How to Navigate B2B Sales in Our New Virtual World
As part of the German Accelerator “Pass The Mic” series, we hosted a virtual fireside chat with serial entrepreneurs about adapting B2B go-to-market strategies and the extra adjustments that are required due to COVID-19. Stefan Groschupf (Automation Hero), German Accelerator Mentor Ralf Hirt (8W8 – Global Business Builders), and Andreas Hofmann (Program CEO, German Accelerator Silicon Valley) share their battle scars and advice on virtual networking, tailoring messages, and developing go-to-market strategies internationally.
Before COVID-19, companies would travel and be in market to get a sense for how to adjust product offerings and how to partner. Now that these direct customer conversations are not possible, how would you advise companies to think about their go-to-market strategy during these crazy times?
Stefan: While this time has been devastating for many companies, remember where there is change, there is opportunity. Coming out of COVID-19, there will be some strong winners. Those who win are going to be the ones who adapt the fastest to the changing environment. Products are being battle tested right now. The big question is “are you selling a nice to have (e.g. vitamin), or are you selling a necessity (e.g. pain killer)?” If you are selling a necessity, your sales cycles will be accelerated. Unfortunately, we will see COVID-19 washing out many of the nice to have products.
A major current opportunity is the practice of selling a product over the phone. Historically, the customer expectation is if the product is more than $50,000, the customer will meet with you and get to know you. The problem is: there is a lot of time wasted during this process. The number one reason sales representatives fail is because they hold too long on “big” opportunities, instead of just qualifying and finding other companies that truly need your product. Now is the time to be much more metric driven, more volume driven, and have a very diligent sales process. Our learning has been that we can do significantly more since we don’t have to waste time and money traveling anymore, as everyone is willing to be on a screen share.
Andreas: This is one of my takeaways as well, I keep saying the world is flat now and everyone is in the same boat. We all have to adjust to the new normal and know that the person on the other side of the Zoom call is in the exact same situation. While there are some negatives, there are certainly positives such as our program becoming much more accessible – as the opportunity cost of getting on a Zoom call is significantly lower than the opportunity cost of participating in the program in-person.
Ralf: Never waste a crisis, whenever there is change there is opportunity! For B2B and SaaS companies, it is always a hard endeavor to penetrate a large market. However during our new decentralized reality, you can leverage shortcuts since it is okay to speak to clients via Zoom rather than flying all over a large country. Quantilope, a German Accelerator company I mentored, had a very successful market entry as they are in market research SaaS and automation space. For them, now is an opportunity to help brands understand the shifting consumer behaviors and adapt their strategies accordingly based on the instant market research insights. In the end, startups should not be scared of launching in the U.S., in fact startups should be embracing the new opportunities.
When you think about one of the harder things to do virtually, it’s networking. Do you have any tips to advance online relationships and get to know each other better?
Ralf: Over the past few months, I had many senior calls that I wouldn’t have had otherwise since people have more time and are not traveling. This situation has been really good for junior members who do not have a large network to win traction and open doors. It is also a great time for those with large networks to reactive relationships and reach out to others for opinions on ideas.
Stefan: I think the difference between ‘networking’ and ‘not working’ is just one letter. I am not a big fan of traditional startup networking. A lot of founders almost define themselves by how much they network. What you need to do is to prospect into companies; from my perspective this is different from networking. Even for fundraising, you do not need networking because if you have a great company that has all the KPIs the VCs will come to you. I think startups waste an extraordinary amount of time thinking they need to network in order to have access to VCs. I am very passionate about this as I have seen many startups thinking if they build a product in the basement they just need to network long enough with VCs and senior leadership communities for them to see the genius in their product – but it is unfortunately not that way.
All you need to do is a very classic go-to-market: you have a product and a sense of your ideal customer profile, from there you buy a database and marketing automation tool, and then start AB testing messages. As you fine tune your ideal customer profile, you will grow your response rate. This is pure old school go-to-market, ringing doorbells to find leads.
Andreas: I think you hit the nail on the head, this is essentially something we spend a lot of time working on with companies in our program. There seems to be this general thought that the best product will naturally win. Founders spend a lot of time either in the basement or behind closed doors working on a product that incorporates their initial idea, yet when they go-to-market they realize there are very few customers and they are not all necessarily willing to pay money for it. At German Accelerator, we work with startups on finding their beachhead market and minimal viable product. The sooner you can get feedback from your customer, the better off you will be later on since you can develop your product based on real market feedback.
What are your thoughts about the importance of first identifying your beachhead market?
Ralf: I am a fan of “nail it before you scale it”. You have to be really laser focused if you are a startup coming to the U.S. since you might get lost in all the activities that you can do. You need to look into where the value proposition is resonating the best. Back it up with smart B2B marketing strategies and leverage social content and virtual events, you should be able to scale relatively quickly.
Stefan: When I started my company, I took $500 and created two landing pages with paid ads to test product ideas on LinkedIn. I measured which industries clicked on it, what the conversation rate was, if customers were willing to pay for this. This way, you quickly get an idea of what is working and what is not. Getting early insight is a major differentiating factor between the U.S. ecosystem and Germany. In the U.S. startups are more willing to put themselves out there with duct tape and vision, whereas Germans are hesitant to bring an imperfect product to market.
Andreas: Maybe it’s the engineering pride, but whatever it is there is something that prevents many German founders from talking about new ideas with potential customers. You need to get feedback on your vision and see what resonates and what doesn’t resonate so that you can pivot and reorient your product.
What is your differentiated approach to target the younger generation that is used to online engagement?
Stefan: In the B2B space, there are three ways to go-to-market. The first is to be completely self-serviced online, where you upload your product and then ‘spray and pray’. Unfortunately, most companies try this route but it can be very difficult to achieve success. The second way is an inside sales market, where you build up a small team to ‘smile and dial’. These call centers combined with email and LinkedIn campaigns will make many calls to ideal customers. The final way is traditional enterprise sales, where your sales reps are constantly going around trying to sell your product. I think it is a good idea to start with the first option and make your way towards the traditional enterprise sales strategy.
Ralf: Every company needs to find the right integrated sales and marketing approach. Ultimately, it comes down to the KPIs that you define and whether or not you deliver. If you have enterprise sales people making their numbers it makes a lot of sense, however if they don’t it’s incredibly expensive. Typically you start with a staged approach, where inside sales get to a certain level and then have a senior seller close the deal. However, marketing now is even more important than before the pandemic because you can reach so many people.
Back to the original question, you need to have the right message for every persona you are targeting. Many companies get lost in over designing communication strategies, so sometimes it’s better to communicate your core value proposition in a consistent way. Drive your messaging across multiple marketing channels, email/social media/virtual events and integrate with sales efforts.
When you have a product, how do you amp up the marketing and messaging around what you have to offer?
Stefan: If you begin a startup, everything needs to be learned. As a founder, you want to optimize the speed of learning. If you nail the speed of learning, everything else will come together. To your question, I would first start with a fake website and see if anything resonates with potential customers. Just be willing to always throw things away. It’s really a question of bringing age old methodologies to the company; every week or two you should do a retrospective and look at Google Analytics and make adjustments. There are too many companies out there trying to be ‘too perfect’ right away, it’s more about being perfect in the speed in which you can improve. I have started companies with nothing else but pounding the phones and asking potential customers if something would be of interest to them – it’s all about the learnings you gather. Everything is iterative and the faster you iterative, the more successful you will be.
For startups that begin in Germany, grow in Europe, and then look at expanding into the U.S. market, what advice would you give these startups as to the differences they can expect?
Stefan: You can sell a less quality product in the U.S. than you can in Germany. I don’t mean this in a negative way, but what I mean by this is that people in the U.S. are more of risk takers. If you can demonstrate a competitive advantage with your 5-person startup, people in the U.S. are willing to invest in you. In Germany, good luck trying to sell to Volkswagen with your same 5-person team, as this process will take you roughly 18 months. In fact, I did some data analytics with my last company: the sales cycle is twice as long in Germany than in the U.S. and the average deal size in Germany is only ½ as big. By definition, this means Germany startups are 4x at a disadvantage as compared to U.S. startups. This is because the startups in the U.S. receive capital twice as fast and they are able to learn from their customers twice as fast. This is why lesser quality products frequently succeed in the U.S. over a better quality product in Germany.
Another important thing to note, is that you need someone to spell check your website and white papers. You want to look professional in your written communications. Invest money in the tools for translating.
Andreas: This aspect of communication, you punch above your weight and look bigger than you really are. The image you portray to the market is super important, and unless you are highly professional you will not be able to break through since there is so much competition.
Ralf: It is not that difficult coming to the U.S. since many aspects are quite similar; however, there are certain things that you need to be aware of. As Stefan mentioned, the deal sizes are usually larger and decisions are made much quicker – this is a good combination to scale a business. You want to make sure to check on your product market fit and pricing strategy. If you look at large companies, such as SAP, the reason they grew so much is because they went to the U.S. market early and made it a priority and this is a good playbook to follow.
In conclusion, what are the most important things to keep in mind for B2B go-to-market strategies?
Ralf: You have to be very hands on and examine your data. You also want to take a close look at your value proposition and make sure it is actually solving a real problem. Many things are happening now in an accelerated way because companies are needing to change and leverage the difficult situation.
Stefan: From my perspective, your strategy now should be optimized on learning. Start with whatever you have today and be very data driven. It is all about the speed in which you can adapt to the changed environment and everyday zero in on making improvements.
This post was first published by the German Accelerator.