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elling your product in a B2B environment can be challenging, even when business is good. A business thrives with sales, but sometimes high ticket items take longer to progress through the sales cycle than products in a B2C environment.
So here are our Top 5 suggestions to help position your business in a competitive B2B environment.
Make sure you are cost competitive
This isn’t to say that you should be the cheapest, but that your products need to compete on a cost basis. It’s worth remembering that sometimes the buyer may not be as passionate about your product as you are. Many organizations outsource procurement; consequently, cost drives organizational buying.
It may also be the case that the buying entity or procurement division is purchasing on behalf of a project. Remember, they have to stay within their budget, so competing in terms of cost remains a factor in most purchasing decisions (even if the client insists it’s not).
Work on your Past Performance
Having a successful past performance and reliable reputation in the industry can position your business as the go-to company. If you have executed a number of contracts successfully, it’s worth providing literature to your buyer that proves you are capable of supplying or manufacturing a product.
Competing in Payment Terms
Despite what clients may say, cost does comes into many procurement decisions. The second factor that strongly influences buying decisions is payment terms.
There is nothing more annoying than learning that you were competitive on price but lost a deal because a competitor offered preferential payment terms to your client.
To combat this, consider purchase order and trade financing structures in which you can approach financial entities to fund a confirmed purchase order. Just make sure you include the borrowing rate in your original costs.
Understand the buying process
Try to understand the buying process of your client. Large companies have different divisions that process purchase orders. When you have been told by procurement that they are awarding the business, the buying cycle may still need to go through legal, management and accounting departments before you receive your contract.
Know when you really need to offer a discount and when you don’t
As mentioned, it is important to understand the purchaser’s buying cycle. Now imagine you were asked to provide a 5% discount at every stage—procurement, legal, approval, accounts, etc. Soon you will be eating into your margins and struggling to sell at a profit. Often, once you are past procurement, the pricing is typically approved.
If other departments come to you for a discount, often this is because they want the kudos for saving some bucks at the water cooler moment.
Imagine offering a discount only to learn that your previous day’s price had already been signed off on. Nightmare!
Below is a typical pipeline of how I use Tubular to structure and manage our B2B sales:
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