b2b marketing, sales & business models
Post on 17-Oct-2014
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This is a list of the Eight B2B business models. The topic is generally for technology startups. Business models for startups.TRANSCRIPT
Copyright DKParker, LLC 2013
Marketing & Models Dave Parker
@DaveParkerSEA
www.dkparker.com
“Separating the forest from the trees from the bark”
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Agenda
! About Dave
! Marketing Methods
! Sales Models
! Pricing Methods
! Business Models
! Financial Models
! Q&A
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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
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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
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Marketing Methods
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How many of the Top 10 Viral Videos 2013 were B2B?
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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
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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
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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
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Copyright DKParker, LLC 2013
Key Metrics - Marketing
! Marketing methods
! Monthly Spend
! Cost of SEO
! Calculation of spend to Lead to Prospect
Your marketing metrics here:
! ________________________
! ________________________
! ________________________
! ________________________
! ________________________
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Sales Models
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Someone has to sell your product – let’s start with you
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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
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Known Market
Unknown Market
Low Price Point
High Price Point
Known Search Words
Unknown Search words
Web Direct ✔ ✔ ✔
Direct ✔ ✔ ✔ ✔ ✔
Indirect ✔ ✔ ✔
Licensing ✔ ✔
Retail
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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
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Key Metrics – Sales
! Sales Method
! Sales Staffing
! Sales Cycle ! Time ! Conversion ratios
! CAC
! LTV
! Churn
Your sales metrics here:your sales here:
! ________________________
! ________________________
! ________________________
! ________________________
! ________________________
! ________________________
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Pricing Methods
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You can sell anything for nothing
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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
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Key Metrics – Pricing
! Product variations
! One time or recurring
! Monthly/Annual
! Pricing over time
! Services
Your pricing metrics here:
! ________________________
! ________________________
! ________________________
! ________________________
! ________________________
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Business Models
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If you have a “K Factor” >3 you don’t need a business model
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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
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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
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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.
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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
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3. Lead Generation
! Example: AllStarDirectories, NetQuote
! Key Metrics ! Cost to generate traffic
! % conversion of form data
! Price per lead
! Challenges:
! Notes:
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4. Transaction/Posting Fees
! Example: 99Designs, KickStarter, Elance
! Key Metrics ! Average transaction revenue
! Fee % per transaction
! Number of transactions
! Challenges:
! Notes:
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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
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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
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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:
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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…
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Innovative Trends
! Groupon – lead gen with consumer benefit
! Airbnb – enabling payments for Peer-2-peer, sharing economy
! Kickstarter – crowdfunding
! Xerox – leasing equipment – 1950’s
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Financial Models
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To the Spreadsheets!
! These details manifest in assumptions
! Time based ! Launch
! Ramp
! Scale
! Market & Brand Development ! Pricing
! Overtime
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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”
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Example
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Q&A
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[email protected] www.dkparker.com/blog @DaveParkerSEA
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Copyright DKParker, LLC 2013
Slides to Print
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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
! ________________________
! ________________________
! ________________________
! ________________________
! ________________________
! ________________________