Doing Business With The New China: Sales Strategy

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The

2 B2B Selling: How It Works

Contents

3 4 5 7 8 11 13 14 15

| Sales Life Cycles

| Innovation S Curve

| Company Life Cycle

| Structuring Sales Strategy | Generating the Innovation | Phase 1: Customer Discovery | Phase 2: Early Adopters | Phase 3: Early Mainstream | Phase 4: Late Mainstream


Sales Life Cycle

elling is a key activity for any company looking to bring their product or service to the China market. Unfortunately one company’s successful sales process does not necessarily mean that it will work in other companies. The sales framework, strategies and actual tactics vary widely on where the product category is in its own innovation cycle and where that particular company or division is in its own lifecycle. This eBook will dive into the Company and Product Sales Lifecycle, which is NOT about how a sales process works like contacting a new prospect, closing etc but about how to structure and think about a sales strategy for China. The material here is targeted at Founders, CEOs and Managers who are looking to create a sales strategy for a new or existing product so they can hire and create the right selling team. The two foundational ideas of any sales strategy rests on the classic innovation curve of the product that is being sold and the company lifecycle framework. INNOVATION S CURVE Innovation can take many forms but the most disruptive type of innovation is where a product or service comes along that solves a consumer or business problem in a new way and creates an entirely new product category. The lifecycle of such a product or service would follow a trajectory like in Figure 1.

S


At each stage of the innovation cycle the product or service requires a different way to sell and market. Here are 2 frameworks that describe the people that are the buyers in each stage. FRAMEWORK 1 1. INNOVATORS: 2.5% of the population. Plays a gatekeeping

role in the flow of new ideas into a system and actively seek information outside their peer network.

2. EARLY ADOPTERS: 13.5% of population. Has the highest degree of opinion leadership. they are localizes and help trigger the critical mass when they adopt an innovation.

3. EARLY MAJORITY: 34% of the population. Relatively longer adoption period than that of innovators. They follow with deliberate willingness in adopting innovations but seldom lead.

4. LATE MAJORITY: 34% of the population. Do not adopt until most others in their system have already done so. Most of the uncertainty about a new idea must be removed before the late majority feel it is safe to adopt.

5. LAGGARDS: 16% of the population. Point of reference for the laggard is the past and extremely cautious in adopting innovations.

FRAMEWORK 2 1. Technology Enthusiasts / Technology Heatseekers / Mavens or

Early Market Buyers: This category of person is 2.5% of the population and enjoys to learn technology for the sake of technology.

2. Earyevangelists / Early Adopters / Visionaries / Change Agents or Connectors: these are 13.5% of the population and are looking to solve specific problems in their everyday lives

3. Early Majority/ Mainstream Pragmatists: these are 34% of the population and are looking for proven innovations and ideas.

4. Late Majority: 34% of the population 5. Laggards: 16% of the population

In both frameworks there is a clear type of buyer that drives the type of sales strategy that is appropriate.

Innovation S Curve


The innovation S curve plays a big role in determining what the right overall sales strategy should be to sell that product or service. Another way to understand what the right sales strategy would be is to understand the characteristics of where the company is in its own lifecycle. Here are a couple of ways to think about company lifecycles: FRAMEWORK 1: This framework looks at company building from a management perspective 1. Courtship: a company is born when there is a tangible

expression of commitment. when the founder incurs and undertakes substantial risk.

2. Infancy: cash flow being monitored on a weekly basis. they are constantly undercapitalized. a company with sales increasing 35% or more annually will have trouble financing its growth from internal sources

3. Go-Go years: at this stage, almost every opportunity seems to be a priority. not uncommon to be in different types of businesses.

4. Adolescence: requires delegation of authority and the founder must live by the policies of the company.

5. Prime: it is the optimal condition of the lifecycle where there is a constant struggle between flexibility and self control. there is early prime and late prime and it shifts between the two.

6. Aging organization: aristocracy. people want less conflict, less change. have reduced expectations for growth.

FRAMEWORK 2: looks at company building from a customer growth perspective 1. disruptive foothold established: early market trying to cross the

chasm into dominating a niche. Once the chasm is crossed then multiple niches are targeted (bowling alley) and rapid growth occurs (tornado)

2. growth occurs: mainstream and growth markets where technology has been accepted and growth occurs at double digits.

3. growth stalls: market matures and growth has flattened and commoditization has occurred. Consolidation occurs and this where the market category is taken for granted.

4. Internal disruptive ideas get squashed: these are declining markets as new ideas replace old ones.

5. managers leave/entrepreneurs coalesce 6. new businesses form

Company Life Cycle


Company lifecycle frameworks determine what kinds of sales and marketing processes are already in place, and what might need to change to tackle a new product or service opportunity.

FRAMEWORK 3: This framework looks at company building from how big the company needs to be to support its operations. This is typically a good description of fast growing internet, App or online type businesses: 1. Family: a small team is formed to tackle an opportunity 2. Tribe: product has some traction and initial team is expanded

to get operating roles into place 3. Village: Teams begin to form with specialized functions within

the company 4. City: Growth occurs across all functions as more customers

are added 5. Nation: growth happens on a national or international scale.


here are four main types of sales strategies that map directly into the innovation and company lifecycle processes. These are: 1. Customer Discovery: this is where assumptions of the value of the new product or service are

tested. The type of person needed here has a high degree of failure tolerance and high change capacity. This maps into the stage where the buyer is an “innovator” or “visionary” and the company is in its “infancy” stage.

2. Whole Product Selling: This is where the initial value is accepted by the customer but the rest of the product in terms of extensions, features, support, service etc are all being tested and created to provide a complete offer to a specific category of customer. Here the sales process is being fine tuned and operationalized with a “renaissance” type sales person who can identify problems and come up solutions on a per customer basis. This maps into the stage where the buyer is an “early adopter” and company is trying to get across the “chasm” into the “Go-go years” or “tribe or village” state.

3. Operational Selling: here is where the product has reached mainstream or early majority customers and where the value has been proven and adoption is rapid. Here the sales process is one of operationalizing and scaling the sales team through adding territories, quotas, managers and other processes to sell. This maps into the stage where the company is in the “prime” state and at the size of “city” or “nation. Not e at this stage, there is also room for disruptive innovations that happen at the low end of the market. This is covered off in the next section.

4. Product Extensions and innovations in the consumption or value chain: here the market has reached the late majority and the company is now extending the product with more features and looking at ways to reduce cost through value chain and consumption chain innovations. The sales model here still rests on the “operational” selling model but it also includes the addition of “product managers” who are looking at feedbacks and incremental improvements to the existing product.

The type of selling that is more inclined to innovation type selling is located both in the first phase (customer discovery) and in the operational selling phases. Why innovation selling appears in the operational selling phases, is because of a split in the type of customer that needs the product, the high end customer and low end customer.

Structuring Your Sales Strategy T


Generating the Idea Although not directly related to structuring the sales strategy, here are some initial questions that

are used by some innovative brands to generate a new disruptive product or service or to generate low end innovations during the mainstream cycle.

NEW DISRUPTIVE PRODUCT OR SERVICE Typically disruptive products need to be 10x better than the alternative solution in order to be truly game changing. GOOGLE 1. What assumptions have to be true for this to work? Let's assume all of our assumptions are wrong

and prove them. 2. What is the most frustrating thing or misconception people have about this product? 3. Look at an uncertainty or trend and run it to its logical conclusion. looks at various trends and asks

'if they persist, will they change business?‘ 4. Run the tape: look at an uncertainty or trend and run it to its logical conclusion 5. Lets have disrespect for the impossible. Let's make an outrageous goal. 6. You have got to get away from the thinking you always need to continuously improve…its not about

taking you design and making it slightly better. Can someone make something that would be make this completely obsolete?

7. The 'what if' process. If anything is possible, what kind of experience would we be creating for customers?

INTUIT 1. What's the improvement in the customers life that they most want? What have they tried before?

Do you use it now? Why did they quit? 2. Don’t listen to what customers say through surveys, look at what they do. Look for customer

behavior and what they are doing un-optimally 3. How to get quantum change? the bullet train thinking - think big and shed previous limitations.

GROUPON 1. Find a space between discrepant supply and demand and prices change everyday. bring data to

the environment which will allow better workflow and better decisions through data. 2. Identifying waste and excess capacity and using it 3. If there is a lot of market fragmentation then it is great for marketplace companies. AMAZON 1. Don't think about competition but draw the box bigger to understand that books are competing

against . Ie..blogs, games etc. 2. Looks for customer obsession 3. What if questions. 'what if a bookstore could offer every book ever written?' ‘What if that bookstore

was always open?'


ELON MUSK 1. Looks at old technologies that are a sad thing…how can we make it not a sad thing? 2. What else hasn't changed in a long time? What might make a better or different experience?

Looks for things that have not changed in a long time. 3. Find an industry which is depressed or under funded and find a technology advantage which can

intercept the next buying cycle 4. Go where people are not. Look at industries which are underinvested or lack of capital to

modernize them. 5. Loves a regulated industry because not attract a person who wants t o compete against the

incumbents. Find the historical reasons for the regulation and that is an opportunity for disruption. the incumbents believe that their position is protected by regulation.

6. However the rest of the world thinks how things should work…assume they are wrong. Because if they are right there is probably not a whole lot of value to be added. What if the common wisdom is wrong?

LOW END DISRUPTION The basis of this disruption is when products start to become complex to meet the needs of the most demanding customers. These are customers where the current product has features which are not used, derive diminishing marginal investments from product enhancements, is complicated and costs too much. Companies innovate faster than customer's lives change. After functionality and reliability have become good enough, competition shifts to ease of use (convenience), customization and then price. Innovators in overshot markets do not create new growth markets but new growth companies and use disruptive innovations to establish a beachhead among the incumbents least demanding customers


Significant growth companies can happen at the beginning of a new product category and at the middle part of the product lifecycle. In the middle of the product lifecycle, innovations focus on other aspects of the product such as convenience, support, consumption chain, value chain or price.

MARC ANDRESSEN 1. An industry or company that has a large incumbent will have a

bundle of products that has accumulated over time and make total sense at the time. To find the new opportunity look at some changes in the underlying technology (Internet, mobile distribution, social networks, bitcoin) and then ask 'if you were to sit down with a clean sheet of paper and knew that the technology was changing in the direction.. What would the proper form of the product if you were starting from scratch?

2. Look for products that polarize people..some people love and some people hate it

DELL 1. Look for a rapidly growing industry that is inefficient 2. The 'adjacent possible'... Taking innovations that happen in an

industry and apply them to another 3. 'far analogies': being able to take another domain and apply it

to another domain 4. search and reapply: search for the best ideas around the world

and apply them locally


Phase I: Customer Discovery and Selling

This is the very beginning of the product lifecycle where an initial idea is formed for a product or service that could solve a particular customer problem. Purpose of Customer Discovery is to identify key visionaries, understand their needs and verify or not that your product solves a problem they are willing to pay to have solved. Meanwhile you start development based on your initial vision. You adjust that vision based on what you find out. Visionary customers are those who will not only spread the good news about unfinished and untested products but also buy them. These are EARLYVANGELISTS. The pain ladder for early customers look like:

-Has a problem -Is aware of having a problem -Has been actively looking for a solution -Has put together a solution out of piece parts -Has or can acquire a budget

The earyvangelists can be found at level 4 or 5. Where they will rely on your feedback, get your first sales, tell others and spread the word that vision is real.


DISCOVERY PROCESS 1. State the hypothesis or assumptions

1. Problems: To find out some of the mission critical problems ask: “if you could wave a magic wand and change anything at all, what would it be?”

2. ROI justification: this is where you estimate the savings, increased revenues, avoided costs etc of your solution

3. Minimum feature set: what is the smallest or least complicated problem that the customer will pay us to solve? Less is more, to get an earlier first customer ship.

2. Test the hypothesis on potential customers 1. Compile a list of 50 potential customers and names. Ask these names from anyone you

know. You should be able to secure 5-10 visits. The goal is to learn from them. Need to make 10 calls a day to secure 3 visits/day.Does not matter about titles, position etc. What matters if they will give you some time. Identify an Innovator list. These are names of people who are first to spot a trend and are looking for something new

2. A problem presentation should be one slide, be on a whiteboard or simply presented 1-on-1. It is designed to elicit information from customers not convince customers. If you are wrong, then its good. This is where you validate the understanding how the customer spends their day in their job and how the workflow/design flow happens. You should understand their issues so you can discuss their issues

3. Check your hypotheses against what you have learned from your customer visits. 1. Find the differences between your product and what was discovered?

1. Where on the problem scale were the customer’s you interview 2. Draw customer work-flow with and without your product. Was the difference

dramatic? Did customers say they would pay for that difference? 2. Priortize the features in terms of importance to the customer 3. Can you match features to customer problems? If not, why not? 4. Which features do customers not care about? 5. Can any features on the product spec be deleted or deferred. 6. Revise the phase I feature list and hypotheses.

4. Develop a solution orientated presentation which focuses on 5 key product features. Include a story of the customer with and without your product. This will be used for more customer visits. Again, the purpose is not to sell.


Phase 2 Selling: Early Adopters

Once a handful of early customers have validated that the problem exists and willing to pay, you then go after the early adopters or visionary customers . These early customers require different material than mainstream ones. They are buying the vision and then the product. Here the type of salesperson needed is one that is discovery seeking and solution orientated but is looking for proof that the solution will solve the customer problems. If the product cannot fix 80% of the customer’s problem then go for a quick no and move on to the next prospect. The sales process here is designed to align sales professionals and their customers in a mutually agreed objective, a signed order is not the appropriate goal of the sales process. the goal is not to close, but a high quality decision that is a rational evaluation of the correlation between customer problems and solution. the ability to guide customers through a sound decision process - discover, diagnose, design and deliver, is a highly valuable differentiator A customers decision not to buy is not necessarily a welcome outcome for sales professionals but in the real world, is a valid outcome. Not every customer is in a situation that requires action and there is no such thing as a solution that is right for every decision. The most productive approach is the one that 'goes for the no' as quickly as possible and redeploys the team in pursuit of other possibilities. we do not abandon, but we continue to monitor their business health, to be ready to respond when appropriate. PROCESS 1. Establish rapport 2. Discover phase and value assumptions: is a hypothesis as to the value we believe we could

bring to this specific customer. Creative a narrative and story of what could be 3. Diagnose phase and value agreement: we determine to what degree our assumptions are

correct by finding the symptoms and indicators that are occurring in the customers business. 4. Design phase, value agreement: collaborate with the customer to create a solution that is

aligned with the issues and expectations of the customer. Map the decision makers 5. Deliver phase, value achievement: we implement the solution and measure results.


Phase 3 Selling: Early Majority Customers

Mainstream customers want a whole product and previous proof that it will work. The salesperson needed here are “coin operated” sales people who are given quotas and territories with a known value proposition and selling process. The generic sales process is: 1. Recognition of needs: this is where you move the customer from the oblivious to the curious and

create a vision where none existed or reengineer an existing vision. They are already aware of the problem or need problem education.

2. Evaluation of alternatives or options: This is the divergent phase where the customer is doing solution research and asking which alternative bests meets his needs and can he afford it

3. Solution selection: this is where the customer selects the best solution and advances to making sure you are the right choice by asking risk-reward questions.

Here are some characteristics of an effective sales person : -curiosity -Intelligence -work ethic -prior success

Other characteristics include -preparation, adaptability, domain experience, intelligence, passion, prior success, brevity, rapport building, voice quality, technical aptitude, objection handling, convincing, needs identification, closing ability.


Phase 4 Selling: Late Majority

Late majority customers do not adopt until most others in their system have already done so. most of the uncertainty about a new idea must be removed before the late majority feel it is safe to adopt. Here selling is about application innovation and incremental innovation. Product Managers take a role here getting feedback on new features and product extensions. An example of a Product Managers career path comes from youTube.com: 1. Junior: Problem, Solution and How is given to them. Execution is the job. 2. Mid: Problem and solution is given. They focus on how and execution. What the team looks like

etc. 3. Senior: Problem is handed to them without solution. 4. Director: Here is a product space, what are the problems in this space. Scope also expands

from features, to product, to multiple products etc Some of the questions that a Product Manager would ask customers would be: 1. What are we doing good? what are we not doing so good? how can we help you better 2. I am glad you are going to give this careful consideration. W=What are some of the things you

like about what I have said so far and what things do you have concerns about 3. Feedback conversations: these should be scheduled regularity to measure value delivery.

1. hat do you think went especially well? 2. Is there anything we could have done differently? 3. Is there anyone else in the org who is experiencing similar symptoms to what you had?

4. Tell me a story about a time when the product had let you down? 5. What else hasn't changed in a long time? what might make a better or different experience? 6. What is truly important to your customer? Could you turn something you produce into a better

experience for your customers? Is the experience of the product ordinary or extraordinary? 7. How often are you delighted by the experience you have with the product? how often are you

disappointed? 8. Consumption Chain Differentiation: Of these attributes, which do you think we are the absolute

best at and which do you think needs some improvement? Order and Purchase Delivery Payment Receipt Installation and Assembly Storage and Transport Use Service Repairs and Returns


1. Customer Experience innovations 1. Who: Who is with the customer when they are using the product? Who are non-

users? What is the behavior of these non-users? What would attract the non-users?

2. What: While customers are using the offering, what else are they doing? Identify all major activities the customer is doing while using the offering.

3. When: When do customers use the product? If we could arrange it, what other times might they use it?

4. Where: Where are our customers using the product? Where else might they use it? 5. How: How do early customers use the product? How do late adopters start using it?

How do they make tradeoffs between using this product and deploying some other solution? How do customers know when to start and stop using the product?

2. Non Negotiable: What attributes do you consider every competitor should offer and that you like?

3. Differentiators: Customer likes and differentiates your offering from competitors. What do you say we do better than anyone else? What do we currently and potentially offer that you would be prepared to pay a premium for?

4. Exciters: If we could create one feature today that would allow you to do things 10 times better with IS, what would it be?

5. Tolerables: What attribute are you willing to put up with it even though you don’t like it? If we could eliminate “X” attribute then would you buy a lot more or more often?

6. Dissatisfier: these are negative features that differentiate you from competition. Overall which attributes do you most dislike? Which attributes would you liked added to the product?

7. Enragers: an attribute that inspires negative feelings. Have you ever been proactively critical of a feature to the point you would write a complaint letter?

8. So Whats: What are the 3 features you use the least or not-at-all from the IS product?

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