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Why B2B Businesses Struggle to Grow from 6 or 7 figures to 8 figures and Beyond.

why b2b companies failI wanted to talk to you today about something that is very dear to my heart and hopefully dear to your heart too.

And that something is why most B2B companies, especially technology companies, don’t achieve their full potential, and how they can achieve this potential.

Background

 
First of all, I am Canadian, and much of what I say here is about Canadian companies, but I know this struggle also applies to B2B companies in the entire western world.

I have been researching a lot over the past few years about why Canada doesn’t have a better and more robust technology community, with bigger players. In the last 40 years, we have had two world class players, Nortel and Blackberry. Nortel is gone (bankrupt) and Blackberry is struggling.

Oh sure, we have a lot of small and medium sized technology companies, but many of them struggle to grow. And I wanted to know why.

There are a number of reasons that many experts state. They say that we don’t have a big enough capital market to fund technology companies. And there is no doubt that tech companies need funding.

However, there are many Venture Capitalists that will help tech companies. But many of these entrepreneurs don’t want to give up the equity to build their companies. They figure that they developed this great technology, so why should someone else reap the benefits. American technology companies seem to be more open to outside funding. Although I do believe recently that is changing in Canada.

I know this because I have talked to hundreds of technology company owners over the past 25 years. Many still believe that if you build it, people will come, and so many of these tech entrepreneurs believe they can do it all themselves. Although I also see this attitude changing, but slowly.

Others say that there are too many government regulations for small business in Canada, including the tax base for small businesses. And again, there is some truth to these claims. But recently, our tax system for small businesses, at least federally, has lowered taxes.

The Canadian federal government has also introduced the Scientific Research and Experimental Development (SR&ED) Tax Incentive Program. Many small and medium sized tech and manufacturing companies take advantage of this. But again, you can’t build a great business with government grants.

I believe the majority of B2B tech companies don’t really want to get very big. And this of course is true of most companies started by entrepreneurs.

But if a tech company doesn’t get enough traction in its marketplace soon enough, it will soon become eclipsed by a large number of other companies with similar technology. As you know, technology becomes obsolete and the timeframe for this to happen is shrinking dramatically.

And this is another failure on tech company owners. Most owners sincerely believe that they don’t have any competitors. I know this again because I have talked to hundreds of tech companies over the past 25 years. But all you need to do is a Google search to see how many competitors you really do have.

So what is really holding our tech industry back?

The Real Reason for Lack of Growth

 
I believe the real reason, for the lack of real growth in Canada’s technology industry, is that Canada’s technology companies are lousy at sales and marketing. Many tech companies have a Sales & Marketing department, but it is dwarfed by the technology department.

S&M SuccessMany have no Sales & Marketing department at all. And some have a a few sale people, but no marketing group.

Did you know that the two longest lasting and most successful tech companies spend about 21% of revenues on sales and marketing, and about 15% on Research & Development? Do you know who these two companies are? They are IBM and Microsoft. Let me repeat that. IBM and Microsoft spend 50% more on Sales & Marketing than on Research & Development.

And nobody has ever accused either IBM or Microsoft of having the best technology in their field. But they both understand how important marketing and sales are to their success, not just technology.

And one of the largest capitalized companies in today’s world is Apple. Why is this? Sure Apple has some very cool technology. But so do a lot of other companies. In fact, at one time Blackberry (previously RIM), the maker of the first smart phone, had a much larger following than Apple.

So why is Apple so big? That’s right, because it has the best marketing. And Apple spends 3 times as much on Sales, marketing and Admin as it does on R&D.

BTW, when I say marketing here, I include three areas, marketing communications obviously, but also sales and customer service. Everything that brings customers to your business, and also keeps them coming back, is marketing. I always believe that companies should have a Chief Revenue Officer to oversee all three areas. But that is another discussion for another day.

Don’t get me wrong, all of these companies, IBM, Microsoft and Apple have very good technology. And all of them received some very good funding, to get them started. But each of them got to the top of their field because of outstanding marketing and sales. And today, this is especially true of Apple, because you can do the same things on other computers, smart phones and tablets that you can do on Apple products.

How IBM Became so Big

 
Let me give you some background.IBM Logo

I started my business career at IBM in the mid 1970’s, and I was put through a nine month training program to learn about IBM’s products, how businesses work, and sales and marketing. But over 70% of the training was about sales and marketing.

IBM, even back then, realized that in order to be successful, they needed to have the best sales and marketing professionals that any company could ever have. And it paid off very handsomely for them.

Many competitors had better technology than IBM. Two of their competitors had admittedly much better technology. Hewlett Packard, now known simply as HP, and also Digital Equipment, known as DEC, which has long since been bought had much better technology in the 60’s, 70’s and 80’s.

In fact, both of these companies, as well as most other tech companies, raided IBM’s executive suite for decades, to have ex-IBM’ers run their companies. Another successful company, because of their training was Xerox, but Xerox is not as big as it used to be or as influential, because they haven’t adapted their technology to today’s world as much as they could have. Although this has changed recently.

Unfortunately, IBM, Xerox and pretty much all B2B companies have abandoned their sales and marketing training because of the “cost”. They stopped realizing the benefits far outweighed the costs.

Technology is important, and it has to be relevant, but it doesn’t have to be way out front. It has to deliver what your clients want, and the message is delivered through excellent marketing and sales. Again, look at Apple.

Solve Your Clients’ Needs with “RELEVANT” Solutions

 
What your company needs to do is solve your clients’ problems with relevant technology solutions. Very seldom does it have to be the newest and best.

In fact, there are very few of your client companies that want to be pioneers with technology, and be the first to use it. They want to see how other companies are using it before they buy. Remember, pioneers have arrows in their backs.

That’s the reason you need to have social proof, showing how other people have liked your products, services and customer support. (For greater proof of this statement, read Geoffrey Moore’s book Crossing The Chasm).

Why Even IBM People Failed

 
But there is another reason that makes successful companies as successful as they are. But before I get into it, let me give you some background.

As I mentioned, I have been talking to, and helping, B2B technology companies grow for over 25 years now. And very few of these companies really have become as successful as they could have been or could be. And the biggest reason for this is they really don’t believe that sales and marketing people will make them successful.

They believe that their technology alone will help them.

Or, and I see this happen too many times, B2B SMB’s especially, hire non-trained sales and marketing people, many of them right out of school, and then complain that sales and marketing doesn’t work for them.

There are many arguments for this failure, and some of them are very valid. In the 80’s and 90’s and part of this century, a lot of technology sold itself. Before Y2K, most tech sales people just took orders, with very little, if any, selling by them.

Back in those timeframes, companies realized they needed technology to become more productive and competitive. And if sales and marketing people happened to get a sales job with big American companies in the 80’s and 90’s, like HP, Oracle, SAP, and even IBM and Microsoft, etc.; they really didn’t do a lot of selling.

These companies all had good marketing, and the sales people were never more than glorified order takers. So, if they ended up with smaller companies after they left these big companies, then they usually failed and failed miserably.

Even in the 1980’s, savvy companies didn’t hire ex IBM’ers until they had at least one other job after IBM and preferably two jobs, before they joined your company. These IBM’ers did not know how to work with small companies. They particularly didn’t understand the marketing side of small companies, and almost all of these so called sales people failed.

One of the biggest examples was getting new clients. If you phoned a company and said you were with IBM, then the people you were talking to listened, and you got appointments easily.

But when you phoned and said you were with ABC Technology Company, after you left IBM, you really had to understand marketing and selling to get an appointment with those companies. And most of the people, from large successful tech companies, couldn’t hack it with a smaller company, and again they failed.

So how do you get someone to help you with the sales and marketing of your technology company? You get someone who has the same passion for sales and marketing and helping you, as you do for your company.

What Causes Success?

 
So how do you figure that out? Let’s look at that idea in some depth, so you can ensure you get the right people to help you, that understand what they are doing in technology sales and marketing.

Firstly, let’s look again at some of the very successful companies. These companies include companies like IBM, Apple, Nike, Coca Cola, etc. What makes the companies so successful? In most part, their products aren’t really any better than their competitors.

In fact I like Pepsi much better than Coke. I have a Blackberry, I’ve never used Apple products, and I have not found Nike running shoes any better than other running shoes. But people still buy their products, all over the world, more than their competitors’ products.

WHY?

The large successful companies, I just mentioned, all do something that none of their competitors do. Their competitors play the marketing game of “what” their products are, and “how” good their products are, and the best way to use them.

These successful companies know the “what” and “how” games too, but they have risen above those company tactics. They know that to be ultra-successful, you have to be in the “Why Game”, not just the “what” and “how” game.

So, what is the why game?

The “WHY” Game

 
WHY GameThe WHY game is when you tell your prospects and clients why you are in business, not just what to do, and how to do it, with your products and services. You still have to know the what and how, but you must convince people to buy from you from a “why” perspective.

So what does this mean, and how do you get people to buy from you from a why perspective.

When you get people to buy from you from a why perspective, they are buying your passion and the fact that you really and truly want to help them; that helping them is your life’s mission. You are in your business, not to give you a job, or to make you rich, but to help people grow and be successful.

Don’t get me wrong. There is absolutely nothing wrong or evil about making a lot of money, but if that is your sole reason for being in business, you will usually struggle, as this will show through when you start talking to people.

If you can convince people of the why, then the what and the how both become secondary. Again, don’t get me wrong, it’s important to show people what and how, but convince them of the why first and the what and how come easily. The best example of showing the why was Steve Jobs.

Let me tell you about my why.

As I mentioned, I have been working with technology companies for about 25 years now. Before I started this business, I owned and operated two technology related companies. Both had software and services, and I sold both companies successfully.

But more importantly, both were really sales and marketing oriented. The technology was secondary to me. Helping other company’s succeed was always of paramount importance.

So after selling my second company, that is when I decided I really wanted to pass on my marketing and sales knowledge to other B2B companies and entrepreneurs. And I must admit, there are many skeptics in this marketplace.

A lot of it has to do with what I talked about at the start of this article. Most tech companies either don’t believe they have to spend on sales and marketing, and/or many of them are skeptical of sales and marketing people, for many of the reasons I described earlier.

So my why is to help B2B companies and especially B2B technology companies build a better world, by becoming successful for their clients.

However, if you don’t believe you need sales and marketing, if you believe your technology, or charm, is all you really need, then I probably can’t help you. And neither can any other sales and marketing strategist.

As a technology company, whether Canadian or not, and if you want to succeed, then you need sales and marketing. And more importantly, you need sales and marketing people who know what they are doing.

Unfortunately, because of the circumstances I mentioned earlier, there are too many so called sales & marketing people out there, who don’t have a clue about how to work with small and medium sized companies, or really don’t know enough about sales and marketing, in today’s world, to help you.

And most don’t understand how sales & marketing has changed and that marketing, in today’s connected and social media world, has become more and more important. Why? Because when marketing is done properly and well, sales will come much more easily. And I am a sales guy originally, and it took me a long time to see this.

Grow Exponentially

 
b2b sales growthSo why, after many years of frustration, am I still wanting to work with B2B companies who mostly don’t seem to want to grow at a pace they could. I am really frustrated that these companies don’t trust the fact that they could actually double, triple, possibly even grow by ten to twenty times their current rate, if they would just apply the sales and marketing principles that work.

The reason, I am still doing this, is I really want to help, and that is what keeps me going. That is my WHY.

Similarly, you need to know the WHY behind marketing and sales to become successful. That is why I not only coach and teach sales and marketing people, I also ensure that business owners know these strategies and tactics too. That way, when I leave, you will know and understand what is needed for your company to grow.

If you are one of these companies, you have to first trust that there are sales and marketing strategies that can help you grow exponentially. Whether it’s me you call or someone else, by all means, please call someone to show you how you can grow substantially more than you have been. And above all else, listen to what they tell you. But be sure it also makes sense.

You will be glad you did, and you will see that the rewards you reap, both for your company (and yourself), but especially your clients, will be much greater than you ever realized.

Takeaways

 
So, what does all of this mean to you? If you want to grow much faster than you are growing now, you need to do these three things.
1. Your product doesn’t have to be perfect. Once it is functional, let the marketplace determine what is needed next.
2. Ensure your spend on sales, marketing and customer service to at least 15% of revenue, and preferably closer to 20% of revenue.
3. Hire expert help, whether full-time or consultants. Marketing has changed the way B2B companies must sell their products now, and your sales and marketing team needs to understand more than just your product line.

If you really want your company to succeed beyond all expectations, let’s talk. Let me show you what I can do for your company to help you grow. Let me show you the what and how, but more importantly, let’s work on the why of your company, and spread the word about your brand.

But you must ensure you are willing to spend what is necessary for this happen, which is at least 15% of revenues, and preferably closer to 20%. Otherwise, your company will not achieve the potential it can.

Thanks for reading this article. If you want to discuss more about how to grow your company at a much better rate than it is growing now, please email me through my email address below.

 
Ian Dainty
Kind regards,
Ian Dainty
Ian Dainty’s Email
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One response to “Why B2B Businesses Struggle to Grow from 6 or 7 figures to 8 figures and Beyond.”

  1. Bob Norton says:

    Excellent article Ian. I have spent over a decade developing the tools and concepts to help companine sbreak through this barrier. I have found every problem traces back to the lack of one of six Management Systems. Of course this is also a lack of experience of the CEO, founder or management team in scaling. I just launched a free new video series called “101 Management Best Practices”. The very first video addresses what founders fail to do to enable a team, instead of sticking with micromanagement:

    81e149577a
    Anyone can get a free weekly best practice video by registering at http://www.AirTightMgt.com

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