.056745tag:blogger.com,1999:blog-571376301174098105.post-38921847890418099282013-12-19T11:44:00.000+02:002013-12-19T11:44:08.987+02:00Ass laden with gold and other means to conquer new international marketsPhilip, Alexander the Great 's father, is said to have remarked that with a gold laden ass one can conquer an invincible castle. Such tactics are not appropriate in today's market conquest, but instead, this post presents some ideas on how a company can make its path to international markets easier.

 As a prelude an example of GSM system sales in Germany early 1990s. Initially, our main target was just licensed mobile operator, Mannesmann Mobilfunk or briefly D2 (now Vodafone Germany). Our starting point was not good. As a system supplier, we were very poorly known in Germany, and we did not have anybody in the country to promote our business.
 But after all, we had something over there: TV product development, manufacturing and maintenance, PC maintenance, cable machine operations and much more. Some of our German operations were also global market leaders, e.g. in rubber mats for airport luggage carousels. We utilised these assets to build our marketing messages: our local presence, commitment and capabilities to support mobile operators. But we were beaten. That time we did not win the D2 deal. But we learned and gradually built a more solid foothold in Germany - and as a result won very significant deals with Telekom (D1), E-Plus - and also with D2.

 In the following paragraphs we take a closer look at where companies can find building blocks to break into new markets.

 Other businesses

 A company, which already has an existing business in a new country, should make use of it. Typically, a new business is not known, it lacks credibility, it is not seen trust-worthy and it is missing connections with potential customers and other business-critical players.

 An existing country commitment sends a strong signal that also the plans related to the new products are serious and long-term. Secondly, local company infrastructure, such as offices and websites, can be used as stepping stones for building local presence. Thirdly, it is possible to use the relationships and contacts created by the already established businesses and their key personnel to lower the barriers to create new customer relationships and other partnerships. Although in the German example above, we were not immediately able to achieve positive results, credibility and support created by our other German businesses greatly reduced the time to close the first deals.

 Local partners

 If a company does not have prior operations in a target country, also partners can become helpful. Besides rapid establishment of activities, partners can provide, for example, complementary resources, required local flavour or existing relationships with target customers. For example, we managed to win a GSM system deal with Austrian Federal Telecommunications Authority (ÖPTV) through partnerships with local Kapsch, Schrack, Siemens and Alcatel. The biggest benefit was getting involved in local, slightly political decision mechanism, but the partners contributed some know-how assets and customer understanding, too.

 The spectrum of potential partnerships is very broad, ranging from agents and representatives to manufacturing cooperation and mergers and acquisitions. Besides longer term goals, also risk and control are important factors to consider when selecting partnership models. For example, a local distributor or reseller responsible for customer sales minimises risk, because there is no need to invest in offices, distribution, sales force, marketing and customer support. On the other hand, control of the market is reduced: for example, what kind of market activities are conducted and how much customer and market understanding is accumulated. All this limits degrees of freedom in company's future market operations. Greater control generally requires greater own investments - this also makes it possible to better define company's future aims.

 Piggybacking

 It is also possible to follow internationally domestic or other established market business partnerships. This is called piggybacking. Typically, customers and distributors are the players that you should look at.

 When a principal company expands its operations internationally, its suppliers often have an opportunity - in practise often an obligation - to follow it. Especially in the B2B markets, this is a useful model of internationalisation. It is usually assumed that a supplier will invest enough in new markets. Besides sales and customer support, it may mean building of operations and R&D capabilities. But there is a risk that resources are too much focused on the original client company. This makes it difficult to acquire new customers in the territory and exposes the supplier too dependent on one principal's business fluctuations. Nokia mobile phone business and its subcontractors are an excellent example of this. Nokia pulled for example, Elcoteq, Perlos and Savcor to new markets, where these companies were not able to adequately expand their bridgehead positions.

 If distributors, system integrators, retailers and other distribution chain players manage to create on one of the markets healthy and successful business with a company´s products, they have a strong incentive to try to repeat the same in other areas too. Distribution partners may be already present in these new countries or the countries may be for some reason easily accessible for them. If a company does not create own understanding of new market needs and potential, its long term operations and success may be at risk. As an example of distribution cooperation we look at the Spanish system integrator, Omnilogic. Over the years, we had successful cooperation in Spain, where Omnilogic took care of close to all customer contacts and deliveries. Later, the company expanded into Mexico and South American countries, thus opening the markets also for our products.

 Other opportunities for international expansion may appear, for example, through technology vendors and financiers.

 Digital tools

 Digital marketing and sales, as well as compelling content, are a great way to pave the way for the creation of new markets. The key is to create in the target market company awareness among potential customers, their trusted thought leaders and other key stakeholders. Company website, localised for the new markets, is the centre of all action, providing target groups with important and interesting content. The target is to attract visitors to the website by participating in discussions both on traditional and social media.

 In many cases, it is also possible to acquire customers through the web. A localised, or even an international online store, together with content marketing, can attract leading-edge customers. These are very important as the company penetrates more deeply into the new markets.

 Modern inside selling tools can be used to sell also quite demanding products without a local presence. If, however, the complexity of the product, or other factors require local support, inside sales can assist to successfully pass the first customer decision criteria, thus creating better pre-conditions for the expansion to new countries.

 Different business model

 Business models that are different from the ones used in established markets are often a good way to penetrate challenging markets. There can be changes for example in monetisation logic, ways to approach customers and company's offering.

 Licensing is natural for the companies that own a specific factor that is important for competitiveness. Such factors may be the brand of a product, its design, technology or manufacturing process. Licensing is also a risk-free way to get a new product on the market and customise it to local requirements. A locally established licensee partner gives an end product a local flavour, so licensing is particularly suitable for countries with high entry barriers. The challenge is the legacy that licensing creates, if a company later tries to build deeper market operations.

 Franchising is a fast way to build a presence in new countries. Typically, it is used for providing consumer or business services.

 Nokia's U.S. market entry utilising Tandy - Radio Shack brand and distribution chain is an example of complying to local requirements in customer interface. In a similar manner, Nokia cooperated with Alcatel and AEG in GSM base station development and marketing to create access to new, previously closed markets, such as France and Great Britain.

 Spearheads

 Spearhead tactics can build a beachhead in a new country. The goal is to use a selected product or service to create relationships with first customers and then deepen this relationship by selling more. Since the first deal is not yet meant to produce profits, pricing can be aggressive or the product or service can be even provided free of charge. Low-cost experiments, or pilots, are often used to reach the same target. The Internet makes it easy to create free service offerings, whose sole purpose is to market a company and make actual product sales possible.

 The last example is from the same country as the first one, Greece. We sold the local Telecommunications Authority, OTE, a cellular network planning and measurement tool. The sale was not as such profitable, but it enabled us to create a client relationship and also awareness of our capabilities in the market. Later, we were rewarded handsomely.Raimo Malilahttp://email@example.com 25.74815100000000747.676419999999993 -15.560442999999992 76.17179999999999 67.056745tag:blogger.com,1999:blog-571376301174098105.post-33621440635587678102013-12-12T12:46:00.001+02:002013-12-12T12:59:34.519+02:00With a little help from my supplier friendsIt is no use to develop only a little bit better product. Just adding new features is seldom the way to build company competitiveness and increase sales. Customer value is created by bringing additional benefits or pleasure. This often requires business model change.

 Also Finnish companies have a lot of room for improvement. Too often business growth efforts are product-driven, with only marginal product improvements or changes.

 When innovation is customer-centric, there are no more limitations to consider also skills outside the firm. Innovation can be based on building blocks originating from customers, suppliers or academia. This post focuses on the supply partners.

 First we shall go through an example in which a company had a strong vision of disrupting an industry and bringing new value to customers. Because the company did not have in-house all the competences needed for the new products, it created various partnerships with technology suppliers. As a final ingredient for success, also a new, innovative business model was created.

 Somewhere in California

 In November 2000, I spent half a day at PortalPlayer, a company in Silicon Valley to meet their management and experts. The company was small, about 100 people; I came from a large, successful mobile communications company. The core know-how of PortalPlayer were solutions for portable music devices. The solution consisted of a dedicated music microchip, embedded software and a PC application. In addition, the company was able to provide a reference design for customers' own product concepts. In our company we were studying ways to expand our business and music-related products were also under consideration, thanks to the emergence of first MP3 players and Napster. Although I was impressed by Portal Player´s capabilities, we did not start any cooperation with them nor were capable of developing music related businesses at that time.

 Around the same time with my visit, another Silicon Valley company and their CEO envisioned creating and providing new, music-related experiences and solutions to consumers. The name of this company was Apple.

 Apple had already made the decision to bring music management software for iMac computers. It was based on the SoundJamMP product, whose developer Apple acquired in July 2000. After some further development it was first launched under the name of iTunes in January 2001. But Apple wanted much more than that. The next step was supposed to be a portable MP3 player. Extremely high requirements were set for the player, with usability and value to the user raised to a whole new level compared to its competitors in the market. It was not important for Apple to design the electronics and the operating system by themselves, so they signed an agreement in early 2001 to use Portal Player reference design as the basis of the new device. iPod was launched in October 2001, and supporting iTunes music store in April 2003. The rest is indeed history.

  Back in Finland: Too few ideas and too much risk avoidance

 Also Finnish companies need to continuously improve their competiveness by bringing new products to market. Very different types of targets can be pursued. According to an often used breakdown, a company can expect benefits in one or more of the following areas:

Improved customer experience and customer engagement

More streamlined operations

New business or business model

 Synergy recently published a research paper, in which it examined innovation capabilities of 50 Finnish companies. All the companies operate internationally and all have significant development activities in Finland. In addition, the results were benchmarked against corresponding international research, consisting of 200 companies. The conclusions were clear: Finnish companies' projects focus too much on marginal improvements and the companies also have a shortage of good ideas. The study has other good observations, but this post is not discussing them further.

Innovation in Finnish firms vs. global benchmarks

 When the results are investigated in detail, it is found that Finnish companies avoid risk compared with international counterparts, see also the image on the left. This is reflected in the high proportion of product improvements and modifications as well as additions to existing product lines. Although a better customer experience would be a key objective, probably also lower material and personal costs are important drivers. This is not the way to build competitiveness.

 Similarly, compared with the control group, the Finns invest lazily in projects that create new businesses or new, genuine innovations. And since the improvement of customer experience and retention are often outcomes of new business models, many of the companies are thus loosing the potential for higher margins.

 Synergy's research also showed that many companies rely too heavily on in-house expertise and resources in generating new product ideas. There is not enough attention to understand customer needs, and the appeal of ideas is not tested with customers early enough. Similarly, if a company culture over-emphasizes technical or product-related know-how, suppliers and partners are easily left with a mere implementer role. As a consequence, new ideas and solutions, which would make it possible to take bolder development moves, are often effectively hidden.

 Conclusions

 Both the results of studies and the above example show that customer orientation and open-minded cooperation with other companies are the key to a successful business.

 The great promise of seeking ideas and solutions from other companies is to have access to the best experts in each of the competence domains. The challenge is to find the right partners and to be able to create a close and trusting relationship with them. In order to partnering be truly useful, a company must be able to build through customer understanding a clear vision of the new brave world that will be available for their customers.

 In addition, company processes need to support innovation with others: division of labor between own and other companies´ efforts as well as integration of the outputs. Also, there must be changes, how potential partners are discovered. The key is to keep eyes and ears open for companies that have an offering that could help to implement the targeted customer benefits. Thorough preparation of specifications for external purchasing and strict competitive tendering are well suited only for marginal product improvements and extensions. In some cases such advanced cooperation models as consortia and innovation communities might prove to be most successful.

 And finally, in the development of new business models, supplier partners are - if possible - even more important. Besides ideas and solutions, these might have such kind of knowledge and insights that will help clearing up the previously insurmountable obstacles.Raimo Malilahttp://email@example.com 25.74815100000000747.676419999999993 -15.560442999999992 76.17179999999999 67.056745tag:blogger.com,1999:blog-571376301174098105.post-41297407690553854672013-11-28T10:03:00.001+02:002013-11-28T10:03:50.305+02:00Local mobile services - saviour for offline stores ?Consumer buying behaviour change, driven by digitalisation, is inexorably advancing. This challenges consumer product companies to take advantage of new models to utilise the change. For traditional retailers, having physical stores, e-commerce growth means a serious threat. But after years of false promises, local mobile services based on wireless proximity technologies are wakening up. At best, they could get modern, digitally informed consumers to use their money in brick and mortar shops also in future.

  Local services not-so-successful history

 When computer-like features started to gradually appear in mobile phones in the 1990s, there was also a wave of interest in local services supporting retail merchants. In 1999, I was involved to establish a startup with a mission to use only recently published Bluetooth (BT) technology to send marketing messages to phones that were taken to shops. After that, I developed similar type of businesses at a large Finnish mobile phone company: in 2002, for example, we created patents for applications in local services context and for shopping experience improvement tools. Neither the startup nor the big company case turned out to be a success.

 A number of other projects came up, both in local mobile marketing and in local payments. In addition to Bluetooth, for example Wi-Fi, RFID (or its offspring, NFC, widely used in mobile phones) and IrDA technologies were in use. For example, in the United States Wideray IrDA solution offered local data services for offline businesses. A little later, Wideray landed also in Finland, where Sonera's also Bluetooth-enabled iJack service was used, among other things, by individual stores, shopping malls and restaurants.

 Wireless local marketing of brick and mortar stores has not really taken off in the last ten years. Today, it is easier, however, to analyse the reasons. The main obstacles were the factors related to retailers, ecosystem and mobile devices, for example:

E-commerce has only gradually disrupted retail business, its global value in 2005 was about $ 150 billion - the forecast for 2013 is already $ 1.2 trillion

Digital marketing has only recently established its position as a major tool for retailers and consumer product manufacturers

Mobile marketing formats and business models were underdeveloped for a long time; ten years ago, the global market size was only around 100 million dollars, the 2013 forecast is close to $ 15 billion

The number of mobile phones suitable for local marketing, i.e. smartphones, had a sharp increase only after 2007, after Apple launched iPhone; iPad tablets first came on the market only in 2010

Usability of smartphones has not been very good; easy to use applications enabled by app stores and other usability improvements have gradually changed the situation

  The great promise

 Next we shall discuss factors which, if successful, could make local mobile services a significant marketing channel - or, if this is not the case, delay realisation of the great promise till not foreseeable future.

 Retailers and digital change

 Consumers' growing willingness to use digital channels has resulted in a huge increase in e-commerce and fierce price competition, which affects both online and offline merchants. Price competition also lowers margins, which creates pressure on consumer product manufacturers, too. In addition, digital channels have become key information and communication tools between brands, retailers and consumers.

 In this context, both traditional brick and mortar merchants and their vendors are looking for new success factors by creating new, digital in-store experiences. By approaching customers when they are presumably ready to buy, i.e. when they are already in-store or in the immediate vicinity, marketing messages can be targeted much more precisely than when using only standard user profile and behaviour based models. The potential value of these messages, both to consumers and marketers, is therefore very high.

 Mobile payments, as well as access to product information through reading QR codes or barcodes have been the main drivers of mobile device utilisation in stores. In addition, also local digital in-store marketing will benefit from wider and wider use of mobile technology. Marketing tools provide consumers, among other things, with information about new products or promotions, coupons, store maps, shopping lists, recipes, and other additional services that support products or purchasing. Identification of consumer location is the prerequisite of the service provision, and there has been various technologies available for that for a quite a long time.

 Although the benefits of local digital marketing for merchant business are very concrete, the ultimate question is, however, consumer willingness to receive marketing messages and use related services. On the basis of recent studies, consumers seem to increasingly want local digital marketing, but it is not yet clear whether this is enough for large-scale deployment. It is also fair to assume that consumers must be able to determine who and when can approach them.

 Ecosystem and development of mobile devices

 Perhaps the most important event in the development of the ecosystem was Apple's recent iBeacons concept release. iBeacons enables low-cost Bluetooth Low Energy (BLE, or BT Smart or BT 4.0) beacons. They emit signals that Apple smart phones or tablets automatically react to when they come within range of the beacon - maximum distance of up to a few tens of meters. Offline retailers can use the concept, for example, to allow payment anywhere in the store, for coupons and other local advertising.

 A number of BLE beacon manufacturers have already entered the market. For example, Estimote offers three beacons for $ 99, Sonic Notify ten pieces for $ 300 and Roximity service costs $ 10 per month for one beacon. Adomaly is an advertising network to reach consumers in-store using beacons.

 NFC technology use, again, is widely supported by mobile phone vendors, mobile operators and payment service providers, but it is already widely predicted that its growth will be stalled. The problem is that key stakeholders are often competing with each other, which has led that NFC software package is not widely enough available in phones. In addition, Apple has not been favourable to NFC, and it looks that BLE will be positioned as a direct competitor to NFC in local mobile payments.

 Amount of smartphones and tablets, as well as their usability are already at good enough level to boost local services mass market. Although all the major software platforms have their own application stores, processes and models to bring also store related applications available for consumers are already sufficiently developed. Notably, Android platform is the most fragmented one, in Apple and Windows Phone environments there are less problems.

 BLE is already supported by most iPhone models, 4S, 5 and the newer ones, as well as by Apple´s tablets. In many high-end Android devices manufacturers have already implemented BLE support, and the support on Android platform level is coming in the near future. By the end of this year all the Nokia Lumia WP models will also support BLE.

 In summary, local mobile marketing is still a great promise for retailers and consumer brands - but realisation of the promise still faces significant stumbling blocks that need to be avoided:

There needs to be a common mode and format of communications between consumers, retailers and brands, and this needs to be supported by a sufficiently wide range of mobile device manufacturers and other ecosystem players

Offline merchants need to be willing to build the necessary local infrastructure in their stores, and use it effectively for marketing and other customer relationship activities

Consumers need to be willing to adopt a new, mobile device based way to get information about products, access promotions, pay for purchases, etc.

 Raimo Malilahttp://email@example.com 25.74815100000000747.676419999999993 -15.560442999999992 76.17179999999999 67.056745tag:blogger.com,1999:blog-571376301174098105.post-6505847432177827672013-11-20T11:11:00.000+02:002013-12-12T17:38:55.604+02:00How to sell an innovative solution to conservative firmsI have many times come across a statement that company's customers are conservative and, therefore, selling them a new, innovative solution is difficult and slow. These customers include machinery industry, construction, services companies - and so on. This is partly true. But only partly - often company´s own legacy, ossified ideas and practises, is a major obstacle to commercialise new products and business models.

 Industry after industry has seen its traditional business truths radically changing, driven and enabled by globalisation, digitalisation and other change forces. Also in disrupted industries, companies have complained about conservatism of practises and customers. And even though an industry sector would not be experiencing outright disruption, greater efficiency measures as well as marginal refinement of products and business models are not sufficient to ensure future success.

 Current well-established way of working, with existing products, business models and customer approach need to be questioned when new solutions are brought onto the market. This post presents food for thought to consider ways, how to reduce obstacles to commercialise new, innovative solutions.

 Sales process renewal

 When a company develops a solution that will bring business benefits to customers in new ways or whose business model is different from usual, old recipes to conduct sales are no longer successful. A new solution can bring to customers a whole new range of benefits, which often in turn means that both buying process and its main influencers are changing. Thus it is up to the company, developing an innovative solution, to rethink its sales process.

 Adoption of new solutions requires strategic considerations in client companies, which in turn takes decision-making higher than usual, often the senior management level. A vendor company must be able to influence these higher-level influencers much more deeply and using the language that they prefer. This calls for linking the benefits of a new solution to customers´ key business objectives. Supplier company´s top management commitment to and participation in sales work is also of utmost importance.

 There are often parties in client companies that in the past have received less attention, but to whom the benefits of a new solution are important. For example, persons responsible for environmental affairs will surely appreciate solutions that help to reduce the environmental footprint of a client company or the one caused by its products. On the other hand, customers' financial officers may find business models that are based on costs proportional to income, instead of investments, very lucrative. In addition, e.g. business management and development, as well as sales and marketing management are more traditional, potential allies. It is essential to have at least one senior protagonist in a customer company, who can help to navigate client´s decision-making depths and shallows.

 Just as important as finding allies, is to identify and neutralise potential opponents of a new solution. The key here is to understand the mechanisms how a solution changes a client company and thus identify the influencers, who may react negatively to change. Cooperation with protagonists makes this much easier.

 Sales and marketing tools renewal

 Finding right buyer contacts in customer companies is not enough. It is also worthy of developing suitable sales and marketing tools for innovative solutions. They are needed to handle reactions and emotions that relate to encountering new things, such as uncertainty, scepticism, ignorance, suspicion and fear. And because the issue is not simply communicating facts, it takes longer than usual to win customers. Here are some impetus to renew company toolbox.

 Typically, more than half of the customers' buying process is over, before they are ready to meet with representatives of supplier candidates face to face. And in the case of new solutions, customer engagement needs to be started even before customers consciously initiate their buying process.

 At the centre of this are digital sales and marketing tools, in particular inbound marketing. If at all possible, the target is to achieve thought leadership in areas that relate to a new solution and that are important to customers. This is done by presenting in-depth and well-justified information. The aim is not yet to sell a new solution, but to show company's in-depth understanding of the customers´ business environment challenges. Thus it will be possible for the customer base to adopt innovative features of the solution. Marketing and sales need to seamlessly and overlapping work together; when a customer demonstrates willingness to consider a new solution, it is time that inside sales and traditional field sales grab the baton.

 Benefits justified by numbers are important to overcome customer doubts. Various modelling and simulation tools can be provided either free of charge or with a reasonable cost, acceptable to customers. Tools can be provided either via a web based service or as a standalone application. Web based tools are easier to link to other digital marketing activities. As with all aspects of digital content and tools, you should consider all of the key customer influential parties: for example, needs of financial officers and environmental people are very different.

 A new, innovative solution is rarely accepted before experimental use, a pilot. Other clients´ pilots may of course be good reference cases, and in the best case they can also be utilised as part of content marketing activities.

 Influencing through customers' customers

 Customers' willingness to adopt a new, innovative solution can also be affected through their own clients. The basic idea then is that customers´ customers will appreciate and want the benefits that a new solution would make possible. In the best case, this may even mean that they specifically want a solution of the supplier company as a part of the overall solution they purchase. For example, a machine or device vendor may be able to convince its system supplier customer's customers that its new solution, utilising sensor and Big Data technologies, should be a part of the total supply. Consumer customers, on the other hand, appreciate for example Shimano bike parts, and Intel microprocessors, thus creating a strong pressure on bicycle and computer vendors to use these components.

 Utilising customers´ customers requires two things:

A company is able to understand the business of its customers´ customers and to determine the benefits that the company solution provides them

A company must be able to communicate these benefits to customers´ customers

 Digital tools, and in particular, inbound marketing, are an excellent and inexpensive way to reach end customers. The same type of tools can be utilised as in the case of actual customers; the content of course, needs to be adapted for a different target audience.

 Partners in strengthening the messages

 Partners typically complement a company 's offering and business model. In addition, they often have a significant role in overcoming customers' uncertainty and other obstacles to adopt a new solution. In order to successfully utilise partners, a business model must provide also them with enough stimuli to work actively together with the supplier company.

 A good example of a complementary offering are services provided by partners: by agreeing on cooperation with an installation and commissioning company that is trusted by client companies, a machinery or equipment company can lower purchase threshold. Another option for this kind of company is to have a new solution as a part of a larger system offering, provided by a company well-known among customers. A third example, again, makes it easier for customers to accept a new solution by including elements of a component supplier, highly appreciated by customers.

 Finally, a few words about second sources. Purchasing processes of many companies require second sources for key components or sub-assemblies. This is challenging for companies that use innovation as a means to differentiate themselves from other market solutions, aiming hereby to gain competitive advantage. However, customers need to be convinced that their business will not be greatly disturbed, even though a supplying company would face severe problems. Different types of contractual terms, such as escrow paragraphs, can give restricted security. Licensing a new product to other manufacturers or system suppliers is an example of other ways to solve the problem.

  Utilising influencers

 Especially in the early stages of the buying process, customer companies are looking for information from sources on which they rely. These sources are herein referred as influencers or advocates. The influencers may be individuals, consulting firms specialising in the industry, research firms, trade publications, etc. Their assessments, reports and opinions often have a major impact on which supplier companies and solutions customers are taking a closer scrutiny.

 The most important thing when convincing advocates is to provide them with tools to increase their social capital: helping them to make their reputation better and increase their visibility. When information related to company's innovative solution is accompanied by new insights and views, it will have good chances to be accepted and further shared by influencers: resulting in increased customer awareness and appreciation.

 Besides traditional mechanisms, such as face to face consultation, advocates can be efficiently and cost-effectively reached through the Internet and social media. In particular, inbound marketing tools make it possible to target right parties with right messages at the right time. Inbound marketing activities, as well as other activities to engage with influencers, must begin early enough. In practise, this means parallel execution with solution development.

 If clients´ customers or partners are important for the commercialisation of a solution, similar type of measures as described above can be conducted to reach them.

 Utilisation of pioneers and revolutionaries

 Existing customers are known to be the most receptive ones for new solutions, due to close relationships between the two companies and their proven appreciation of the supplying company's solutions. But some customers are more innovative and faster than others. These customers should be identified, and sales and marketing efforts should be focused to them. Pioneer company references are then worth gold when tackling slower and more conservative customers.

 If current customers do not find the courage to use a new solution, it is worth to look for industry customers, who are willing to rebel against prevailing ideas. These may have aggressive growth targets, desire to differentiate their offering and business model or they may strive to innovate using their broader ecosystem. As always, a company should not just wait to be contacted. It should identify interesting players and approach them with messages that fit with rebellions´ business objectives.

 Revolutionaries that are industry outsiders are ultimately most open to new ideas. In the best case, a supplier company with an innovative solution is thus pulled to huge success - if things turn out to go badly, an outsider is excluded and forgotten.

  Conclusions

 This post is meant for companies that are developing - or planning to develop - new, innovative products and that are facing significant challenges to commercialise their solutions due to customer conservatism and inertia. The key conclusions are:

Potential customer and industry conservatism is just an excuse for innovation laziness and poor results; a company should also be able to renew itself; besides new solutions, this means new approaches, methodologies and tools for commercialisation.

To commercialise a new solution, a company needs to be active on the market early enough; the ultimate goal is to reach thought leadership in the discussions related to the new solution topic; digital media tools make this possible in a cost-effective manner.

Development of a new solution and its commercialisation should be overlapping activities; market and customer commitment to a new solution is best achieved by listening to customer needs, by giving them the building blocks to first understand the value of a solution and by supporting them when they use this value in their business development.

 Raimo Malilahttp://firstname.lastname@example.com 25.74815100000000747.676582499999995 -15.560442999999992 76.171637499999989 67.056745tag:blogger.com,1999:blog-571376301174098105.post-63344761772206155062013-11-14T10:02:00.000+02:002014-10-16T19:18:08.301+03:00Shotgun tactics when selecting international marketsA business acquaintance told me an interesting story about expansion into international markets. The starting point was four Finnish companies that wanted to start international sales. The companies wanted to cooperate as much as possible to minimise costs. Experts of internationalisation as well as public support organisations suggested that the companies should start by entering a very well-known neighbouring market, Sweden - and set that as a precondition for any funding support. The companies rejected the proposal. Instead, they hired a shared export manager and began an extensive round of testing the markets, the main instrument was trade fairs in over 20 countries. On the basis of this round, one of the companies launched successful international operations in a Western European country, one in East Asia, one in the United States, and one - in Sweden. If the companies had believed advisers, it is very likely that only one of the companies would have been able to successfully launch its export activities.

 This post sheds light on why shotgun shooting tactics, as it is often called, is a feasible alternative when a company is planning to enter international markets or an established company launches a new product internationally.

 International market selection

 There seems to be a broad consensus on prioritisation and selection of international markets among internationalisation experts and researchers:

The first step is to select the markets for closer examination by looking at macro-economic variables

The second studies overall market potential of the industry in the selected countries, and

The third evaluates company´s sales potential in relation to required investments.

 The most important factors affecting the selection are thus firm-specific ones and those related to target markets and their entry barriers.

 The plans made according to above mentioned model are systematic but also mechanistic. They often lead to significant investments, not being able to change plans as needed, until available money has already been spent.

 The main stumbling blocks of commercialisation, which can be identified only with considerable delay, include for example:

Do targeted consumer or business segments have adequate underlying needs that need to be satisfied?

Are company products acceptable for targeted consumer and enterprise segments?

Is there right type of channel partners available, such as distributors, retailers and system integrators?

Are there partners, events, communities and other necessary tools available that are needed to execute planned marketing strategy?

 Of course, these things can be studied by means of desk studies, but a more in-depth view can only be found by having closer contacts with customers and markets. Traditionally, the tool has been own or outsourced market research, but its disadvantage is significant time, money and resources required. Globalisation of consumption and purchasing decisions, along with online methods, has created new, more cost-effective methods; international market selection can be made more iterative, avoiding too early choices that can easily lead to waste of resources. This means that before concentrating efforts too strictly on certain markets, it is better to shoot a little bit wider, so that really the best launch markets can be found.

 Iterative development of international markets

 This section primarily deals with digital marketing methods as part of an iterative process to select target markets. We shall focus on the four particular stumbling blocks of commercialisation, discussed above, which are also among the most important market criteria when selecting target markets.

 Customer need - market fit

 Social media is a huge data repository of consumer and business needs and preferences. Available data are also continuously updated, real-time, so decisions based on this data are likely to be more relevant than when conducting market research based on statistics or sampling methods. Also location information of potential customers is extremely important in country selections of a firm: Facebook, Twitter, Linkedin and other social networks provide information on needs at country level and, where appropriate, at regional or even city level.

 Market information can also be obtained by using inbound marketing methods: compelling content that relates to customer jobs to be done, is created on company webpages and consumers or businesses are lured to visit the site. Potential clients are attracted by participating in discussions on key websites and digital communities important to them, by inviting visitors through traditional marketing messages and by optimising company website to get found by search engines. If a company needs to select, what customer jobs its products will be targeting, this can also be conveniently tested by means of inbound marketing.

 A website available only in English, along with social media and market statistics, provide sufficient guidance to reduce the number of markets to be screened. The important thing, however, is that preconceptions and 'usual country priorities' should not limit choices too early. When both digital and traditional methods have been used to find a good subset of countries, it's time to go and study customer needs in these countries in more detail. If necessary, and if you have time, the content can be localised for target market languages to go deeper into local websites and social communities. At this stage it is essential to find those potential markets, with customers most eagerly waiting for company products.

 Product - customer need fit

 In traditional commercialisation models, a product feature set is defined and almost built, before there is any wider feedback on how features fit with customer needs. Various types of limited customer testing are usually arranged, however. Although internationalisation has created customer segments with similar needs around the world, different markets often focus on different features. Iterative product development continuously tests product features and their fit with customer needs, and this testing is started as soon as possible in product development process - and at the same time it is tested, how various product characteristics resonate at different markets.

 By discussing pain points that consumers or businesses are facing in their areas of interest, it is easier to understand the needs of potential customers, which in turn helps to prioritise planned features of the product. The audience can also be asked direct questions, queries that are fast and affordable to execute online. Needs for product related support and complementary services can also be evaluated using the same methods.

 Seeking feedback from potential customers thus directs development and commercialisation of products to meet also changing circumstances. In addition, the feedback becomes an integral part of market attractiveness assessment and ensures that the selected target markets really appreciate the properties of the company´s product.

 Channel strategy - market fit

 A successful channel strategy identifies right channel partners as well as makes them strongly committed to sell company's products.

 The Internet can be used to discover and explore in detail suitable partners to sell company products. Digital dialogue with potential customers and thus obtained feedback also help define the most popular purchasing channels. These methods are suitable for both online and brick & mortar stores. Similarly, also other important channel players can be found, such as distributors and system integrators. One can also study, for example, what factors are driving the business of potential channel partners or whether potential channel partners are already representing competing products.

 Inbound marketing aims to get channel partners interested in a company and its products and tries to motivate partners to visit the company website. The aim is to create relationships, which can be further developed at face to face meetings and various events such as trade shows and conferences.

 Understanding of customers and getting them excited to buy company products are precious tools, when trying to get channel partners committed to sell company's products. If this is combined with partner interest generated through inbound marketing, even a smaller firm is able to achieve reasonable cooperation terms and conditions.

 Channel partner identification and building their willingness to cooperate should be started early enough on each of the markets relevant for commercialisation. If the process is able to identify channel partner relationships that would have a perfect fit with company business and product objectives, priority of this market should be considerably raised. If, however, a market offers only not so lucrative partner candidates, you should forget this market for the time being and seek the first references on other markets. Similarly, if the sales channel structure or its mode of operation in a market differ considerably from those of other target markets, it usually decreases the attractiveness of the market in question.

 Planned marketing strategy - market fit

 Here we focus on two things: availability of marketing partners and applicability of company´s marketing communications messages on studied markets.

 In addition to channel partners, company marketing plans might reserve a major role for players that boost awareness and demand of company products. The most important ones are advocates, such as industry experts, Internet sites, magazines, etc., that are trusted and relied on by potential customers during various stages of their purchase process. The best and most profound way to affect advocates is by using inbound marketing activities; by offering them new information, views or other ideas related to company products, as well as by attracting them to visit company web pages for more information. Besides influencers, for example, complementary service providers, various communities and events can have a significant impact on demand increase; these can be found by using the same methods as presented earlier.

 By testing marketing messages, the best arguments and ways to communicate benefits are found. Also such online content tools as pictures and videos can be tested, to find those that best resonate with potential customers.

 To assess the attractiveness of an individual market, it is essential to understand how well partnering and communications, as defined in marketing strategy, can be applied to this market. If the match is great, local adaptation requires very few resources. Of course, if a market is a very interesting one, it is possible to tailor a specific approach applicable to the market by spending a lot of money. In this case, success is uncertain, as experiences from other markets cannot be directly utilised.Raimo Malilahttp://firstname.lastname@example.com 25.74815100000000747.676419999999993 -15.560442999999992 76.17179999999999 67.056745tag:blogger.com,1999:blog-571376301174098105.post-39685720116417986492013-11-07T12:09:00.000+02:002013-11-07T12:09:40.367+02:00Marimekko digitally x-rayedOriginal collections, brand and marketing that is based on own and partners' shops are traditional strengths of Marimekko. At the same time, a number of consumer brands and retailers are increasingly building their competitive edge on digital tools, the Internet and social media. This post studies how Marimekko have managed to combine these new tools with their business activities. Although some of the analysis methods give only indicative results, the main conclusions are, however, built on a solid base.

 Marimekko business

 <o:p></o:p>

 Marimekko is a Finnish textile and clothing design house with net sales increasing again, after the bottom in 2009. This is caused by international growth, which in turn has eroded the profitability of the company. The numbers of 2013 are rough estimates based on realised results of the three first quarters.

Share of search engine visitors (%)

 Digital Marimekko

 Number of website visitors is a good yardstick for digital popularity. Most of the Marimekko website visitors are coming from search engines, see the figure on the right. More than half of the searches are Marimekko ones, written right or wrong. Thus, by studying the Marimekko keyword frequency, it is possible to make good enough conclusions about the company's popularity in the Internet world.

Global Google searches of Marimekko

 If you look at the global number of Google searches made for Marimekko (see the picture on the left), we can see that the number was at its highest early 2008. After that the search numbers have fallen and the decline is projected (dashed line) to continue. The drop in 2008 is at least partially explained by the global economic crisis. It is to be noted, however, that the revenue growth seems to be driven by the visibility caused by retail expansion, not by Internet publicity (that is becoming more and more important).<o:p></o:p>

The sentiment of Marimekko tweets

 There is also room for improvement in how Marimekko use social media: the current effect is mediocre, and the company websites are not promoted enough. The sentiment of company's social network attention can be examined, for example, by means of tweets. There were not a lot of Tweets concerning Marimekko before April 2011. Since then the sentiment has been consistently positive, until since June this year apparently the copy scandal changed the tone much more critical. It seems reasonable to assume that the company, without further publicity problems, will soon be able to normalise the situation.
 <o:p></o:p>

Engagement of Marimekko website vs. some benchmarks

 When Marimekko get consumers to visit their website, they are out there reasonably well, see the picture on the right. Engagement of websites in Finland and in Japan is quite good, compared e.g. with fabrics and women's clothing benchmarks. This is also confirmed by Hubspot evaluation of the Marimekko website, which gives 76 points out of one hundred possible. The main problems are the lack of regular blogging and partially website optimisation for search engines. Marimekko does not provide an application for smartphones and tablets to access the website conveniently.<o:p></o:p>

 In addition, the website has very little text (2.72 % ) relative to HTML code. This slows down page loading, which in turn affects e.g. result positions of Google searches. More broadly, Marimekko seem to have problems with content marketing, the low level of blogging is just a sign of it. Publishing compelling content for customers and thought leaders would help to get coverage on other websites and that would correspondingly feed visits to Marimekko's own website. The graph below highlights the number of inbound links to the company website. The number of links, both to the Finnish site and the international one, has since 2011 grown very slowly. It remains to be seen whether the good performance of 2013 is only the result of negative news.<o:p></o:p>

Inbound links of Marimekko Finnish and Japanese websites

  Business by market areas

 Marimekko report their business by market areas, see the graph on the right. More detailed information is not available, but the analysis will attempt to go to the country level whenever possible. The numbers of 2013 are estimates.

 Own stores

 The table below shows the amount of Marimekko stores (own, retailer owned ones and shop-in-shops) by market areas. The revenue figures generally correlate well with the number of stores, especially in North America and Asia-Pacific. In Sweden, the option for online purchasing raised own sales; it remains to be seen, if possible online shop launches in other areas will affect in the same way. <o:p></o:p>

 Marimekko webpages

Origin of Marimekko website visitors

 Marimekko have their own websites in Finland, Sweden, the United States, Japan, China and South Korea. Swedish site is in English. In addition, there is an international site in English. The fact that there are no sites with local language available in some major market areas is a serious problem; France, Germany, Spain and Italy are good examples.<o:p></o:p>

Global website ranking of Marimekko

 There is no information available about the traffic volumes of the Far East websites. According to Sitetrail, Finland and the United States are leading the visit statistics of the rest of the world, see the picture above. The development of company´s global website ranking is shown in the figure on the left: despite of international expansion, the company ranking has not greatly changed. Finland is by far the most favourable country, Marimekko's rank is currently 615.

 Marimekko searches

Google searches of Marimekko in Finland

 Development of Google searches in Finland is shown in the adjacent graph. After 2011, there has been on a slight upward trend, surpassing even the sales and store number growth. Dashed line shows the forecast.

Marimekko searches, Sweden and Denmark

 In Scandinavian countries, searches are, in turn, been on the decline, see the graph on the right. Interest to make Marimekko searches is thus not following the number of stores or even revenue growth.<o:p></o:p>

 The situation in biggest Central and Southern European countries is presented below. The trend is slightly positive in Germany and negative in Italy and Spain. United Kingdom has remained unchanged. In spite of the growing sales, the share of Marimekko´s store sales has been on the decline, which is also reflected in the search statistics. In all countries, the Google one day Marimekko promotion (Google Doodle) in 2012 has created a clear peak.

Google Marimekko searches in Central and Southern Europe

USA and Canada, Marimekko searches

 Searches in the United States have roughly remained at the same level, only slight decline this year. In Canada, there is a slight increase. Although the number of stores and company own sales have grown up in a relatively fast pace, this does not appear to have an impact in the search statistics.<o:p></o:p>

Japan and Australia, Marimekko searches

 In the Asia-Pacific region, both in Japan and in Australia, business expansion, the opening of new stores and the popularity in the digital space have gone hand in hand. This has resulted in a brisk revenue growth. In Japan, the concern is that during the last couple of years, the trend is downward. There is no information available about China, due to the central role of the Baidu search engine in the market.

 Inbound links to Marimekko webpages

 Geographical origin of inbound links to Marimekko webpages is illustrated in the map below. At least China does not yet pop up with the weight corresponding to its value in Marimekko's strategy, and also in the United States the relative visibility is quite poor. In contrast, Finland and the rest of North and Central Europe are relatively well represented.<o:p></o:p>

Inbound links to Marimekko webpages

 Marimekko in social media

 The origin of Marimekko tweets are shown in the map below. The United States and Japan are by far the biggest tweeting countries - the number of tweets in these countries is, however, always large compared to smaller countries. Other notable countries, as regards to Marimekko related tweets, include Finland, Australia, Canada, United Kingdom and Italy. There is a surprisingly weak popularity for example in Sweden, Denmark, Germany, and France.

Marimekko tweets by country

  Business by product lines

 The company business is divided into three product lines, Clothing, Interior decoration and Bags, see the picture on the right presenting their revenues. The numbers of 2013 are estimates.

 Digital footprint and marketing of the product lines can be evaluated using Google search statistics. This is best done by comparing Marimekko related searches with suitable benchmarks.<o:p></o:p>

Marimekko searches vs. women´s clothing ones

 Women´s clothing is perhaps the most important segment of the Clothing product line. The trend of Marimekko searches has clearly fallen behind women's clothing category that serves as a benchmark. The thick horizontal line describes the zero-level development of searches and Marimekko's line is a lighter blue, see the picture on the left. While Marimekko's Clothing sales has recovered slightly after the drop that started in 2008, this does not seem to appear in the digital popularity.

Marimekko searches vs. home-making & interior decor ones

 Google searches of home-making and interior decor category are a good benchmark for Marimekko´s Interior decoration product line. Again, Marimekko has fared less well than the benchmark. Also the recent sales growth is not seen in Marimekko searches, compared with the benchmark.

Google Marimekko searches vs. clothing accessory benchmark

 Clothing accessories category of Google searches are used to benchmark Marimekko´s Bags product line. The growth of the product line that started in 2010 was first visible also in search statistics, but after that Marimekko has fallen behind their benchmark.

  Conclusions

 It is clear that Marimekko are not effectively enough using available digital marketing tools alongside product portfolio renewal, expansion of retail and the brand. There is a risk that with changing consumer purchase behaviour, relying more and more on digital channels, Marimekko´s relative competitiveness will suffer.

 Marimekko is not visible enough on the Internet. The websites are clearly not interesting enough, and the company messages do not reach other websites. In addition, in many major market areas, there are no company websites available in local languages. In social media, Marimekko is not sufficiently benefiting from word-of-mouth and the company websites are there not promoted enough.<o:p></o:p>

 The worrying thing is that Marimekko´s new stores and other major investments in new market areas do not seem to get enough support from digital activities. Although some promising examples can be found, this means inevitably only half-hearted success. All the three product lines seem to have a declining trend in the digital world compared with the benchmarks. <o:p></o:p>

 Besides customer acquisition and retention, digital tools offer a great promise for in-depth identification of customer needs, rapid customer feedback of new products, as well as customer-oriented testing and improvement of marketing plans. Marimekko will face the threat of missing these potential benefits, unless they fully utilise opportunities of the Internet and social media.
 Raimo Malilahttp://email@example.com 25.74815100000000747.676419999999993 -15.560442999999992 76.17179999999999 67.056745tag:blogger.com,1999:blog-571376301174098105.post-25788010636631713072013-10-31T08:33:00.000+02:002013-12-12T17:22:55.668+02:00Internet industrially - doping for competitivenessI got to know industrial automation in the late 1980s, when we developed software and interface modules based on Bitbus distributed control standard to connect sensors and actuators. In mid 1990s, I was leading another company, which created and sold one of the first machine-to-machine (M2M) solutions based on wireless communications. This fuelled the view that this area will generate great business - but, as is often the case, slower than we imagined at the time.

 In retrospect, it can be understood why in the 1990s there was no premises for the emergence of major businesses:

Availability and use of sensors were limited and the prices were high: for example, our proprietary GPS tracking solution cost hundreds of dollars per unit

IP technologies and wireless communications were not yet sufficiently developed: for example, we had to use wireless SMS and a proprietary protocol built on top of it to communicate with smart devices

Data storage and processing methods were immature: our solution was a typical client-server solution with proprietary applications

Ability and willingness of firms to use networked solutions for optimising operations was limited: in most cases, solutions were customised, and thus it was not possible to scale business

 The situation is radically changing. The Internet and other new technologies open up a world of new business opportunities. This post outlines the opportunities from manufacturing industry point of view, focusing on companies´ product sales and customer relationships. Benefits, relating to e.g. company's own internal decision-making or improvement of internal efficiency, are not discussed here in detail.

  Manufacturing industries meet the Internet

 The physical world is becoming an information system. This change is referred to as the Internet of Things (IoT), sensor revolution or programmed world, among others. GE calls it the Industrial Internet. Regardless of the naming, sensors and actuators embedded in physical objects - from roadways to pacemakers - are linked through wired and wireless networks, which often (but not always) use the same Internet Protocol (IP) as the Internet. Vast amounts of data are sent through these networks to computers for analysis and the results are further submitted to users in an easily readable format.

 There are number of factors driving the development, such as:

Availability of various types of sensors, growth of sensor use and sharply declining prices, caused by e.g. consumer product volumes and advances in material technologies

Development and standardisation of wireless communications technologies, such as 3G, WiFi, BT Smart and RFID

Development of Big Data storage and analysis technologies, especially driven by needs of consumer Internet services

Companies with strong interest in business model development and operations optimisation, based on realised benefits derived from the use of Internet tools

 The core of the IoT is to use analytics for process automation, performance optimisation and downtime elimination, as well as to predict when a machine or component will fail. For industrial companies, this may indicate a threat or an opportunity. The threat is that the value of products will migrate to software, provided by other companies, thus endangering profitability of traditional product companies. A more sensible approach is to see the opportunities; in parallel with securing current product business, new value adding Industrial Internet offerings need to be developed.

 The Industrial Internet is expected to see tremendous growth. Wikibon says that last year $ 20 billion were used in IoT technologies and the forecast for 2020 is $ 514 billion. Similarly, the Industrial Internet generated last year value of $ 23 billion, and in 2020 it is projected to reach $ 1279 billion. Looking this from another perspective, the Internet today is connected to a little more than 10 billion units. By 2020, the figure is 30 to 75 billion, depending on who is the predictor. The IoT is the biggest growth driver.

 Regardless of whether above projections will be realised or not, huge business opportunities will be opening up. The key is to use existing and potential customer relationships and to create new solutions that are exploiting the Industrial Internet. This will also build competitive barriers against cheap equipment suppliers and create opportunities to maintain and further develop company's manufacturing competitiveness.

  Business models for the Industrial Internet

 To realise the potential of the IoT requires, besides new technology skills, also new business skills related to the Internet and its business models. This section first discusses various options for company business development and then presents four models of how the Industrial Internet can be used by a manufacturing company.

 Development options

 In principle, a company can develop both technical and business aspects of Industrial Internet solutions in-house, only recruiting necessary additional skills, if needed. Possible challenges here are the old models of thinking and the legacy in building new competences - the company makes too little and too late. Often used solution is to establish internal incubators, organised separate from day-to-day businesses. The incubators are able to develop and test new ideas before they are transferred to the responsibility of mainstream businesses. For example, Bosch has set up three innovation clusters: connected mobility, connected energy and connected building.

 Capability building together with partners is a very viable option. Partners may be universities, research institutes and other companies. Especially with the latter, there are many models where traditional rivalry may in some areas be complemented with tight collaboration.

 Mobile operators that are very active in the M2M space as solution providers, are natural partners among larger companies. Other prominent players include such companies as Cisco and Ericsson in communications, Intel in micro chips as well as IBM in software and services. Correspondingly, also the big Industrial Internet players are seeking cooperation. GE has made a substantial investment in EMC / VMware spin-off, Pivotal, a company that builds Big Data solutions. In the same area, GE has also announced collaboration with Amazon.

 As in the development of the Internet in the past 20 years, startups are going to be a very important source of new ideas and innovation. Cooperation with startups can be anything from using their solutions to acquiring a startup. In this area too, GE has been very active by setting up a base in Silicon Valley and by kicking off a number of cooperation activities with startups.

 There are plenty of startups working with sensors, Big Data and M2M, just to name a few. Besides sensor technologies and solutions, startups are also launching solutions to gather and aggregate sensor generated data. Storage, analysis and presentation of Big Data has spawned a number of new entrepreneurs. The traditional model of M2M startups has been seeking cooperation with mobile operators, but also other models are already being introduced in the market.

 Improving product competitiveness

 Improving competitiveness of a company´s products by increasing their life cycle revenues or by reducing their life cycle costs is probably the most common way to take advantage of the Industrial Internet. For customers this is realised through various value-adding services that are either a core part to utilise the product or supporting the product very strongly in some other way.

 A good example is GE that embeds smart sensors in the jet engines and takes advantage of terabytes of data generated to optimise aircraft performance and the ways the engines are maintained. Konecranes TRUCONNECT services, on the other hand, contribute to crane safety, optimise maintenance costs and predict the needs of modernisation. An finally, Vesta support services assist customers to define optimal locations for windmills.

 New business

 It is also possible to build a completely new, independent business. Typical products are consisting of software that solve specific customer problems. Software may be able to control only the equipment provided by the firm, but it is often advantageous to create interfaces to other vendors´ products, too. In particular, for start-ups and businesses that account for only relatively small part of customer's installed base, this is often the only sensible strategy.

 Bosch software products promise to integrate equipment with customers' business processes - equipment can be sourced from numerous manufacturers. The software can also be connected to various back-end systems from multiple vendors. GE has developed an application for power companies, which can be used to determine how to best build and operate turbines. Same kind of software are being developed for rail, mining, oil and gas companies.

 New business model

 Benefits of new business models - if successful - may be significant. The challenge of reaping the most dramatic benefits is that the development of new value chains requires key players´ support and it takes time to build these chains.

 Real-time data generated by sensors, combined with historical data, makes it possible to analyse and predict with high precision use of equipment and machinery. This paves way for new business models, where manufacturers are charging for their products based on costs, revenues or time, whereas the conventional model relies on equipment or machinery purchase and maintenance.

 Another example uses crowdsourcing to create added value for company's products. Ford is utilising open interfaces and allows in its OpenXC initiative to customise car features with add-on modules and applications. GE also relies on individual and startup innovation and value creation, and has launched measures to develop solutions for tackling air traffic delays and efficiency of hospital visits.

 Marketing assistance

 Although it would not be possible to create value-added products, totally new businesses or new business models, the Industrial Internet can significantly boost company's marketing and sales efforts. The main idea is to provide customers and other important stakeholders useful and interesting information, which will improve the competitive position of company's products. The key stakeholders are traditional and digital media, channel partners and influencers important to customers. In this context, the key source of information is the data generated by the products of the company or other data that the company can access at a reasonable cost.

 Also the companies that sell to business customers cannot forget opinions of media and consumers: if corporate citizenship is not communicated properly, it will be quickly heard by customers´ decision-makers. If a company sells its products through channel partners, the partners will appreciate any information that helps them acquire new customers or any new opportunities to sell customers new services. Both for media and for customer advocates, it is important to get new information and insights that will enable them to further build their authority in the topic area. Well-thought, fact-based opinions based on available data are a great way to engage customers through media and advocates and thus support sales of company´s products.

 For example, a car manufacturer could embed one more sensor to its cars: air pollution sensor would give a car user air quality information from those places that are important to him and give everyone an overview of air pollution situation. When used properly, this kind of activities can provide very interesting information for consumers and also for media, which creates good opportunities to highlight company's social responsibility. Cisco is strongly involved in even more ambitious project. Planetary Skin tends to use billions of sensors on land, water and in the air to detect and predict changes in the environment.Raimo Malilahttp://firstname.lastname@example.com 25.74815100000000747.676419999999993 -15.560442999999992 76.17179999999999 67.056745tag:blogger.com,1999:blog-571376301174098105.post-87798416073484621332013-10-23T09:48:00.001+03:002013-10-23T09:48:49.544+03:00Quo vadis, Sports Tracker ?Sports Tracker application is like an old friend. I have used the fitness application from the time it came to market in 2005. I have no closer relationship with Sports Tracking Technologies, the company that is currently responsible for the business.

 I was amazed when I read that a Sports Tracker competitor, Endomondo application (which I have also used), is used five times more when counting sport use kilometers. This aroused my curiosity. Are Sports Tracker really trailing Endomondo so badly? What factors have contributed to the development? What is Sports Tracker´s future and how could they improve the business? I did a little bit detective work. By using only public and free sources and tools, the picture became considerably clearer. This research trip is also a good example of how companies can analyse businesses and competitive situation, and thus develop more successful strategies.

  Sports Tracker vs. Endomondo

 Sports Tracking Technologies (hereinafter referred to simply as Sports Tracker) are a Finnish company with Nokia Corp. roots. A Nokia project launched the first version of the fitness application in May 2005. Endomondo are a good benchmark, because they are coming from another small European country, Denmark, where they were founded in November 2007. Apart from these two, a number of other competitors have emerged, such as Nomad, Skimble, Strava and Runtastic. They are not discussed in detail here.

 Number of users

 The Sports Tracker application has been used for 230 million sports kilometers, and the Endomondo one for about 1600 million. Various sports kilometers do not match, so this does not clarify the situation. If the number of users would be available that would help a lot. But only Endomondo have published the information that they have cumulatively 20 million registered users. AppAnnie give estimates on application downloads and they provide, inter alia, the following information:

In Apple App Store´s health and wellness category the free Endomondo application was in top five in eight countries and in top ten in 23 countries

Correspondingly, Sports Tracker were in top five in three countries and in top ten in 13 countries

In Google Play´s health and wellness category Sports Tracker were in top five in two countries (Endomondo in eight) and in top ten in six countries (Endomondo in eighteen)

 Although AppAnnie do not evaluate Sports Tracker´s traditional area of strength, Symbian, currently Endomondo seem to have a clear lead in download volumes.

 Product features

 We shall not make any product reviews or comparisons, they are already readily available from multiple sources. Instead, we shall first focus on expert views that are affecting potential customers and also on how users are seeing the two companies´ products.

 In various expert reviews Endomondo would appear to get generally higher marks than Sports Tracker. The former have an extensive feature set and well-functioning web services, the latter have a praised mobile application. Sentiment analysis of user tweets is one way of measuring user perceptions, see also the picture below. Product usage experiences are likely to be the most important factor affecting the sentiment of messages. The companies´ products seems on a par till autumn 2011, after which Endomondo reputation is a little bit better.

 Characteristics of company products do not explain differences in popularity, so we need to have a look at the reach of potential customers. The most important factor affecting it is the range of operating systems supported. Sports Tracker support extends to the following: Symbian, iOS (Apple), Android, and MeeGo (Nokia N9). Endomondo again support all the previous except Meego, plus they support also RIM (Blackberry). In addition, it is important to understand when the most important operating systems got the support, see the picture below. The picture also shows smartphone sales per Symbian, iOS and Android.

 It is clear that Sports Tracker were too long stuck with Nokia and Symbian, and as a consequence, came too late on the tremendously crucial iOS and Android markets. It is difficult to assess whether this was due to not understanding the markets, long-standing links with Nokia, lack of resources or something else.

 Marketing

 Use of the Internet and social media have certainly been the key of both companies´ marketing efforts.

 Google search statistics dramatically reveal how Sports Tracker have not been able to improve after the year 2009. Endomondo overtook them in the beginning of 2011 and have since then continuously been able to increase their attractiveness. The picture on the left shows also projected searches with dashed line. The number of searches correlates well with overall marketing efficiency and thereby also with interest in company's products.

 Web service is an essential part of the overall service offering as perceived by a user. Company website is also an important part of digital marketing assets. Hubspot tool gives Sports Tracker website a score of 54 (scale 0 - 100) and Endomondo get a much better grade of 81. The main problems of Sports Tracker are blogging, mobile use of the website, lead generation and optimising pages for search engines.

 Endomondo also have a clear advantage when measuring website visits, see the pictures on the left, Endomondo at the bottom. The pictures illustrate companies´ global ranking of website visits. Again, the Endomondo trend is positive, whereas the Sports Tracker position has not really improved over the years.

 Popularity of company's websites is also greatly affected by the number of incoming links. The picture below shows that till the summer of 2011, the companies were equal; but after that, especially since summer 2012, Endomondo have improved much more. This can be partly explained by product features and partly by website attractiveness and success in content marketing.

 Problems with Sports Tracker website content become also visible when looking at search results (SERP) of keywords that are important for fitness applications. The two companies occupy the top positions when searching the respective company names with Google. But for example, when searching 'GPS sports tracker', Sports Tracker occupy only the position 3, whereas Endomondo get positions 2, 4, and 5. 'Social Sports Computer' is the central Sports Tracker website tag line, but the positions are not better than 5 and 6.

 The most worrying thing is that even when Sports Tracker are able to attract visitors to its website, these visitors do not find the pages interesting enough, see the Alexa picture below.

 More than half of the visitors only visit one page, and others do not find a lot of compelling content.

 Also in social media utilisation, Endomondo seem to be more skillful. For example, already in 2010 they were more popular than Sports Tracker in Twitter messages, and after that differences are even more remarkable, see the picture below. As regards to Twitter followers, the two companies are almost on a par: Sports Tracker are followed by almost 18000 and Endomondo by almost 21000 persons. This indicates that Sports Tracker still have, however, loyal core group of followers, which are constantly interested in their products.

 Business Model

 Product development and marketing are of course closely linked to the resources available. Resource availability, on the other hand, is greatly affected by the business model and especially revenue streams.

 After Nokia years, Sports Tracker became an independent company in May 2009. The company's turnover in 2012 was 702 000 euros, it was making heavy losses and the equity was negative. The fitness application is downloadable free of charge, and there are no fees related to usage of supporting web service. The company seem to be receiving their income by selling heart rate measurement belts, iPhone bike mounting accessories, headware and socks. Long Nokia connection seems to have affected on the company mindset and implemented business models - when the company was a part of Nokia, the role of their service offering was mainly to support primary equipment business.

 Endomondo have been able to take advantage of the emerging business opportunities. When Apple launched App Store in July 2008, and Google store opened in September 2008, they were able to rapidly grow their user base. Alongside the free application, a paid PRO version was launched in December 2010. App Store made it possible to make in-app purchases, i.e. to buy extra features for free apps, in August 2009, and Google Play store started to offer the same option in February 2011. Endomondo began to take advantage of these opportunities in 2011. The company also began to show advertising in connection with its applications and website services in September 2012. In addition, the company have partnered with another company to sell a variety of sports-related products. Endomondo revenues are already sufficient to cover operational costs.

 Financing

 In order to build operations and products as well as to acquire users, both companies have needed to seek external funding.

 Sports Tracker financing was handled by Nokia for a long time, but after the establishment of the new company, they have been funded at least by Nokia-Technopolis Innovation Mill, Tekes and the City of Helsinki. Amounts of money have not been published.

 Endomondo have received undisclosed amount of seed funding in December 2010, $ 800,000 in March 2011 and $ 2.3 million in September 2011. The company claim that they do not need any external money to continue operations.

 It is noteworthy that Endomondo´s external funding has always been linked with company's reported product improvements, measurable improvements of market position and business model enhancements - see also the facts presented earlier. There is no detailed information available about Sports Tracker´s financing projects, but the presented facts tend to imply that attracting new money is much more challenging than in the case of their competitor.

 Conclusions

 Sports Tracker seem to have a lot of work to further develop their product and marketing as well as to improve the business model. It is most likely that unless the company is able to get external funding, it is not possible to make sufficient investments.

 There are, however, substantial and growing markets for the company's expertise and products: fitness and well-being are increasingly important future trends. And the markets have certainly not been shared, yet. According to Alexa statistics, both Sports Tracker (below left) and Endomondo (right) site visits are dominated by small or medium-sized markets; it is still possible to significantly change competitive positions both on current target markets and on many of the biggest markets, not deeply penetrated today.

 It is vital, however, that Sports Tracker are able to find again an agile way-of-working, where new emerging business opportunities are boldly and rapidly utilised. This will create constantly renewing competitive advantages upon which to build a successful business.Raimo Malilahttp://firstname.lastname@example.com 25.74815100000000747.676419999999993 -15.560442999999992 76.17179999999999 67.056745tag:blogger.com,1999:blog-571376301174098105.post-11965669858439189472013-10-17T10:00:00.000+03:002013-10-17T10:00:13.950+03:0010 commandments of professional services digital marketing: acquiring new customersProfessional services firms are perhaps the most conservative marketers, primarily because they trust that customers will find them, if they just do good work. This applies to all industries, say, advertising, legal, consulting and ICT services. This is no longer enough. Increasing competition and disruptions looming in many sectors emphasise the need to find new customers and to use the best of digital marketing methods. Although digital marketing can also be used to recruit capable professionals, we shall not focus on that.

 Professional services marketing

 Professional services marketing activities are often divided into five categories:

Broadcasting: All activities that generate leads, enquiries and potential business opportunities with new customers.

Courting: Actions for a single, specific prospect; these activities are traditionally called selling and proposing - even though, especially in professional services, a client makes a decision to enter into a business relationship, not just a purchase.

Superpleasing: Serving existing customers on existing matters so well, that they want to continue to cooperate with the service provider.

Nurturing: Measures to win new assignments from existing clients through strengthening relationships.

Listening to the market: Market data collection and analysis, as well as better understanding of customers, so that a company is able to more effectively market its professional services.

 Since broadcasting and courting target new customers, our main focus is on them. Existing customers affect new potential customers through their reference value and word-of-mouth, so superpleasing and nurturing cannot be forgotten. Both existing and new customers are sources of market insights, i.e. what customers want and how customer needs change. Digital marketing tools are also ideally suited for these activities.

 Target customers and their buying process need to be well understood: who will influence purchasing decision, and how, what information they need in each phase of the partner selection and where are they typically looking for the information. In addition, it is vital to identify, what external parties are affecting services procurement and how they are affecting it.

 When marketing to new customers, there are three basic principles:

More attention to selected prospects than to a long list of miscellaneous opportunities

Demonstration of competence is more effective than asserting

In person tactics are the most effective ones

 Finally, customers are won, when there is an opportunity to discuss potential client's problems, so all marketing activities should be planned to give clients the necessary confidence to start these kind of discussions. Next we shall present ten online marketing cornerstones that help a professional services firm to create confidential relationships with its potential new customers.

 Make your web site your identity

 Own website is also for a professional services firm an important part of the identity, the heart and the face, which gives the company its virtual looks and drives its digital marketing operations.

 A company website cannot be a digital company or product brochure, with full of arguments of provided services and excellent know-how. Instead of details of the service offering, it is better to have a look at the offering with customers´ eyes: what are the customer benefits of the services. The most important thing is that the website makes it possible to pass the first customer evaluation gates - the essential criteria are references, capabilities and resources. To build customer confidence, there should be a clear focus, when describing company expertise - there are very few companies that can claim to be an expert at everything.

 Pictures, diagrams, videos and other multimedia elements should be used, if they clarify, what a company wants to say. Otherwise, cosmetic changes and improvements of a website or technology gimmicks are seldom very beneficial for achieving company's business objectives.

 Become thought leader among your customers

 Customers love companies that are able to provide new information, new perspectives and new ideas. Compelling content is the core of thought leadership. Attention, interest and desire to cooperate are won by demonstrating that a professional services company is useful and provides added value to its customers' business.

 Company website is the centerpoint of becoming a thought leader. Published articles, research, short videos, webinars, etc. create confidence among site visitors by discussing important issues and concerns of potential new customers. If the company's service offering is personified as its key individual skills, the content must be strongly linked to such persons. However, if the expertise is more anchored to the company structures and practises, this should be communicated on the website, too.

 Target customers' needs should drive the creation of content. The content is planned according to what information client decision-makers and external influencers need for each stage of the procurement process.

 Share your insights

 Many professional services firms have interesting content on their websites, but major stakeholders will never see it. To ensure that content marketing is effective and that it will generate new leads and business opportunities, a company needs to amplify its message. This is done by sharing generated content on sites that are important to customers and their thought leaders; to sites that are happy to take the content free of charge due to its reliability and significance, as well as to those that take a sponsoring fee to publish it. Sharing raises awareness of the additional information found on the company website, and significantly increases site traffic. An effective way to increase visibility is to send press releases through special agencies; for example, when new articles or research is published on company website.

 Email distribution can be effective, if messages are not sent on a regular basis according to a schedule and if they can tell the audience something valuable. Often, this means that sent messages must be tailored to the needs of target segments.

 Make influencers love you

 Several studies suggest that traditional marketing communication has lost much of its power; buyers and decision-makers are looking by themselves for information on products and services - leaning on the Internet and influencers. Their reviews, reports and opinions are often significantly affecting on which companies will be considered in detail.

 It is instrumental to identify influencers as well as information sources and communities that they favour, so that influencers can be turned company advocates. And when bloggers, journalists and other thought leaders favour company offerings, it has a bigger impact than company´s own communications.

 When trying to influence the influencers, it is vital to provide them tools to increase their social capital: to grow their reputation and online reach. New and relevant information and constantly updated statistics that are important to customers, are good examples of such effective tools.

 Extend your reach through social media

 Finding new customers through personal contacts is a traditional but laborious way to market professional services. Social media changes this. Potential customers are already in e.g. LinkedIn, Twitter and Facebook and social media is the best way to get to know them and to create an image as a credible and viable service provider. Access to virtual world contacts is also very cost-effective compared to real world ones. And even though there might not be any direct deals through social networks, they may initiate processes resulting in business relationships. For example, cold calls are much more effective, if before making any calls, there is already an established social network link.

 Create hooks to catch your customers

 Often there are industry practises that can be renewed or changed, thus making it easier to acquire new customers. A good example is to put such new information on company website that has previously been available only as paid services; customers will be able to apply this knowledge by themselves, and thus create a limited version of what other service providers are offering. Information provided can also consist of well-edited current news that is necessary for customers. The company that has made the information available will be well-known to potential customers and thereby strengthens its position, when negotiating future service contracts. Use of a downloadable application to create awareness among client companies is another example: the application provides selected customer decision-makers tools that they need in their work and gets them initially familiar with the service company´s offering.

 Marry real world with virtual one

 Digital world tools are most effective when used in combination and parallel with offline marketing. At best, their use is seamless ranging from broadcasting messaging to closing of a deal and strengthening of relationships.

 The basic level is to link all offline marketing efforts to company webpages to attract potential customers to visit them. Various events, such as seminars and conferences, can also be successfully supported by web tools: besides being event promotion tools, it is possible e.g. to identify in advance the business challenges that the participating companies are facing. This is possible by listing the topics that have been interesting for a specific participant and by seeing what have been his areas of interest in social media. Another example relates to making presentations in industry conferences: copies of the presentation, as well as additional company information should be forwarded through the company website, in return for contact information.

 Be patient with your customers

 Most of the professional services purchases have been decided before making actual bids; the intent of a bid is just to seal the deal - or then not. Therefore, while a customer has been identified but the deal is not yet closed, it is important to systematically nurture potential customers to get them increasingly interested. Both traditional and digital marketing tools should be used together. Best nurturing methods have produced extremely good results compared to more conventional ones.

 It is essential that company website content is targeted to the various stages of customer procurement process. By defining the typical steps how customers get familiar with website content and by comparing that with actual behaviour, it is possible to create a deeper understanding of customers´ purchase barriers. Based on what has been discovered, it is possible to make customers initial suggestions and proposals, with the goal to get customers agree on personal meetings to discuss in greater depth the clients´ business challenges.

 Make yourself easy to find

 All of the above digital marketing principles will also improve company's site ranking in relevant search results. Fresh and interesting content makes search engines visit company site on a regular basis. And when the site visitors share the content to their social contacts, it convinces search engines that the content is useful. The company must, of course, also take care of search engine optimisation activities.

 The above described organic search results are the most highly respected ones among users, but if a company has enough money, also advertising on search result pages is possible. Since measurability of results is one of the absolute benefits of search advertising, you should test the results of such advertising prior to a possible large scale deployment.

 Improve continuously

 Digital world offers excellent opportunities for continuous improvement. Various testing methods, such as A/B testing, are the tools for this. The idea is to provide relevant audience two or more different versions of webpages, and based on results, determine which version is operationally most effective. It can be tested, for example, how to best respond to page visitors: provision of an article, suggestion to participate in a webinar or connection to a specific expert. Although there would not be plenty of website traffic, you should, however, recognise the potential for test marketing and conduct tests that are the most important for success.
 Raimo Malilahttp://email@example.com 25.74815100000000747.676419999999993 -15.560442999999992 76.17179999999999 67.056745tag:blogger.com,1999:blog-571376301174098105.post-55809240703684824992013-10-09T15:52:00.000+03:002013-10-09T15:52:20.735+03:00Better prices to new customers ?I thought I made a good deal, when I continued subscription of a trade magazine for the year ahead. The next day, however, I got an offer, which promised me as a potential new subscriber the same magazine with a price tens of percent cheaper. And this was not the first time - numerous times I have seen that I am valued less as a customer than those who are newcomers. Here we shall discuss this from business point of view. When should a company reward new customers, and what factors influence this?

 When to reward or punish customers

 Yale researchers Shin and Sidhir have examined in more detail, what kind of pricing strategy you should apply in your business - whether existing customers should be 'punished' with a higher price or less favourable terms than the new ones.

 In the research, they found that from company point of view, it is essential to understand how concentrated is customer value and how flexible is customer shopping. Concentration of customer value varies greatly, in some areas (such as newspaper purchases or subscriptions) all customers have close to equal value (excluding value for advertisers), while in some businesses there is a significant difference in terms of money between good and ordinary customers (for example in private banking and air travelling). The easier and more convenient it is to change a merchant or product or service vendor, the higher shopping flexibility is.

 On this basis, the researchers formulated guidelines for companies, shown in the attached picture. Only if the most valuable customers are buying a lot more than others, and if the product or merchant can be easily replaced, it is worth rewarding existing customers, i.e. to give them lower prices or better benefits than to new ones. The reasoning is that otherwise it is too easy for customers to select other solutions. And because the most valuable customers are the most profitable, it is best that the benefits are given only to them. In all other cases, it makes sense to attract new customers with better terms than the present customers get.

 Business characteristics

 The model above provides clear guidelines for companies, but when applying it, specific characteristics of the company business should carefully be taken into account. This section discusses some important factors that should be evaluated, when planning the approach.

 Relationship Marketing

 The key idea of relationship marketing is to know customers, to deeply understand their needs and to appreciate customer relationship that has been created - this builds a competitive advantage for a company. In contrast, technology or gradual improvement of products are often seen as non-sustainable competitive advantages

 Relationship marketing creates convenience, trustworthiness and other emotional ties, which build barriers for customers to change company or its products, thus reducing shopping flexibility. As presented above, this should make attracting new customers with better terms more lucrative. On the other hand, this observation is contradictory to normal customer experience: staying friends with a company that does not value me as a customer and gives newcomers better conditions, is seldom preferred.

 The Internet and Social Media

 The Internet gives consumers access to tremendous amount of product and service information, opinions and buying options, independently of time and place. This has a significant impact on company's customer strategy.

 First of all, a large number of vendors and availability of supply facilitate re-orientation of purchases, i.e. shopping flexibility increases. Secondly, opinions and company reputation spread through the web and social media much wider and faster than in the past - and it is also well-known that negative opinions spread much wider than positive ones, so favouring new customers may make existing customers communicate bitter words. Internet content and new products, services and business models enabled by the web create alternative and new ways to satisfy consumer needs, which increases shopping flexibility - often indicating the fact that customers no longer buy the products or services they used to.

 The Internet and social media provide companies also tools to enhance their customer strategy. The web can be used to actively communicate with customers, to create dialogue with them and to develop communities around company and its offerings. This increases customer loyalty and creates competitive barriers. Internet technologies can also be used to enhance basic product or service by developing extensions, boosting differentiation and exit barriers.

 Globalisation

 Globalisation works in conjunction with the Internet and changes consumer purchasing: there are more and more cross-border availability options for existing products and services.

 Besides reducing differences in national consumption patterns, globalisation has also created global consumer tribes, which are emotionally connected by common values of consumption and which use consumption of certain products or services to create a community and to express their identity. If a tribe considers a product or service extremely important, shopping flexibility will be very low and shopping value may be much higher than average.

 Digitalisation

 Digitalisation has already revolutionised a number of industries, where transition from physical distribution to digital one has brought new business models and new leading players. The process is underway for example in newspaper and magazine publishing, where printed media is now being complemented and competed by digital products. In addition, there is a great threat of non-consumption, people switching their purchased media products over to ad-sponsored or even free digital content. This environment is a classic example of highly flexible shopping and very low concentration of customer value.

 Digitalisation will also bring changes to other industries. Companies can use it to increase customer loyalty and to create valuable extensions for their offerings. For example, both online and offline retailers are using customer information to develop customised offerings that will increase customer engagement and sales.

 Company cases

 Finally, let´s look at two cases that highlight challenges and opportunities, when applying the learnings above.

 Mobile Operators

 Mobile operators are selling subscriptions and often mobile phones, together with subscriptions or separately. The value of customers for an operator varies quite a lot, and shopping flexibility is affected e.g. by type of customer contract, bundling models, means to increase competition such as number portability, as well as operator's own actions. In most countries there are three to four operators, and in addition, some countries have so called virtual operators.

 Mobile phone use varies greatly, depending on user and use purpose, and operators offer various packages with different service content and prices. The most valuable customers may bring in more than ten times more revenues than standard customers. Prepaid subscription is the most flexible one: when services quota has been used, you can purchase more or take a competing offer. Prepaid customers are usually the least profitable ones. When a customer has a postpaid contract, the situation is very similar with the previous one, but subscription packages (either with or without a phone) create typically a commitment of three months to two years. During this period, a customer is very tightly tied to the chosen provider. Popularity of contract types varies greatly from country to country. For example, postpaid is dominating in the Nordic countries, while in Southern Europe and in developing countries prepaid is typically more popular.

 Operators were long able to make subscription change very difficult, because of missing number portability. Gradually, however, widely spread number portability provisions have increased purchasing flexibility. In addition, operators have used their own, exclusive value added services as a means to retain customers. Success of strong, independent service brands also in mobile context has made these initiatives, however, a relatively small success.

 Typical customer strategy of operators has thus been offering of more affordable packages to new customers. According to the theory above, making better than normal deals with new postpaid or prepaid customers is questionable - unless you know that they will be generating plenty of revenues in the future. So far, operators have not been innovative enough to build high enough customer exit barriers and to sufficiently reward their loyal customers.

 Tiimari

 Tiimari, a Finnish retail chain, has already been analysed in a previous post. Tiimari product categories are very widely available also in other offline and online stores. Because the company name is the most important brand asset, not its products, and because customers do not have any closer emotional ties with the company products, shopping flexibility is high. The largest purchases can be quite large compared to average ones.

 Tiimari offers same deals for regular customers and new ones. Company products are clearly easily replaceable. If it is not possible to create exit barriers for customers, the company will either need to provide tangible benefits to their major clients, or more effectively hunt for new customers while existing customers´ buying behaviour is unpredictable.Raimo Malilahttp://email@example.com 25.74815100000000747.676419999999993 -15.560442999999992 76.17179999999999 67.056745tag:blogger.com,1999:blog-571376301174098105.post-27451591199050780532013-10-02T12:06:00.000+03:002013-10-03T07:01:34.060+03:005 models for Big Data business successCan data be used to create growth? At least Ronald Reagan believed so, when he said that information is the modern world oxygen. Information has, of course, always been important in business, but the Big Data phenomenon is forcing companies to think more about how they could use information to drive their business.

  Big Data and company competitiveness

 Gartner defines: Big Data are high-volume, high-velocity and high-variety information assets that demand cost-effective, innovative forms of information processing for enhanced insight and decision making. Big Data's core is therefore not the data nor its high volume, but the company's innovative way of using various sources of available information for successful business building. More and more enterprises are already operating this way: a recent survey found out that 80 % of companies see that harnessing data would make their business stronger.

 From a company point of view, sources of data can be divided into three, partly overlapping categories:

Firm internal data or the one available through business operations: for example, customer click data at company web pages, data collected by customer services or data provided by equipment and systems delivered by the firm.

Data obtained from other companies or entities, in most cases paid data: for example, aggregated data related to potential customers or machine use -related or environmental data provided by firms generating or aggregating them.

Public data: Data that has been made available by government, often free-of-charge, for example, various public records, weather and map data.

 Data volumes are not large, they are huge - last year 2.6 zettabytes (10 to the power of 21) of data was created in the world, and that number is expected to grow by 40 % annually.

 Source of data has a significant impact on businesses. This can be analysed by looking at the simplified value chain of Big Data that consists of four stages, see also the attached picture.

 Each stage of the value chain sets different types of requirements to be competitive:

Data generation: Opportunity to get access to proprietary data by means of own business; understanding of what is essential in data and how it can be generated.

Data aggregation: Understanding of where and how data can be acquired; understanding of how data should be combined and stored so that it can be further processed and made useful.

Data analysis: Analytics and algorithm skills; ability to interpret the importance of data from use point of view.

Data usage: Ability to present data to users in a readily comprehensible form; understanding of user needs.

 Familiar theory that explains how early-stage vertically integrated industries are gradually transforming into specialised ones, ie. horizontally integrated, can also be used in Big Data context. As industry competition is constantly in motion, companies need to shape their own strategy and positioning on the value chain by looking at their competitive advantages and capabilities.

 Big data advantages, at their best, reinforce competitiveness of a firm, resulting in profitability and growth. In order to really achieve results with planned activities, Big Data projects need to be anchored in the improvement of competitive position. Assessment of own capabilities gives a realistic picture of what value chain positions are sustainable in a long run. Because overall business benefits are the most important ones, it is feasible to outsource the stages, where competitive advantages cannot be defended.

  Big Data growth engine

 This section deals with development of Big Data business models and especially ways to achieve growth. Big Data strategic benefits, such as ability to make faster, better or more proactive decisions, or efficiency improvement factors, such as improvement of capabilities and processes, are not discussed in detail here.

 Independent Business

 Independent Big Data based product businesses can be built by established companies or startups.

 For established companies, it is convenient to develop new offerings for existing customers or take advantage of the data that the ongoing activities are generating. In the first case, understanding of customer needs and good customer relationships are typically key competitive advantages. In the latter, preferential access to data gives differentiation. For example, McKenney, a mechanical contractor of buildings, developed a service to reduce maintenance costs by collecting actual building data over the years. If a company position in customer interface or in data collection is strong enough, it is possible to partner with other players to complement the value chain.

 Startups are usually missing most of the established companies' competitive advantages and resources in utilisation of Big Data, so they have been more active in the development of tools and know-how. There are many areas, however, where new, disruptive business models have been created, such as job search and recruitment firm Bright, Climate Corporation in crop insurance or Ambiohealth in remote health. Acquiring a startup can offer an established firm a head start to create a new business.

 Improved access to public data has reduced the barriers that startups and other actors are facing when bringing new services to markets. For all have access to the same information, successful companies need to continuously improve user experience or add new data sources to stay competitive.

 Sales of tools and know-how

 In particular startups are actively developing new tools and know-how, in order to sell them to other businesses and organisations. These are exemplified by DataSift and Enigma in data aggregation, Cloudera and Cloudant in data storage, Cloud Physics and Gravity in data analysis and Icimo and Platfora in data presentation. Sensinode, recently acquired by ARM, is an example of Finnish Big Data startups, focusing on data collection technologies.

 Support to other businesses

 Activities that support well-established businesses will be hugely important as sources of business growth. Also startups are important as outsourced innovators of established firms: they are able to develop and test new ideas and when enough traction has been created, an innovation often ends up being part of the purchasing company's activities.

 Support activities aim to maintain and improve competitiveness of company´s current business operations. Life cycle cost reduction of company products through proactive maintenance, cost reduction of distribution through route optimisation and customer satisfaction increase by utilising customer data are good examples of that. The key thing is how Big Data affects on overall revenues and expenditures, not costs and potential income of Big Data initiatives as such. GE and Konecranes are great examples of companies investing in so called industrial Internet - it is believed that Big Data strategy differentiates products and brings significant additional income. Amazon and Walmart are prominent firms utilising Big Data for customer relationships.

 The core of the data used for support purposes is mostly in-house, but it can complemented, where appropriate, with purchased and public data. For example, weather and traffic data can be used to refine equipment use or website behavioural data.

 Data sales

 If a company cannot find meaningful ways to use available Big Data in its own business, opportunities to sell the data to other players should be explored.

 Companies such as Bloomberg, Experian, and Affecto are already selling their data and also offer views and analyses based on them. These actors, however, are vertically integrated with operations primarily based on their own data. It is expected that new players, who generate or aggregate unstructured data originating from multiple sources, will be given a wealth of new opportunities.

 This will provide Big Data generators and aggregators opportunities to sell data with various maturity levels; either to specialised broker firms or to other firms that make use of this data in their own businesses.

 Marketing tool

 Big data can also serve as a tool to attract customer prospects to become clients of a company. The trick is to provide free or low-priced information that is important and valuable to potential customers. Use of information creates a relationship of trust with the information provider and reduces barriers to buy full-priced products. Earnings impact is generated indirectly, through increasing customer numbers and revenues.

 For example, an investment services company could use social media and the Internet to make sentiment analysis of listed companies for anticipating stock price movements and to provide this service free-of-charge for potential customers. Similarly, an equipment manufacturer could create thought leadership in its industry by developing an easy way to track factors that affect on raw material or semi-finished product prices, important for its potential customers.

 If the used data are company proprietary, it is usually easier to functionally combine them with the products sold to customers. There are no reasons, however, that would prevent from developing this kind of offering based on acquired data only.Raimo Malilahttp://email@example.com 25.74815100000000747.676419999999993 -15.560442999999992 76.17179999999999 67.056745tag:blogger.com,1999:blog-571376301174098105.post-72677641040920342772013-09-24T18:56:00.000+03:002013-12-12T17:25:57.453+02:00Boost subcontractor business through Internet toolsSubcontracting companies often claim that the Internet and social media are not so important to their business - if something should be done, it is probably website face-lift. These companies could not be more wrong; digital world opens up new success opportunities also for subcontractors. This post is discussing, how subcontractors can utilise the Internet and social media for business and as a sales and marketing tool to build a successful customer relationships strategy.

 Subcontractor business
 Although other definitions could be used, here we define subcontracting as activities, where a company produces and supplies its business customers (principals):

broadly manufactured standard products,

own special products or custom-made products,

parts, components or sub-assemblies ( modules ), or

materials

 It is also assumed that the principal uses subcontractor's products as part of the final product or solution. Business logic of companies supplying professional or other services differs quite a lot, so findings of this post can be only partially applied.

 Awareness and brand recognition of subcontractors among end users (whether they are consumers or businesses) is quite poor. Thus there are only limited options available to improve subcontractors´ competitive position through end user demand generation. There are exceptions, however, such as well-known Shimano and Intel.

 While web based tools are very important also for manufacturing operations, logistics and product development, these are not discussed in detail here.

 Regardless of size and industry of a subcontractor, utilisation of Internet tools is built on a traditional model, how a successful company should plan its business strategy: what is the product and the business model and who is the customer. It is also vital to define target customers and understand, what kind of buying process they are using; who influence the purchasing decision and how, what kind of information they need in various stages of the process and where they are typically looking for information. In addition, external parties that affect client companies´ buying process should be identified, whether they are sources of information, reviewers, references or something else. All this is a foundation for a solid customer strategy that uses both well-established sales and marketing tools and new and more effective approaches enabled by the web.

 Sales and marketing tools are changing

 Subcontractor business is subject to a number of change forces affecting business success and shaping customer buying process. Next we shall discuss in more detail tools to

 create and maintain customer relationships and how the Internet is changing their use in various phases of the buying cycle, see also the figure.

 Face-to-face sales

 Face-to-face selling and resulting customer intimacy is often claimed to be the core of subcontractors´ customer relationships. But principals - as all B2B customers - are engaging later and later with their supplier candidates: recent research indicates that typically more than half of the customers' buying process is completed, before they are ready to directly meet vendor sales rep. In practise, this means that a company must be able to demonstrate to potential customers its offering, references, and other competitive advantages well before the first sales call. The biggest reason affecting this change is the Internet, offering easy-to-use means to look for and evaluate possible solutions and suppliers.

 An increasing number of people are involved in companies´ decision-making process, buying process lasts longer, and buyers are better informed of competitive situation - but also busier. Again, the Internet, social media and other new technology tools have largely caused this change, but they have also increased the use of inside sales in B2B businesses.

 Inside sales can be used not only to reduce costs, but also to reach a larger number of customers' decision-makers at an earlier stage and to supply them with more information, relevant in decision-making. Especially in the early stages of the buying process, it is possible to do remotely a significant proportion of the activities, earlier requiring face-to-face interaction. And excluding only the most complex products, it is becoming more convenient to also close deals using remote sales. Relative importance of inside sales, compared with traditional field sales, is growing rapidly, both as regards to number of sales people involved and time used for it.

 Information

 Among other things, company brochures and other printed material, industry trade journals and key influencer reviews and analyses have been instrumental in building target customer awareness. Also, not so long time ago, the main purpose of first customer visits was to introduce the company and its products - as mentioned above, not so successful tactics anymore.

 Although most of the companies still provide the baseline information also in printed form, the Internet is by far a superior media, thanks to being always close to up-to-date, affordability and availability of information. On the other hand, it is difficult to be found in the vast data archives of the Internet, but fortunately there are both digital world and traditional methods to influence it; in both cases the key is to motivate and attract potential customers to visit the company website.

 Also news, reviews and reports have largely moved online, printed word is complementary, particularly used for comprehensive analysis and report distribution. And since number of available information sources is huge, it is essential to know, where your potential customers and other people affecting customer purchases are looking for guidance and what are the most important professional social media groups to which they belong. On this basis, a company can plan the actions needed to create awareness and positive attitudes among external influencers.

 Events

 Events, such as trade fairs, seminars and conferences, are becoming less critical as a means to deliver generic information, but still they are very important to directly discuss with target customers and influencers and share with them own point-of-views. As a result of digital tools and application of mobile technologies, the nature of events is also changing. It is possible to explore potential client businesses in greater depth and reach and affect a much larger number of businesses than in the past. For the most advanced B2B companies, events are no longer individual campaigns, but an integral part of continuous face-to-face and online interaction to acquire and retain customers.

 Advertising

 Digital media has taken much of the previous role of trade magazines, and neither TV nor radio are able to effectively target subcontractors´ customers. That's why they are ineffective, as shown in subcontractors´ advertising spending. For example, in the U.S. newspapers' share of the B2B media revenue was 37 per cent in 2008 and only 29.4 per cent in 2012. Digital advertising is the winner, in 2008 11 % and in 2012 16.2%. It has clear advantages: easy targeting, good results to costs ratio and excellent measurability .

 Search engine, e-mail and mobile advertising, banners and sponsored content are the most important tools for digital advertising, and all of them are gaining popularity in B2B business. These tools are excellent for raising awareness among potential customers, with the intent to continue dialogue with them by attracting them to move to the company's online premises. Sponsored content on other sites, important to customers, is also an effective way to maintain existing customer relationships and to push customers to purchase more.

 Making subcontractor more valuable for customers

 As a key part of their strategy, numerous subcontractors try to get rid of bids with detailed customer specifications and heavy competition; their aim is to become a strategic partner with their customers, with joint development of subcontractor´s offering, thereby also contributing to the development of customers´ end products. All strategies, of course, can be successful, and all can effectively utilise digital tools, too. But the more a company is seeking partnerships with its customers, the more important inbound marketing becomes. Thus, inbound marketing can also be seen as a key part of solution selling or consultative sales.

 Inbound marketing is built on digital channels, such as making use of blogs, videos, articles, e-books, search engine optimisation and social media. The aim is to create engaging content to earn customers' attention, to make it easy for customers to find the company and to attract customers to the company website to familiarise themselves with company´s expertise and strengths.

 Maturity of a company in inbound marketing can be divided into three stages. A basic approach primarily serves company´s own activities, such as product launches and marketing campaigns. In a more sophisticated model, content is directed at the target customers and their needs, in order to provide adequately information to the customers and external influencers and to make them view the company positively. The most advanced companies are seeking to become thought leaders in selected areas that are important for customers, by presenting in-depth and well-founded point-of-views on those areas. Thus, inbound marketing is not just a part of marketing or customer strategy, but a key element of company's business and competitive strategy.

 If it is realistic to assume that a subcontractor could affect end customers of its client companies to improve its competitive position, interesting content for the end customers should be placed on company´s own and external websites, too.

 When creation of content is rooted in target audience and their information needs, the most important thing is to understand, what kind of information various internal decision-making roles and external influencers need at each stage of the purchase process. At best, traditional marketing and sales roles are mixed and overlapping. Marketing tends to push knowledge and influence deep into client's decision -making process. Sales aims to get close to the customer before there is even awareness of a need, and using various inbound marketing tools, tries to build the purchasing process favourable for the subcontractor.

 Business objectives and digital media
 Finally, let´s look at some typical business objectives and how digital media tools can help to achieve them.

 Retain existing customers and generate new business

 With existing customers, it is not only retaining the current business, but also getting them to make additional purchases and to buy totally new subcontractor products.

 The most important thing to maintain and grow business with existing customers, is to make customers feel that they have made a good purchase. This is achieved through helping clients to use the product and through external reinforcement. The basic guiding principle of use assistance is the same, as when using content for buying process: first identify critical use phases of customers and main stakeholders that are involved in use of the product. Then for each of the phases and use roles, produce and make available tools and information that help customers to use the product or get more out of it. Positive reviews by industry influencers, publication of new reference cases and other external confirmation convince the key customer stakeholders that your company continues to be a competitive business partner.

 Existing customers are known to be the most receptive to company's new products, and smooth cooperation with a customer is an excellent starting point for new deals. If customer employees, affecting on new product purchase, are not yet known, existing contacts can be used to create a connection with them. The goal is again to influence the customer as early as possible, even before the need is materialised. Well-planned and targeted information can convince the key customer persons to notice that the best partner for the new need is the supplier, already well-known.

 Acquiring new customers in existing markets

 Today, subcontractors no longer need to rely on cold calls, coincidental exhibition meetings or newspaper advertisements to generate customer awareness and interest. First of all, the Internet and social media can be used to identify potential customers and their key influencers, and even those individuals and entities that these influencers trust and rely on. After this, customer targeting is much more focused even with traditional approaches. Another way, often a better one, is to attract target customers to the company's website by providing sponsored content or ads to the sites and communities, where the target customers' key people spend their time.

 Creation of interesting and compelling content for customers on company website will benefit new customer acquisition in two other ways: first, references to the content on industry influencers websites generate new contacts and potential customers, and secondly, well-planned content improves search result page position of the searches made by potential customers. High-quality content that directly does not try to sell subcontractor´s products or expertise, is also welcomed free of charge by external web sites, important for customers.

 Expansion into new market areas

 When expanding into new market areas, awareness of a company is very low compared to the ones, where the company is already active. Therefore, development of new markets should start early enough with content that is interesting for the new regions and also localised; for example, also available in local languages. The same tools as described above, when acquiring new customers, can be successfully used in this context, too. Special attention should be paid to influencers, who are not directly present in the new target areas, but who nevertheless have a significant impact on subcontractors´ potential customers. For example, internationally-oriented industry websites and important reference customers often create fertile ground for new market penetration.

 New product launch

 When a company is still only planning to launch a new product, it is vital to get feedback from current and also new customers. The aim is to test and iterate important go-to-market elements, such as customer value proposition, product features, business model, target segments and key marketing messages. At the same time, this step is also beneficial to prepare markets for the product launch and to produce right type of content related to the new product. Since a company is a newcomer in the markets, it needs to show its expertise in the areas related to the use of the product; and, to be considered as a thought leader, a subcontractor needs to introduce new approaches to customer jobs to be done. For example, a subcontractor may introduce a new product that is supported by a tool that assists product use or by a modelling software that can be used to evaluate benefits of the new solution before it is bought.Raimo Malilahttp://firstname.lastname@example.com:blogger.com,1999:blog-571376301174098105.post-22211956244388733502013-09-19T09:48:00.000+03:002013-10-17T11:14:13.154+03:00Modern inside sales boosts B2B businessToo frequently occurring situation: you are back from sales trip, with empty hands, results zero or negligible. The customer did not need your product, he is still in very early phases of his purchasing process, costs of dealing with a potential customer far exceed anticipated revenues - there are multiple reasons. Modern inside sales methods and tools are transforming the way, how B2B businesses are operating and boosting their sales. Companies should seriously consider deploying them as part of their overall sales activities.

 Modern inside sales

 Modern inside sales is about professional B2B selling of medium- to high-valued goods or services, where customers are not met face to face but remotely, using various communication tools. These sales conversations cannot be scripted, and it typically requires multiple contacts before the agreement is reached. In parallel with the term inside sales, we can also use remote or virtual sales. Traditional field sales, or outside sales, is often seen as the opposite of inside sales.

 Inside sales image has been dominated by telemarketing, i.e. often hastily educated people selling low-value goods or services to consumers, using ready-made scripts and trying to close a deal in one call. Telemarketing is outside of this post focus.

 Insidesales.com estimates that in the United States, remote sales already employs more sellers (2.34 million) than traditional field sales - and the growth continues. The same study found that also field sales force uses remote selling in their work: 24% of their time is spent on inside sales, 35% on outside sales and 15% on customer related travelling. Inside sales force, in turn, uses 63% of the working time by doing remote sales and 5% by field selling. Growth of inside sales thus means that both time spent on inside sales and number of inside sales employees are growing.

 This post focuses on remote sales and in particular on its use in demanding B2B sales and marketing cases. Inspired by successful references, numerous B2B companies are investing large sums of money to build inside sales capabilities and resources. Next section deals with drivers behind popularity of this phenomenon.

 Drivers of inside sales growth

 General cost awareness favours the growth of inside sales, key drivers being increase in the time used for selling, lower travelling costs, lower sales staff salaries and increasing the efficiency by using the most appropriate tools.

 Remote selling professionals use relatively more time to actual sales than their field sales counterparts, due to time needed for customer travel by the latter. Also, travel costs are a major cost item, especially with foreign customer accounts. Median salary in inside sales jobs in the United States is less than 70 per cent of that of field sales, and also in demanding B2B sales, differences are significant. In Europe the situation is similar. It is widely alleged that inside sales is growing due to these wage differentials, but probably the greatest cost benefits are brought by always being able to use the most appropriate sales methods and tools.

 Globalised markets accelerate inside sales growth by making sourcing and sales context global, by harmonising markets and by tightening of competition.

 Globalisation of sourcing and purchasing processes - search and comparison of solutions and acquiring them worldwide, forgetting borders - has lowered the threshold to use electronic communications means, especially in the early stages of buying process. Vendor companies have been forced to follow the trend and their customers, only very few B2B players can count on serving only domestic clients. Markets that previously have been local are also becoming quite uniform: same technologies, standards and processes are in place across industries, globally, making it easier to present and offer products through remote sales. Globalisation has also brought competitive pressures, favouring inside sales: for example, a company might be competing not only with traditional local competitors, but also with large international companies, emerging country businesses and new players seeking to disrupt the industry through innovations and business model changes.

 New communication and information technologies are the practical tool to enable inside sales. Also, buyers´ increased ability and willingness to use these technologies are paving the way for the growth of remote selling.

 Improved communication means are closing the gap between remote selling and face to face interaction, essential when selling demanding B2B products. Besides telephony and e-mail, new technologies, such as conference and video calls, instant messaging and other social media tools have been taken into use. Internet and extranets, again, are a superior way to share up-to-date information, ranging from basic product information to customer-specific proposals. On top of these communication and information technologies, there are also versatile tools available that assist expanding inside sales: e.g. sales configurators make it possible to define features of more and more demanding products remotely, either by customers themselves or in cooperation with the seller. To support remote selling, there are also a number of integrated software packages available, e.g. Salesforce.com, Insidesales.com and Lead Desk offerings.

 How to use inside sales

 Most B2B companies use both field and remote selling in their sales processes. The optimal division varies, depending on, inter alia, nature of the product or service, distribution strategy, marketing and sales processes, as well as level of company globalisation. Next we shall discuss various ways to organise inside sales for demanding B2B business; real implementation can, of course, be a combination of these.

 Product or service based approach: Remote sales is used to sell offerings, where customer risk is relatively small. Typically, these do not require on-site assessments or definition of delivery content. Also modular, customisable solutions can be sold remotely, provided that interaction can be supported by sales configurators and relevant guidelines. Complex solutions, often requiring consultative and value selling approach or in-depth customisation, favour meeting customers face to face. When selling services, the more standardised they are, the better for inside sales.

 Phase of customer engagement process: Remote selling methods are extremely well suited to verify and crystallise customer needs. After this field sales can continue, having better quality cases to work on. Also, up-selling or cross-selling of goods or services can be conveniently done remotely.

 Market segment approach: Small and medium-sized enterprises, whose purchases are not large enough and the buying process is relatively simple, are often taken care of with inside sales. Customers with large potential, complex needs, complicated buying process and involvement of large amount of people in the process, require face to face interaction. Many vendors use channel partners to handle customers with smaller potential and then allocate inside sales to support distributors and resellers. When planning, how to approach an individual company, a vendor needs to actively listen to its customers: a client might favour, for operational or other reasons, different kind of approach than planned by the vendor. For example, a large potential customer may object face to face meetings and prefer buying online for cost and resource saving reasons.

 Geography based approach: Remotely located customers that are non-strategic are typically inside sales targets. When a company is expanding internationally, a new country can be first served through remote selling, before setting up a local office.

 Some execution challenges

 Finally, a few words about the challenges that a company often faces, when it begins to use inside sales. Organisation, skills development and the role of outsourcing are among the most important ones.

 When a company is defining inside sales responsibilities, practises and the roles of sales people in the new operating model, old field sales traditions and bias will inevitably start to affect. For example, client meetings and associated travel, new methods and tools, as well as reward and recognition are topics that cause strong reactions, either not letting go or rejecting ones. This is why implementation should be planned well, by engaging and motivating existing staff, as well as reasoning any changes thoroughly.

 Skill and competence development is absolutely essential to achieve results. Persons doing inside sales, whether they do it on full-time or part-time basis, need to learn the new processes and tools, besides understanding the strategic premises of the new operating approach. Especially, when demanding B2B solutions are concerned, tools as such are not enough: there should be thought out guidelines on how to effectively use them to convince customers and to close deals. Also field sales skills must be further developed: all need to understand, what are the roles of inside and outside sales, and on the other hand, the field force needs to be capable of taking more consultative sales approach, away from routine sharing of information.

 There are potential outsourcing partners that can assist in inside sales, too. Often their core expertise, however, is in more traditional telemarketing. In B2B sales, relatively simple products can best be outsourced, but the more demanding products are, the bigger organisation and skills development challenges.Raimo Malilahttp://firstname.lastname@example.com 25.74815100000000747.676419999999993 -15.560442999999992 76.17179999999999 67.056745tag:blogger.com,1999:blog-571376301174098105.post-71412772782257519282013-09-10T14:17:00.001+03:002013-09-10T14:17:42.380+03:008 tips to sell an unknown product and brand to retailerLG has just made a time-limited, exclusive distribution agreement with Best Buy on newest TV model sales in the United States. But few vendors have strong enough brand or enough marketing money to easily recruit retailers or especially retailer chains to sell vendor's products to consumers. In summary, strong bargaining power of retailers makes building of retail channels one of the most challenging go-to-market activities.

 Retail Business
 Retail business models vary widely depending on the role a retailer takes, i.e. what functions of product retailing and services a retailer delivers to an end customer. This post will focus on product sales, where services are primarily in a supporting role.

 In order to make a retailer a compelling cooperation proposal, it is important to understand, how retailer business model works and what the key measures to evaluate success are. Put simply, the three main measures are sales, margin and productivity, more information can be found e.g. here.

 Revenue growth is a key objective in retailing. To affect it, among the most important levers are product mix and its promotion, store format and location, customer profile, retailer positioning and pricing.

 Profitability is monitored, above all, through gross margin and net profit, both in money and percentage terms. Gross margin is a measure of retailer´s value added, a difference between the price paid to suppliers and the price obtained from end users. Net profit is gross margin minus overheads, such as advertising and promotional costs, store costs, distribution and logistics, as well as administrative and financial costs.

 Inventory turn as well as sales and profit per used store space (m2) are the most important productivity measures.

 After a retailer is identified as a potential partner to complement vendor´s channel strategy, the next task is to analyse in more detail retailer´s strategy and business fundamentals, as well as its opportunities as a seller of vendor´s products. On this basis, strategy, tactics, and business case are developed, aiming at merchant to accept vendor´s cooperation proposal. In the following we introduce 8 building blocks that can be used to assist in formulating a lucrative offer, matching with merchant´s sales, margin and productivity objectives. The ideas are best suited to tackle retail chains with physical stores, but they can be adapted to create argumentation for online retailers, too.

 Positioning for growth
 If a product takes a merchant to new growing businesses, it becomes much more interesting. A product may spearhead use of some new technologies that are about to be introduced also in many other product categories. On the other hand, a product may be the first one in emerging and significant product category or market segment. In addition, a product may primarily generate demand among consumers, who are the most lucrative customers, because of their regular large or high margin purchases.

 A vendor needs to explicitly document, how the future lucrative market will emerge and also numerically justify opportunities for retailers. A retailer is thus getting coaching, what kind of new business opportunities are looming ahead and how to develop necessary skills and competences necessary for them. If a vendor is also able to lean on success cases from other countries or market areas, it has a chance to be considered as a valuable cooperation partner, beyond basic supplier role.

 Creation of new demand
 Being able to appeal new customer groups that have previously been non-customers, in other words hesitating, refusing or not explored ones, is an extremely interesting message for retailers. To convince a merchant, a vendor must be able to clearly demonstrate the elements and features in its offering that are appreciated both by current customers and non-customers. A vendor may also bring in new customers by introducing a product that offers less features than competitors´ ones, but still enables new customers to get their jobs done, all at a lower price (low-end disruption).

 Reaching new customers
 By doing active and well-designed inbound marketing, a vendor may be able to generate plenty of consumer attention and interest around its products. For example, social media presence can create a community that actively increases consumer pull through word-of-mouth and viral activities. Correspondingly, product functionality can be extended with an application that also gathers a lot of information about customer needs and requirements. A well-thought-out way to link acquired customer interest and insights to serve also retailers, is a valuable asset in getting them engaged.

 More sales to existing customers
 It is often possible that a vendor can sell complementing products or services to existing customers; complementing offerings assist in using the basic product functionality or enhance the offering to get new jobs done. This kind of additional product utilities make merchants more important to their customers and increase their share of customer spending. Accordingly, a vendor product may be complemented by some other products or services already sold by a retailer, in order to form a complete, easy-to-deploy solution. In both cases, it is vendor´s job to identify and communicate the opportunities.

 Exclusive sales rights
 From retailer profitability perspective, it would be best to have no competition in product selling, so that pricing could be done as independently as possible - in other words, a retailer would have exclusive rights to sale. For a vendor, this is very rarely a desirable situation, due to suboptimal pricing decisions, marketing support or market coverage. Exclusive rights for a limited time is an often used compromise, sometimes requiring stronger sales commitment from a retailer in return. If it is possible to make an exclusive version of a product that only a retailer can sell, at least some of the benefits of exclusive deals can be achieved. For example, in mobile phone sales, dominated by operators in most of the countries, both of the above approaches are widely used.

 Sales mix margin improvement
 By selling more to existing customers, not only increases revenues but might also lead to a higher gross margin percentage, a very nice message at least for a person responsible for the category. For example, accessories and supplies in strongly competed personal computer and laptop sales bring plenty of margin Euros, thus increasing also overall profitability of the category.

 Also, if a vendor product has higher margins due to barriers to competition, such as patent protection or proprietary technologies, this should be clearly highlighted when communicating to retailers.

 Utilisation of vendor resources
 Bringing vendor´s know-how and resources available for retailers improves both profitability and productivity. In order to be cost-effective for the vendor, and to benefit retailers significantly enough, it is good to target the resources only at the most critical success factors and to avoid too long commitments. In the same way, vendor´s partners can be utilised to bring their own know-how, especially if the vendor has privileged access to partner resources.

 Business model that supports retailers
 Finally, you have to remember the significance of a business model that cleverly supports retail business. The model needs to be developed early enough and recognise the vital role of retailers in economic success of vendor´s product. This needs to be further built in to all business model elements - to assist retailers to reach their key objectives, increase sales and improve margin and productivity.Raimo Malilahttp://firstname.lastname@example.com:blogger.com,1999:blog-571376301174098105.post-39458462594636508842013-08-31T16:55:00.000+03:002015-04-16T13:54:38.686+03:00Company competitiveness - do it yourselfWeakness of growth and exports as well as outsourcing of manufacturing to other countries are making big headlines in Finland. Although structural problems and weakening cost competitiveness should be addressed immediately, companies also need to assess their own efforts and how they are building their competitiveness. These measures will have a significant impact on the general
 business conditions, too.

 This post has business perspective focus: What factors are deteriorating local business environment (local in this post refers primarily to national environment, i.e. Finland) and causing problems, when a firm tries to drive its competitiveness. In addition, we shall discuss some ideas, how the negative trend can be reversed. Structural issues or general cost competitiveness are not addressed here.

 Local business environment is instrumental for business
 Local business environment, or "commons" as it is called, and how a company can utilise this environment, are essential building blocks of the company's competitiveness, also in global business context. Globalisation has created vast amount of new opportunities through international division of labour and expansion of reachable markets, and there is no need to cry over past, it´s gone.

 It is often argued that future winners, especially in software and content businesses, do not need to care about physical distances. Yes, it is true that access to target customers and smooth distribution of products to customers make is possible to expand business rapidly. But, as in other industries, also software and content businesses lean heavily on local environment - and actually their biggest new business opportunities are often linked to physical products.

 A company that has extensive global operations and networks, might not depend so much on local commons. But when studying this on single product or business level, it is clear that competitiveness can be considerably boosted by supportive local business environment.

 Thus a successful business carefully utilises its local operating environment, and also recognises that it is profitable to contribute to continuous development of commons.

 Erosion of local business environment
 As noted above, local environment can either support or hinder development aims of a firm. Omitting macro-economic factors, competitiveness of Finnish companies is also considerably affected by management decisions: Focusing on operational efficiency, resulting in delayed or insufficient renewal and innovation in response to new opportunities and challenges.

 Cutting costs by moving production to lower cost countries, of course, can help in the short term, but in the long run, it will not save the company. The sad story is that by outsourcing manufacturing, a company also significantly narrows many essential capabilities needed for renewal and innovation - especially, when creating high value-added products, manufacturing process often plays a key role. Once manufacturing is no longer physically close, process engineering expertise cannot be maintained, since it depends on daily interactions with manufacturing. Without process engineering capabilities, it is difficult to conduct research on new process technologies, which in turn makes developing new products more challenging.

 In Finland, one good example is dilution of electronic product related capabilities, caused by Nokia gradually moving manufacturing operations abroad. Similar kind of development is ongoing in other technology sectors, too - for example, related to STX cruise ship business.

 Outsourcing of manufacturing to other countries is particularly affecting expertise of subcontractors. If there are no muscles to follow the principals, e.g. sub-suppliers focusing on development of tools, materials and testing, have less motivation and assets to continue enhancing their products and skills further.

 When conducting mechanics, electronics and software R & D, continuous dialogue with component suppliers and manufacturing operations ensures low-cost bill of materials, low assembly and testing costs, good manufacturability and product quality. Often also purchase logistics, including sub-assemblies, is outsourced, which hampers high-quality R & D work.

 Manufacturing companies are also important customers for new products or processes - often it is possible to develop new products in collaboration with geographically close customers, jointly finding the solution features that really bring value to customers. Especially for startups and small businesses, physical distance may be an insurmountable obstacle to such an approach.

 Joint product and business model development with customers is one of the cornerstones of modern company's competitiveness. Although the Internet, social media and other advanced tools allow development with far-away consumers and enterprise customers, those customers that are located in close vicinity and otherwise qualify as good customers have their strong merits. In consumer markets, it is important that Finns continue to be willing and capable of testing and deploying new solutions. Good customer companies, on the other hand, are eagerly seeking vendor partners that can help them increase their own competitiveness: Hence, if a company renewal is forgotten, it has also a very negative impact on its supply chain companies. Both in B2C and B2B businesses, ability to build international customer relationships and distribution solutions is a prerequisite for a scalable, successful business - target market know-how, networks and experience are critical.

 If investors do not have understanding of a company business, it has significant consequences - for big listed companies, smaller ones and startups. In Finland, low number of listed consumer product and health care companies results in limited understanding of these businesses, lower levels of interest and high risk aversion. Startup investors prefer cases that relate to their own experience - in Finland e.g. mobile and gaming areas are overweight at the expense of other sectors.

 Case: A consumer product startup
 Let´s take a closer look at a Finnish consumer product startup to more deeply understand, how it was supported by the local operating environment. While the experiences can not be generalised to firms that are e.g. larger, operate in other industries or in B2B businesses, the case probably reveals many common experiences.

 Company product consists of dedicated devices with mechanic and electronic parts, device embedded software, smartphone or tablet application and cloud service software. The company had considerable expertise in various technologies, international business, sales and marketing, but it needed partners is such areas as development of mechanics and electronics, manufacturing, product commercialisation, distribution channels and business finance.

 In the development of mechanics and electronics, some of the key challenges were:

Sufficiently robust plastic construction that is easy to produce

Reliable and affordable solution for motion detection

Industrial design, which communicates intended use and positioning

LED-based lighting solution that reproduces colours well enough also during the day

Electronic component selection optimised for consumer products

 Particularly difficult was to find a partner that is able to take overall responsibility for the mechanical and industrial design of a consumer product, and that has enough understanding of materials and mechanical components. It also looks that skills to develop consumer electronics hardware are not so strong outside of mobile device world: There is a lack of vision for the best future solutions, and thus component choices were problematic. Without company's own strong experience in project management, both development quality and schedules would have suffered badly.

 There were several suggestions that the entire device development (mechanics, electronics and embedded software) and manufacturing should be outsourced to experts (ODMs) in China and its neighbouring regions. On the basis of the evaluation, however, it was concluded that because product definition, product development and manufacturing need a concerted effort, it is best to outsource manufacturing to a Finnish or possibly Estonian partner, at least in the early stages. The challenge was that after Nokia gradually moved its manufacturing operations out of Finland, there are no companies left that are capable of assembling consumer products in volumes - the focus is primarily in industrial customers with small volume needs. Another example is steel molds needed for manufacturing plastic parts: After business changes of Perlos and Eimo, molds are not anymore manufactured in Finland and also very much of the related capabilities have been lost.

 The company got plenty of advice, how to commercialise the product, but it became clear that demand and brand building skills, painfully needed in international markets, were in short supply. Very often publicity tricks or tips of possible partners were the only substance, whereas, for example, it was difficult to get comprehensive business views, how to use the Internet and social media as a tool for commercialisation. Few people seemed to have experience in high-tech consumer product commercialisation, and if they had, it was strongly linked to mobile devices.

 In addition, understanding of international sales channels and distribution strategies beyond mobile operators and phones is thin. Larger retailers in Finland are also very careful in terms of new product concepts: They are waiting for tangible evidence of demand, rather success cases in the most important markets of the world, before they want to commit to new products, marketing and sales.

 Securing financing is one of the key startup challenges. In Finland very few potential investors have optimal experience and knowledge background for the case company business: High-tech consumer products and their commercialisation as well as distribution channels to consumers.

 What can be done?
 What can a company then do to best utilise local commons and contribute to further development of local business environment? Here are some ideas to start with.

Companies need to create a customer-focused culture of continuous internal renewal and innovation. Understanding of customer needs, iterative product development based on customer feedback and a strong desire to find customers more value-adding solutions are the core of innovation and success. Not mere cost-cutting.

Drive cooperation with other companies, especially in innovation and development. If you trust that your company is able to internally generate ideas needed for future success, tendering well-defined products and projects is a sensible model. But rarely all the wisdom is only within the company. The firm must open its innovation and development process in such a way that products, technologies, and expertise of external firms and other actors are actively screened. Promising ingredients are then combined with the company's own competences to create solutions and business models that even better meet the needs of customers.

Experience and know-how to better use. There are plenty of experienced and knowledgeable professionals with seasoned business background that are under-utilised. First of all, they should be utilised much more widely, in particular for SMEs and startups, but also for business development of larger companies. Second, besides normal fee based consulting, there are plenty of other models, how experienced persons can be more deeply involved. Besides participating as an investor, e.g. performance-based assignments, interim management or part-time employment are feasible options. These experts are also often able to contribute their international networks and best practises, how to deal with them.

Owners and investors should demand renewal and innovation. Future success correlates with ability to produce new value for customers. This applies both to listed and non-listed companies, and should be reflected in the guidance of its owners.

Boosting public sector effectiveness requires renewal and innovation. Strictly limited invitations to tender are not the best means to get new ideas and to create opportunities for innovative companies to develop reference customers. Innovations in collaboration with corporate partners should be an integral part of the public sector toolbox.

From company support to innovation support. Customer money is much more valuable than any direct support received. Could part of the Tekes funds be re-directed to support joint customer - vendor business innovation? Thus, for example, a client could get support for introduction of a new solution and would pay supplier as usually. And if the new and innovative solution achieves targeted business benefits, the customer would pay the support money back to Tekes.

 Raimo Malilahttp://email@example.com