B2B vs B2C Innovation
I just had a conversation with a consulting firm that specializes in B2C innovation. Now they are being asked to do some B2B innovation. They asked me, “What’s the difference between innovation in a B2B and a B2C environment?”
Although in many respects, the innovation efforts are similar, there are quite a few differences which are worth noting. Yes, B2B can invest in collaborative product development and other more sophisticated methods/technologies. However, in this entry, I want to focus on the “softer” and less quantifiable differences between them. These mainly have to do with what your customers really want. Business buyers have different motivations than consumers.
Businesses Want You to Improve Their Business
Quite often, businesses buy from you because they want you to improve their business. You can reduce their costs, improve their effectiveness, or increase their business in some way. This requires a different mindset when studying customer needs. Although focus groups and discussion boards may be helpful in designing a new toothbrush, they are not as practical in a B2B environment. Instead, you need to observe their business. Back when I was a leader in Accenture’s business process reengineering practice, I discovered something interesting. The most valuable use of reengineering is not to improve your processes, but rather to improve your customer’s processes. Observe your customers. Map their processes. See how your products/service can improve their business. And don’t forget to reengineer the interface between your business and your customer’s business. As Michael Hammer (the father of Business Reengineering) used to say, “Make yourself ETDBW – Easy To Do Business With.” (the graphic above shows the three levels of process improvement)
Businesses Want You to Help Them Provide Better Product/Service to Their Customers
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Before You Can Multiply, You Must First Learn to Divide
While in Asia, I heard a great expression, “Before You Can Multiply, You Must First Learn to Divide.” I now find myself using this saying nearly every day.
The idea is that if you want to grow your business, you must learn to partner with others – and give them a slice. This means you take a smaller slice of a bigger pie.
I have been doing this for a while now with my agent. He takes a percentage of my business in exchange for handling everything from negotiating, contracting, logistics, travel, invoicing, etc. I am convinced I make more money through this arrangement…and work less.
I recently had a conversation with a guy who runs a seminar business. When big name American speakers come to his country, he hosts a public seminar. His biggest challenge is getting butts in seats. When I looked at his business model, it was flawed. He has a lot of fixed costs, like advertising, printing (brochures) and postage. His customer acquisition cost is ridiculously high, and was often hit or miss. He could spend $5,000 on a newspaper advertisement and get only three customers paying $300 each. Even with 50 paying customers, he is still paying a 33% customer acquisition cost – assuming no discounts. My suggestion was to create a model where others make money only when he makes money. One example is to set up an affiliate program where he gives a large commission to people who get him paying customers. This moves his costs from fixed to variable. This removes his risk while encouraging others to take a vested interest in his success.
Yesterday I was at a board meeting for my local National Speakers Association chapter (I was the President last year and am still on the board). Over the last two years we spent a lot of time and money on something we call the “Visibility Initiative.” The idea was to get visibility for our members in order to help them get more gigs. We spent thousands on website development and marketing. If we use the “divide before multiply” concept, it would make more sense to get someone to do all of these activities for us. Speakers bureaus sell speakers to event planners. They already have the connections and already have websites. This is their business. Therefore, if we partner with a bureau (or two), they get their commission for every gig booked and we get greater results with less effort.
When I was on the Donny Deutsch show, a caller asked, “I am the owner of a business. How do I retain my top talent?” Donny asked what percentage of the business he owned. The caller said 100%. Donny’s response was (paraphrasing), “Wrong. As of today you own 80%. Go into the office of your top 10 people and tell them that they are now partners in the business. Give them 2% each. They will have a greater sense of ownership. Besides, this is probably the amount you would have given them as a bonus anyway.”
Where can you multiply by first dividing? Where can you give a slice of your business to someone else? How can you grow your business while creating more income for others?
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7 Things You Can Do To Save Your Job… Or Create a New One
Last night I was on “The Big Idea with Donny Deutsch” on CNBC. I was there to discuss how to save your job during a down economy. I had a number of tips prepared, but due to limited time, I was only able to give 2.
Here are my 7 “big ideas” for saving your job or creating a new job.
1. BE LAZY – Most people spend 60% – 75% of their time work on activities that do NOT create value for the business. Don’t! Be lazy and stop doing what you don’t need to do. Rethink all of your work and focus on the important activities. You’ll make yourself more valuable to the company and you will work less.
2. SEEK OUT OVERSEAS OPPORTUNITIES – Given the weak dollar, US products and services are bargains in other countries. Volunteer for an ex-pat job. Take on a sales job overseas. I will be spending more time overseas this year than I had over the previous 6 years combined.
3. ACT LIKE AN OWNER OF THE BUSINESS – If you think like the CEO rather than (fill in your job here), you will think more strategically. You will make smarter business decisions. Instead of just focusing on “what” you do, ask yourself “why” are you doing it. This will certainly impress your boss.
4. USE PERSONAL CONTACT RATHER THAN EMAIL – Deciding who to layoff is often more emotional than logical. Therefore, it is critical that you maintain a personal relationship with fellow employees and bosses. Email is impersonal. To help you break the habit, take my 30 day challenge.
5. PLAN FOR YOUR PINK SLIP – Assume that you will eventually lose your job or choose to leave. Therefore, be sure to build your resume, build your brand, and build your network of contacts outside of the company. Your career is your responsibility.
6. SOLVE PAINS – During tight economic times, people are more willing to invest in products/services that eliminate pains. Problem solvers are in big demand…always. My speeches on recession proofing businesses are more popular than those focused on innovation.
7. CHARGE MORE – Oscar Wilde once said, “A cynic knows the cost of everything and the value of nothing.” People equate value with price. Charge more and you will be valued more. Reducing prices makes you a commodity. Increasing prices makes you a luxury. Luxury items tend to do better in tough economic times.
P.S. If you want to see the complete list of 10 tips I had prepared for the show, go to the CNBC website. They also republished my article on “6 Ways Innovation Can Recession-Proof Your Business.” You can also check out the complete list of guests from the show.
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Blog Lists
Just in case you don’t already have enough to read….
Here are two lists with hundreds of great blogs you should consider reading. My website has been selected for both, so I am slighly biased…
HR World’s The Top 100 Management and Leadership Blogs That All Managers Should Bookmark
David Zinger’s Favorite 300 Blogs
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Targeting Your Audience
There is one thing I realized early in my speaking career: being a great speaker does not mean you will necessarily have a great speaking business.
This past weekend I gave a presentation on how to have a great speaking business. Although my tips were targeted at speaking professionals, they are relevant to anyone in any business.
Over the next week, I will share several tips from that speech. Today’s concept is on how to identify your target audience.
From my experience, there are two questions you need to ask in order to determine your target market/audience:
- What pain do you relieve?
- Who has this pain AND who has the money to eliminate it?
What’s the pain you relieve?
I speak on innovation and creativity. Although these are buzzwords in the industry, they are not necessarily an easy sell. However, if you focus on the problem it solves, it feels more relevant. For example…
- Competing in a commodity market (de-commoditizing commodities)
- Eliminating internal blocks to business growth
- Recession proofing your business
Organizations are more apt to want innovation when it is the antidote to a pain rather than a grand aspiration. People are more likely to buy your product or service if it addresses a specific need.
The next challenge is to find out who has the money to eliminate this pain.
Find the money
My innovation services have a clear buyer: large corporations. These organizations typically have some money to solve their pain – if it is important.
But what if you are a speaker on financial planner or nutrition? Although these may be of value to individuals, they are probably not of direct value to corporations. You could try to get corporations to hire you (or use your product) as an employee benefit. But since you won’t be contributing to the bottom line of the organization, the sale will be more difficult.
What are your other options?
As a speaker on these topics, you can either hold public seminars, but that is a lot of work.
Maybe a better solution is to find associations where individuals with this need/pain gather. These can be trade associations, non-profits, or event multi-level marketing organizations.
One PR firm I know has a somewhat unique model. They connect “for profit” enterprises with non-profits who use (and can potentially) recommend their products. For example, a medical device manufacturer might connect with nursing trade association. Or a technology manufacturer could connect with an association of freelance “geeks.” There are associations of all kinds out there.
These symbiotic relationships can help both parties achieve their goals. They can make it easier for you to access your target audience. It might give you greater credibility. And you can help the associations add value to their members.
If you can articulate the pain you solve and then find where these people gather, you may find greater leverage in your marketing initiatives.
I will continue these tips in future blog entries.
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