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B2B Marketing, Sales & Business Models

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Information about B2B Marketing, Sales & Business Models
Business & Mgmt

Published on March 5, 2014

Author: daveparkersea

Source: slideshare.net

Description

This is a list of the Eight B2B business models. The topic is generally for technology startups. Business models for startups.
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Marketing & Models Dave Parker @DaveParkerSEA www.dkparker.com Dave@dkparker.com Copyright DKParker, LLC 2013 “Separating the forest from the trees from the bark”

Agenda !  About Dave !  Marketing Methods !  Sales Models !  Pricing Methods !  Business Models !  Financial Models !  Q&A Copyright DKParker, LLC 2013

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 Copyright DKParker, LLC 2013

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 Copyright DKParker, LLC 2013

Marketing Methods Copyright DKParker, LLC 2013

How many of the Top 10 Viral Videos 2013 were B2B? Copyright DKParker, LLC 2013

Copyright DKParker, LLC 2013

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 Copyright DKParker, LLC 2013

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 Copyright DKParker, LLC 2013

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 Copyright DKParker, LLC 2013

Copyright DKParker, LLC 2013

Key Metrics - Marketing !  Marketing methods Your marketing metrics here: !  Monthly Spend !  ________________________ !  Cost of SEO !  ________________________ !  Calculation of spend to Lead to Prospect !  ________________________ !  ________________________ !  ________________________ Copyright DKParker, LLC 2013

Sales Models Copyright DKParker, LLC 2013

Someone has to sell your product – let’s start with you Copyright DKParker, LLC 2013

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 Copyright DKParker, LLC 2013

Known Market Web Direct ✔ Direct ✔ Indirect ✔ Licensing ✔ Unknown Market Retail Copyright DKParker, LLC 2013 Low Price Point High Price Point ✔ ✔ Known Search Words Unknown Search words ✔ ✔ ✔ ✔ ✔ ✔ ✔

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 Copyright DKParker, LLC 2013

Key Metrics – Sales !  Sales Method !  Sales Staffing !  Sales Cycle !  Time !  Conversion ratios Your sales metrics here:your sales here: !  ________________________ !  ________________________ !  ________________________ !  CAC !  LTV !  ________________________ !  Churn Copyright DKParker, LLC 2013 !  ________________________ !  ________________________

Pricing Methods Copyright DKParker, LLC 2013

You can sell anything for nothing Copyright DKParker, LLC 2013

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 Copyright DKParker, LLC 2013

Key Metrics – Pricing !  Product variations Your pricing metrics here: !  One time or recurring !  ________________________ !  Monthly/Annual !  ________________________ !  Pricing over time !  ________________________ !  Services !  ________________________ !  ________________________ Copyright DKParker, LLC 2013

Business Models Copyright DKParker, LLC 2013

If you have a “K Factor” >3 you don’t need a business model Copyright DKParker, LLC 2013

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 Copyright DKParker, LLC 2013

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 Copyright DKParker, LLC 2013

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. Copyright DKParker, LLC 2013

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 Copyright DKParker, LLC 2013

3. Lead Generation !  Example: AllStarDirectories, NetQuote !  Key Metrics !  Cost to generate traffic !  % conversion of form data !  Price per lead !  Challenges: !  Notes: Copyright DKParker, LLC 2013

4. Transaction/Posting Fees !  Example: 99Designs, KickStarter, Elance !  Key Metrics !  Average transaction revenue !  Fee % per transaction !  Number of transactions !  Challenges: !  Notes: Copyright DKParker, LLC 2013

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 Copyright DKParker, LLC 2013

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 Copyright DKParker, LLC 2013

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: Copyright DKParker, LLC 2013

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… Copyright DKParker, LLC 2013

Innovative Trends !  Groupon – lead gen with consumer benefit !  Airbnb – enabling payments for Peer-2-peer, sharing economy !  Kickstarter – crowdfunding !  Xerox – leasing equipment – 1950’s Copyright DKParker, LLC 2013

Financial Models Copyright DKParker, LLC 2013

To the Spreadsheets! !  These details manifest in assumptions !  Time based !  Launch !  Ramp !  Scale !  Market & Brand Development !  Pricing !  Overtime Copyright DKParker, LLC 2013

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” Copyright DKParker, LLC 2013

Example Copyright DKParker, LLC 2013

Q&A Copyright DKParker, LLC 2013

dave@dkparker.com www.dkparker.com/blog @DaveParkerSEA Copyright DKParker, LLC 2013

Copyright DKParker, LLC 2013

Slides to Print Copyright DKParker, LLC 2013

Key Metrics - Marketing !  Marketing methods !  ________________________ !  Monthly Spend !  ________________________ !  Cost of SEO !  ________________________ !  Calculation of spend to Lead to Prospect !  ________________________ !  ________________________ !  ________________________ Copyright DKParker, LLC 2013

Key Metrics – Sales !  Sales Method !  ________________________ !  Sales Staffing !  ________________________ !  Sales Cycle !  Time !  Conversion ratios !  ________________________ !  CAC !  LTV !  Churn Copyright DKParker, LLC 2013 !  ________________________ !  ________________________ !  ________________________ !  ________________________

Key Metrics – Pricing !  Product variations !  ________________________ !  One time or recurring !  ________________________ !  Monthly/Annual !  ________________________ !  Pricing over time !  ________________________ !  Services !  ________________________ !  ________________________ Copyright DKParker, LLC 2013

Key Metrics - Business Model !  Which Model? !  ________________________ !  ________________________ !  Challenges !  ________________________ !  ________________________ !  ________________________ !  ________________________ Copyright DKParker, LLC 2013

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