B2B Marketing, Sales & Business Models

Copyright DKParker, LLC 2013

Marketing & Models Dave Parker

@DaveParkerSEA

www.dkparker.com

[email protected]

“Separating the forest from the trees from the bark”


Agenda

!  About Dave

!  Marketing Methods

!  Sales Models

!  Pricing Methods

!  Business Models

!  Financial Models

!  Q&A


About Dave

!  VP Programs at UP Global (Startup Weekend + Startup America)

!  Serial Entrepreneur

!  EIR at Mitsui Venture Capital

!  Board member for three mid-market, handful of startups and advisory board for over 50+ startup companies

!  Husband, Dad


Two Methods + Three Models

!  Marketing Methods – are mechanics to be tested

!  Sales Models – how you SELL your product.

!  Pricing Methods – how to price your product

!  Business Models – are the way to monetize, including key metrics

!  Financial Models – include revenue and expenses. Used for both forecast and actual


Marketing Methods


How many of the Top 10 Viral Videos 2013 were B2B?



5 reasons you won’t go viral

1.  Viral & Network effect is a B2C marketing method calculated as “K Factor” k = invites sent * conversion

2.  No inherent virality in your offering – nothing to share with other people, e.g. Facebook or WhatsApp

3.  No collaboration virality – extending your offering

4.  Your target market is too small (TAM/SAM)

5.  Budget and Creative - No “me-too” approach will work


What you can do

!  Clear product positioning = word of mouth. Can your message be repeated to their boss?

!  Make your product more valuable over time <REALLY?>

!  MVP vs. KAP “Kick Ass Product”

!  Free trial is different from Freemium !  Corporate users will expense a service below a specific price

point

!  What the conversion % to paid is the question you will have to answer


Marketing Channels and Metrics

What are your core assumptions for marketing?

!  Track all Marketing by channel and $$ spend !  Paid, SEO, etc.

!  Cost to create leads (traffic)

!  Cost (effort) and % convert to prospects

!  Cost (effort) and % convert to customers



Key Metrics - Marketing

!  Marketing methods

!  Monthly Spend

!  Cost of SEO

!  Calculation of spend to Lead to Prospect

Your marketing metrics here:

!  ________________________

!  ________________________

!  ________________________

!  ________________________

!  ________________________


Sales Models


Someone has to sell your product – let’s start with you


B2B Sales Models

!  Web Direct – Advertising and conversion based sales, sales support?, requires customers to search and find

!  Direct – internal sales people (Inside or Outside), # of deals/Month, salary + commissions

!  Distribution/Channel Sales – Indirect or external, <# of deals/Month, no Salary, just commission <Mindshare. Fulfill demand, don’t create demand

!  White Label Sales/Licensing – infrastructure or license sales, long sales cycle, few but targeted customers

!  Retail – Product on shelves - N/A


Known Market

Unknown Market

Low Price Point

High Price Point

Known Search Words

Unknown Search words

Web Direct ✔ ✔ ✔

Direct ✔ ✔ ✔ ✔ ✔

Indirect ✔ ✔ ✔

Licensing ✔ ✔

Retail


Sales Model Assumptions

The following apply to ALL models

!  Cost of Customer Acquisition (CAC)

!  Lifetime value of Customer (LTV) !  Typically 36 month calculation

!  Time to close sale !  How does this change with product/market maturity?

!  Churn/Retention


Key Metrics – Sales

!  Sales Method

!  Sales Staffing

!  Sales Cycle !  Time !  Conversion ratios

!  CAC

!  LTV

!  Churn

Your sales metrics here:your sales here:

!  ________________________

!  ________________________

!  ________________________

!  ________________________

!  ________________________

!  ________________________


Pricing Methods


You can sell anything for nothing


Pricing

!  Value based pricing – don’t start too low

!  One time or recurring?

!  What do you need to charge to cover: !  Cost of build

!  Cost of Sale

!  Profit Expectation = Cash flow

!  A/B test on closed landing pages


Key Metrics – Pricing

!  Product variations

!  One time or recurring

!  Monthly/Annual

!  Pricing over time

!  Services

Your pricing metrics here:

!  ________________________

!  ________________________

!  ________________________

!  ________________________

!  ________________________


Business Models


If you have a “K Factor” >3 you don’t need a business model


6 7 8 Scalable B2B Business Models

Scalable doesn’t include services

1. Subscription – Salesforce – cost of customer acquisition, lifetime value and churn

2. Market Place – Alibaba – average transaction, commission on transaction

3. Lead Generation – AllStarDirectories – traffic, form data, price per lead

4. Productizing a Service – adding scale to a service


6 7 Scalable B2B Models, Cont.

5. Transaction Fees – Flattr, KickStarter – average transaction fee, commission

6. Commerce – Physical Goods- Wholesale, cost of goods, retail, average margin, physical good

7. Combinations – Multisided markets – hardware sensors, software services with data analytics

8. Non-profit


1. Subscription

!  Example: Salesforce , Box, Moz

!  Key Metrics !  Average Revenue Per User (ARPU)

!  Conversion ratio – trial to purchase

!  Churn

!  Challenges: MVP won’t be enough to be KAP

!  Notes: “Consumer IT”, Moz uses no sales force.


2. Marketplace

!  Example: Alibaba

!  Key Metrics !  Average Transaction Amount

!  Number of Monthly Transactions

!  Commission %

!  Challenges: two sided market places require you start with one side, value to seller

!  Notes: critical mass or marketplace required


3. Lead Generation

!  Example: AllStarDirectories, NetQuote

!  Key Metrics !  Cost to generate traffic

!  % conversion of form data

!  Price per lead

!  Challenges:

!  Notes:


4. Transaction/Posting Fees

!  Example: 99Designs, KickStarter, Elance

!  Key Metrics !  Average transaction revenue

!  Fee % per transaction

!  Number of transactions

!  Challenges:

!  Notes:


5. Commerce

!  Example: AmazonSupply, Grainger, Go2Marine.

!  Key Metrics: !  Wholesale or cost of goods sold

!  Average Margin %

!  Average Basket

!  Commerce – Physical Goods- Wholesale, cost of goods, retail, average margin, physical good

!  Notes: Owns customer relationship


6. Combinations

!  Combinations business models happen for two reasons !  You don’t know which model is right

!  At scale you can expand revenue sources

!  Examples: Hardware sensors + software services to create data analytics

!  Challenges – most require traction


7. Non-Profit

!  Example: UP Global !  Non Profit that provides programs for (consumer)

entrepreneurs

!  Majority of revenue is from Sponsors

!  Challenges: it is scalable, but requires direct sales process for funding

!  Notes:


Other Models – ONLY at Scale

!  Big Data Sales – Data Analytics

!  Multisided Marketplace – Etsy, Zarly

!  Panels – ability to interview panel of customers or pay for Access. Examples: PatientsLikeMe, Toluna

!  B2B2C – please don’t hurt yourself…


Innovative Trends

!  Groupon – lead gen with consumer benefit

!  Airbnb – enabling payments for Peer-2-peer, sharing economy

!  Kickstarter – crowdfunding

!  Xerox – leasing equipment – 1950’s


Financial Models


To the Spreadsheets!

!  These details manifest in assumptions

!  Time based !  Launch

!  Ramp

!  Scale

!  Market & Brand Development !  Pricing

!  Overtime


Just say “no” to $100M!

!  Avoid the Top 10 Fails Fundraising

!  Bottom Up vs. Top Down Model

!  Find a proxy for your business model “Like this for that”


Example


Q&A


[email protected] www.dkparker.com/blog @DaveParkerSEA



Slides to Print


Key Metrics - Marketing

!  Marketing methods

!  Monthly Spend

!  Cost of SEO

!  Calculation of spend to Lead to Prospect

!  ________________________

!  ________________________

!  ________________________

!  ________________________

!  ________________________

!  ________________________


Key Metrics – Sales

!  Sales Method

!  Sales Staffing

!  Sales Cycle !  Time !  Conversion ratios

!  CAC

!  LTV

!  Churn

!  ________________________

!  ________________________

!  ________________________

!  ________________________

!  ________________________

!  ________________________

!  ________________________


Key Metrics – Pricing

!  Product variations

!  One time or recurring

!  Monthly/Annual

!  Pricing over time

!  Services

!  ________________________

!  ________________________

!  ________________________

!  ________________________

!  ________________________

!  ________________________


Key Metrics - Business Model

!  Which Model?

!  Challenges

!  ________________________

!  ________________________

!  ________________________

!  ________________________

!  ________________________

!  ________________________