"Organic growth" -- or building a business with your own internal resources -- makes especially good sense in today's tough economy. For many small firms that sell business-to-business (B2B), growing through debt financing just isn't an option anymore. But if you're like most small firms that sell B2B, you may be making predictable mistakes that are inhibiting your ability to compete.
Dan Adams, president of Advanced Industrial Marketing, Inc., has spent his career helping companies that sell B2B overcome obstacles that tend to stunt organic growth. Here are some of the missteps that Adams has seen others make, and that you can avoid:
Mistake #1: Imagining customer needs in a vacuum. At most businesses, the new product process begins with the word "idea." But whose idea is it: yours or your customer's? Unfortunately, most suppliers start with their own solution, not the customer's. Then they try to validate it by showing it to some potential customers, and measure what they consider to be marketplace "need" by watching what happens when they launch the product.
That's backwards, says Adams. "Companies should invert this process," he says. "Start with customer needs and end with supplier solutions. Doing things in the wrong order may feel better, but it's far less likely to result in sales and customer satisfaction."
Mistake #2: Relying on sales reps to capture customer needs. Sales people alone are not the right ones to uncover what's needed in the marketplace. That's because they are usually rewarded for near-term selling and often can't reach the true decision makers anyway. But put a good salesperson on a team with marketing and technical colleagues, train all in advanced B2B interviewing methods and you'll run circles around your competitors.
Mistake #3: Failing to research the market or seek customer feedback. Many small companies rely on prior knowledge or simply "gut feeling" when devising new products and services for the B2B marketplace. But these days, even small firms need to be much more sophisticated in their approach to determining true customer needs and "pain points." One low-cost approach is to train yourself and all of your employees to routinely interact with customers for the expressed purpose of gather intelligence about their needs. Sometimes the best information can come through casual comments. Soon you'll overwhelm competitors by turning a trickle of customer feedback into a torrent.
Mistake #4: Using hand-me-down consumer goods methods. Traditional consumer-type research relies on surveys, questionnaires and interviews. That's fine for consumer goods, says Adams, but B2B customers tend to be more measured and rational in their approach to purchasing, and they are far fewer in number. They're smart and will make you smarter if you engage them in a peer- to-peer dialogue. Let them lead you to their areas of interest, probe with skill, and you'll be shocked at how much you'll learn.
Mistake #5: Gathering only qualitative customer feedback. "A new client once came to me extremely frustrated," says Adams. "He had spent months interviewing customers, only to hear his partner say he didn't believe what customers were saying. Unfortunately, business owners often hear want they want to hear and then parade some customer quotes for support.
What you need, adds Adams, is quantitative data, which measure customer importance and satisfaction on key outcomes. Skip quantification and your new product will be based on assumptions, bias, and wishful thinking.
Mistake #6: Listening only to immediate customers. Unlike B2C producers, your product might become part of your customers' products, your customers' customers' products, and so on. It's a mistake to interview only your direct customers, because they are usually unable or unwilling to disclose downstream needs.