Entrepreneur Association of Tokyo
"B2B Sales Methods for Start-ups"

Setting the scene: Do you have a strong VP?
Assuming that you are an Entrepreneur with something to sell to another business, what do you do next? Go and sell it, right? Well, according to Dan Harris from Market Analytic Partners, probably not! You should first examine and test your Value Proposition (VP). In 25 words or less and deliverable in plain language, your VP should highlight where the value of your product/service lies, and why the customer should buy from you.

It’s not sufficient to just say you are the best. What are the benefits to the customer? Customers want more sales, lower costs or more profits and are unlikely to care how fast your CPU’s run. So unless you can talk convincingly to the customer about benefits, you don’t even have a start, and if you don’t have a strong enough VP then the rest of the discussion is pointless. Once you think you have a strong VP then it needs to be tested with enough customers to prove that you really have something to sell.

Is your business “minimalist” or “muscular” ?
The size and age of your business will affect your sales strategy. For many start-up businesses, the initial sales force consists of only one person: the owner of the business. This is a ‘minimalist’ situation, where your need is to bootstrap as much as possible. Once the sales team expands, with a sales manager and a team of sales people the approach can then be more ‘muscular’, with increasing sales being the prime objective.

Minimalists need to leverage their time and resources effectively: build allies, use PR (make speeches and get written up in magazines etc). They should push any routine functions such as keeping databases, event arrangements, and mailings to assistants wherever possible.

Musculars need to recruit the best sales manager they can because a top-notch, class A sales manager will recruit other class A people, while lesser-quality, class B managers tend to recruit mediocre, class C quality people.

The selling system
A selling system is made up of various components which combine to give an organized structure to your efforts. The initial elements include product strategy, channel strategy, target market / definition of the suspect universe, territory assignments, etc.

In its middle, a system has the core selling process, which has facets like identifying specific suspects, prospects and leads, initial contact, initial meeting, presentations, and negotiations through to contract. Lastly, a system includes methods for the salesman’s involvement in implementation of what was sold, how to get repeat or expanded business with customers, and how to provide feedback for further product development. At the management level (for musculars) a system includes sales staff recruitment, compensation, training, motivation, performance tracking, and termination.

The core selling process involves the specific identification of leads and contacting them to arrange meetings. You need to manage your pipeline, or funnel, where suspects turn into leads, leads into prospects, and so on down to completed sales. You need a process to manage your lead pipeline; a random process won’t generate as much sales results.

The difference between suspects, prospects and leads
EA-Tokyo seminar attendee, Brian Tannura, who’s business sells novelty vending machines asked Dan to clarify the meanings of suspects, prospects and leads. Definitions can differ, but according to Dan, there is a spectrum: at the broadest level there are all the companies in the world, or at least Japan. But most likely, many or most companies won’t be suitable for your product, and you won’t have enough resources to go after everybody. So you need to tie your VP to the much smaller set of companies that you are going to pursue.

Companies that fall into you target market can be called ‘suspects’ and may be any number of companies depending on your business. They are just ‘suspects’ because you are only guessing, suspecting that they may buy your product. Once you contact any of these suspects and they express interest they become a ‘lead’. Once you meet with the lead and confirm their interest, budget and timing and that they are willing to discuss more, they become a ‘prospect’. Once the prospect has made a purchase they become a customer, and after repeat purchases they become a loyal customer.

The importance of having a selling process
The core selling process is very important, but no single selling process fits all businesses. There are many successful companies across many industries with a wide range of products, so obviously they have figured out how to get those sales in their differing situations. Examples of selling processes are those from Solution Selling (SPI), SPIN, Miller Heiman, and Fuji-Xerox.

Do you need a selling process in Japan? Yes, you do. It is not so important which selling process you use, it’s more important to be using the process daily. So pick a selling process and stick with it. ‘Minimalist’ businesses don’t really need to write their process down, but the owner/salesman should explicitly use the process he/she has selected. ‘Muscular’ businesses, in order to get everyone on the same page, will be better off by formalizing their process, to get everyone using the steps and speaking the same language.

Specific selling issues in Japan
There are numerous myths – the conventional wisdom - about selling in Japan’s complex business environment, however Dan questions many of these myths. These include:

“Western sales methods don’t work here.”
Dan: global selling techniques – the building blocks of the process - do work in Japan, you just have to localise them.

“Proposals are bottom up (from the tanto-sha) and only those received from the working level are approved.”
Dan: bottom up is time consuming; get to upper management and align yourself with their thinking, then you can speed up the process and probably improve your close rate. Upper management does not just rubberstamp what is brought to them; they set the policy, guidelines and objectives.

“Cold calling is impractical in Japan, because an introduction is always needed”.
Dan: cold calling can and does work in Japan. Of course, anywhere in the world sales people would prefer an introduction, so if you can get one, so much the better. But don’t ignore cold calling.

Along with these ‘myths’, Japan does have particular business customs that you need to be sensitive to, such as showing deference to age; pre-set annual budget decisions; and form over substance. For the latter, even if something is effective, Japanese may shy away from it if its aesthetic effect is poor. In addition, if you or your sales staff use the Japanese language to deal with Japanese prospects, you might get locked into the polite relational strictures, which can impede flexible and swift business dealings.

What is a lead and lead generation?
The core of the selling system is lead generation. Considering that leads are the fundamental factor in generating sales, then what is a lead and how do you get them? Dan defined a lead as ‘a specific person with a budget who plans to buy within the next 12 months, and has decision making power’. Without fitting these prerequisites the person still needs nurturing and isn’t really a lead. When definitions differ, this will often cause marketing and sales people to butt heads. It is very common to hear marketing staff say they gave the sales people 100 leads and the sales staff didn’t follow up with 80 of these. It’s probably because these weren’t really leads, but more like information inquiries!

EA-Tokyo’s Dave Mori asked Dan how to get this type of information? Dan replied that someone has to speak to the person at least once to determine these points. If the person is willing to meet you then the lead may quickly turn into a prospect. Someone, somewhere has to get this info, whether it’s done by the marketing side, the sales staff or via referral. Without defining budget, timing, and decision-making, you are just having a pleasant conversation. Another seminar attendant said he used the direct approach - simply asking politely, but directly “Do you want something like this”?

Three categories of lead generation
Lead generation activity is in three main categories: phone calls, referrals & networking, and marketing. Each category has a different amount of ‘live’ interaction. Phone calls are interactive, while marketing is just a one-way message given to suspects. Referrals imply that someone interacted with the person and found out the interest, and you will follow up with a call.

Dan provided a handout that he obtained from startwithalead.com. It showed various ways to generate leads including: phone calls, email, events, direct mail, branding networking/referral, lead nurturing, public relations and website. Dan stressed the point that you can’t do all of these, so you must establish the activity levels you need in your ‘funnel’, then decide on a mix of calls, referrals, networking and marketing to reach those levels. You must choose methods that are mutually reinforcing, such as sending an email about a seminar, then a phone call, and follow up by networking at the seminar. Marketing via your website and getting people to sign up for a newsletter or some other free content can also generate names.

In asking others for selling advice, be careful about what kind of business they are in. Depending on each business’ suspect universe and deal size, each one will end up with a different set of activities. For example, auto parts suppliers (a handful of suspects, huge deal size) uses different sales activities than a vendor of small PBX’s (hundreds of thousands of suspects, very small deal size).

Quantifying your activity levels
To get really organized you can work out what levels of activity you need at each stage of your ‘funnel’, to reach your desired sales levels. The first step should be to quantify your current average size of deal, and how many deals this year you need to reach your sales target. Working backwards from that, you estimate what percentage of discussions actually become a sale; what percentage of first meetings become sales discussions; and what percentage of first contacts (phone calls) become first meetings. You can relate these to the size of your suspect universe to identify how many leads you need, calls you make per day, etc.

For example, if your sales target is 10 million yen a month, and each deal is one million yen, then you need to close ten deals a month. How many suspects will you need to call, then meet, then how many will become leads and prospects and negotiate and then finally how many will buy? Knowing your success rates at each step will enable you make sufficient contacts per week to achieve your desired sales. If you don’t have a ‘feel’ for your success rates, make your best guesses and use Excel to do “what if” at various percentages through the funnel.

You may be stunned to find out how much activity you really need to end up with the sales levels you want. Dan coaches and teaches methods to improve your success rates at these steps.

So quantify your action plan then check yourself daily, or at least weekly. If you are not reaching your goals then you need to rethink what you are doing. There is no white knight to come and save you. If you can’t figure out and execute the needed activity levels – daily, weekly - then it’s going to kill your business within 3 to 6 months.

Over the years a common problem has Dan witnessed is keeping up your call activity as its natural to put this kind of thing off. To stay on top of this be disciplined and set aside specific times of the day for calling. Cold calls are difficult and no one likes doing them anywhere in the world. Therefore try ways to ‘warm up’ your suspects and prospects. Once they have some awareness of you, then it’s not a cold call anymore. Moreover, a prospect often needs several ‘exposures’ or one-way contacts before they remember you. A monthly newsletter can be great for doing this. After a few months they will remember who you are, and a call won’t be so cold because you have already warmed them up.

Referrals as a way of generating leads
Referrals and networking are great, but they do not eliminate the need for cold calling. Even with referrals and networking you need to be systematic, a ‘nice to meet you’ email is not enough, and you must stay in contact frequently enough to be remembered. You have to train your referral people too, to remind them what your doing and create a buzz. You also need to repay them. Referrals from satisfied customers are great, but if you are just starting out you won’t have a set of satisfied customers and it may take a few years to build up a critical mass of satisfied customers.

Marketing
Dan defined marketing as any one-way contact with a prospect, that includes any kind of advertising, mass emailing or postal mailings etc. Don’t spread yourself too thin. Focus on a few of the methods that support each other. To keep your name in front of customers you need to do something every 6 to 8 weeks, and choose wisely what methods you use. With mailing you only have about 10 seconds to catch the readers attention before it is discarded, and email is even shorter. There are pros and cons to consider between postal mail and email: email have have lower cost, ease of creation, and ease of creation, but a postal mail item may get more attention.

Money for mass media advertising is probably not feasible for your start-up, so try things like articles, white papers, website, and seminars, and do them frequently enough to have an impact on the suspects you have selected. Giving even something small in value to your suspects will let them have a positive image of you, and advertising may not help much with this. Overall, marketing by itself will not usually generate all the leads you need. Just sending some one some information is not a lead, but it can help to get you out of the cold call mode.

Digging for names
No matter what, B2B sales requires contact with specific people. Finding these people isn’t easy, so DIG DIG DIG, be creative and diverse in your name finding methods. Use your referral network, association member lists, google searches, magazines, web searches, trade show speakers and booths, networking websites, registrants to your website and any other means you can think of.

Initially, to keep track of your names you can create a spreadsheet with Excel, including columns for most recent contact, type of contact, follow-up date, follow-up action, position, budget, timing for purchase mode, decision making capability, source of contact etc. You can have a separate sheet with the address details for marketing contacts. This is not a one-time exercise. After constant digging for a year you should get a comprehensive list. Five hundred to a thousand names may be all that one person can handle well without an assistant.

Lead nurturing
Once you have your contacts you need to nurture them. Ninety percent (or more) of the suspects you contact will not be in purchase mode at the time of contact, but will make a purchase sometime in the next two years. If you want to grow your business you want to learn the shape of the market – when the suspects will likely come on the market. Therefore you must be in contact often enough to catch them in their purchase cycle, and if possible, calculate their purchase cycle on your own. For example, if their budget is made in December and becomes effective in April, then you need to talk to them before December to get in next year. This is your future business and the more you can learn about the timings for this other 90%, the better off you will be in the next period.

Summary
Once you have a strong Value Proposition, you should create a selling system that suits your business.  One of your hardest tasks will be consistently using your system on a daily basis over the long term. The core activity in the selling system is lead generation. Finding leads isn't easy, but even with the best negotiation skills in the world, without leads you won’t make sales.  It is vital to choose a selling system and stick with it. 

Japan is different, but so is every country. Be sensitive to Japanese business traits and localize the trimmings, but don't be afraid of using ‘foreign’ selling methods – the fundamental elements of the process - in Japan.

Quantifying your levels of business activity and success rates will help with time management and will assist you in making sufficient contacts per week to achieve your desired sales. Conduct marketing with methods that are mutually reinforcing; focus on a few methods that will help create a buzz and enable you to have a stronger impact.  Try to 'warm up' your leads with consistent contact so they gain an awareness of you, and any future contact with them won’t be so cold.  Finally, maintain phone contact, which is interactive and helps you ‘learn the shape of your market’ so you can catch your prospects in their purchase cycle.

February 06 , 2007

FEBRUARY 06, 2007 (Tuesday)
Dan Harris
Principal, at MAP Market Analytic Partners.