29 October 2014

10 sales acceleration cornerstones

Very few products sell without extra efforts. Well-oiled sales processes, on the other hand, understand customers´ thoughts and needs and help to significantly increase sales. Next we shall discuss ten sales process cornerstones. In addition, of course, you need to carefully craft sales strategies with implementation plans and resourcing, but without an effective sales process, a company will run short of what would be possible to achieve.

Link customer buying process with your sales process

The knowledge of customers' purchase process will help you to understand how they buy and what kind of steps they take to end up buying. When a company´s way to sell is adapted to purchase process, it ensures attention to the activities that customers deem valuable. For company salespeople, this provides a solid backrest to focus on the essentials that advance sales at all stages of the purchasing process. If, on the other hand, company sales are driven by the factors not related to customers, sales resources are not allocated in an optimal way and the focus is on the wrong things.

Define sales process stages

Definition of sales process stages creates a common language for the sales team. If this common language is missing, the results may be good in individual cases, but in the longer term execution is not satisfactory. And when it is time to grow sales muscles, a well-defined process effectively transfers sales know-how to new persons and thus brings more results more quickly.

Criteria for the transition between the stages are the glue which makes the sales process ticking. The criteria must be based on customer behaviour. This ensures that customers will move a sale forward, instead of seller's pre-defined plans, hopes or dreams sitting on the driver´s bench. The seller's task is, of course, to affect customers so that they are continually advancing in their purchase process.

Define buyer personas

By identifying and defining key buyer personas that have major influence during the purchase process, a concrete direction for sales tool development is created. All personas have their own objectives, needs, desires and fears. On the basis of describing buyer personas, a successful business can focus on exactly the right measures that will increase customer confidence and remove the uncertainties. To secure that the sales process is advancing smoothly, the definition of personas needs to be made for each stage of the process.

Specify major customer interactions

In almost all successful customer cases - and also in less successful ones - it is retrospectively easy to identify those interactions that substantially contributed to the final result. When an effective sales process is in place, this is done in advance. By developing well-defined patterns to respond to customer interactions that are either advancing or stalling opportunities, sales persons will have a more professional approach and also sales cycles will become shorter.

Harness all customer interface functions 

In a modern organisation, sales, marketing and other customer-facing teams work seamlessly together to provide value to customers. Thus the sales process can not be separated from other customer-related processes. Shared objectives will guide team operations, supported by coordinating processes, practises and tools to achieve the objectives.

Typically, demand generation activities made by marketing people produce qualified leads that sales persons start to work with. When a deal is done, various other functions - depending on the type of business - will be involved in fulfilling the customer promise. And after this, the round starts again to retain the customer, make upselling and cross-selling, etc. If sales just sub-optimises its own operations, it also builds barriers to its long-term success.

Make sales process an everyday tool

If a sales process is merely a forgotten document in a file, it does not bring any results. The most important thing is to make the process a part of everyday way-of-working. This is easiest to achieve by embedding it into the customer relationship management system; the system of course, can be of any kind, implemented through modern service or through excel tables. Thus, for example, sales pipeline management as well as planning and forecasting activities are done as part of the sales process. This will force everybody involved in sales to adopt the process quickly.

Focus on tools that bring value to customer interactions

It is easy to find and develop new sales tools or methods that claim to enhance operational quality and results. However, you should be careful with this. Sellers' time is very limited. By far the most important criterion - and often the only one - is how well a new tool or method can assist sales persons to work more productively with clients. It is too often that new things only increase paper work and other routines, thus taking time from customer value-adding activities.

By rapidly introducing right tools and methods, it is possible to create competitive advantages for the company, so even on this front you should do active development work. If a new tool or method that really improves customer operations is identified, it is vital that sales persons actively start to use it.

Measure adherence to sales process 

Measuring adherence to sales process is a good way to ensure that results are achieved. In addition to measuring the development of sales pipeline, e.g. forecast accuracy, completion of key interactions in each stage of the sales process or use of sales tools are worth regular follow-up. The principle of using metrics also paves way to process, way-of-working, team and individual development.

Coach sales persons

Managers have a crucial role to play to secure sales process adoption. If managers do not show an example how the process generates excellent results, it will be considered only a top management gimmick with no value. Also, the acceleration of best practices sharing is an integral part of  managers´ coaching role.

Continuously develop your sales process 

When the world changes around us, also purchasing processes change. If we are not able to further develop our sales process and the way we respond to changes, we shall find ourselves using a typewriter in the age of the Internet. This has a devastating impact on the ability of our salespersons to successfully fight against competitors. Therefore, continuous development to respond change and learnings of current process weaknesses is the key to good future sales results.

Start now

Now is the right time to start sales development activities. If you know what to do, try to achieve first wins as quickly as possible. On the other hand, if you are unsure of your business performance and of where to start, a quick test on this page will help you to evaluate the health of your sales process and to prioritise your development efforts.

16 October 2014

Find the most compelling export countries

One of the best ways to stimulate growth is successful market entry to new, international markets. But first you need to identify the most compelling markets - and these decisions are better to be based on the facts. I have also in my own career come across with internationalisation cases, where the key motivations were, for example, the language and cultural knowledge of decision-makers, coincidences or emerging romances.  It is of course possible to be successful just by counting on luck, but a more systematic approach will probably produce better results.

Here we shall go through methods to identify the most lucrative markets, introduce a tool for Finnish companies to facilitate the first steps of the job and walk you through an example of the use of the tool. The methods are suitable not only for international market expansion, but also when evaluating country priorities in new product, service or business model commercialisation.

Methods to identify the most compelling markets

Both company internationalisation researchers and experts of the sector appear to have broad consensus on the priority-setting and choice of international markets:
  • First, select the markets worth taking a closer look, based on macro-economic variables of the markets
  • Secondly, study the market potential for company's products in selected countries, and 
  • Thirdly, estimate the sales potential of company's products in relation to required  investments
The main factors affecting the market selection are thus:
  • Company related: e.g. the type of product or service, management characteristics, the size of the company, or experience in internationalisation issues
  • Target market related: e.g. the attractiveness of the country or market, marketing infrastructures or competition
  • Target market entry barrier related: e.g. country risk, customs and other barriers or physical and psychic distance
According to the model set out above, the made plans are indeed systematic but also mechanistic. They often lead to substantial investments, without the possibility, if necessary, to change the plans.

Of course, these things can be studied by means of desk studies, but a more in-depth view can only be found by having closer contacts with customers and markets. Traditionally, the tool has been own or outsourced market research, but its disadvantage is significant time, money and resources required. Globalisation of consumption and purchasing decisions, along with online methods, has created new, more cost-effective methods; international market selection can be made more iterative, avoiding too early choices that can easily lead to waste of resources.

Internationalisation Heat Map

Internationalisation Heat Map was developed as a tool for Finnish companies to easily and rapidly evaluate the attractiveness of entering various European markets. The tool encompasses all the European countries with the exception of mini countries, as well as some of the Balkan and Eastern European countries, where no reliable information is available.

Six elements were selected as the key factors of the Heat Map, with a user giving weight to each of them:
  1. Market size: measured by the population of a country 
  2. Purchasing power of the market: the measure is country's gross domestic product (GDP) per capita
  3. Ease of doing business in a country: measured using a World Bank comparative study on barriers and incentives of doing business in different countries
  4. Market openness: measured by using a comparative study by the International Chamber of Commerce on international trade openness in different countries
  5. Physical distance from Finland: measured using distances of country capitals from Helsinki, Finland
  6. Psychic distance from Finland: there are numerous, complex formulae developed to evaluate this, but here we use a good approximation of country's total trade (exports + imports) with Finland
The tool is used so that a user will assess the significance of each of the factors 1 to 6 from his or her business and internationalisation point of view, giving each factor a number value between 0 and 100. If the number is zero, then the factor is not taken into account in assessing the attractiveness of the country. Similarly, the number one hundred means that the factor is extremely important. Each factor should be evaluated individually, but a user gives each factor a weight based on what is important in company business. Each country gets an end result between zero and one hundred: the higher it is, the more lucrative the country is for market entry.

An example of Internationalisation Heat Map use

As an example, the tool is applied to analyse internationalisation plans of Ludus Helsinki. I was heavily involved in the business operations of the consumer product company aiming for rapid international expansion. Its products inspired children and young people to move, using a gaming-based service concept consisting of the Internet, software and dedicated devices.

 The most important factors of Ludus Helsinki internationalisation plans were market's purchasing power, ease of doing business in the country and country's psychic distance from Finland. The basic reasons behind this were
the facts that the product was quite expensive compared with its benchmarks and that it required a specific distribution and retail infrastructure. The size of the market and its openness were also important, but distance from Finland was not considered to be a very vital factor. The weighting of the various internationalisation factors is illustrated in the picture above.

The factor weighting produced the results of the chart on the right side. The most interesting export destinations seemed to be Germany, Sweden, Norway, Russia, the United Kingdom, the Netherlands and Denmark. The only surprise was Russia ending up so high. The importance of Russia, however, decreased significantly, when other important points for the Ludus Helsinki business were taken into account:
  • Tablet and Smartphone penetration in the country
  • The importance of non-competing physical activity for children and young people in the country
  • Sophistication of using digital marketing methods and tools in the country
The results were also very consistent with the conclusions of Ludus Helsinki digital marketing efforts: highly ranked countries generated more customer interest and the distributors and retailers in these countries were also the keenest to start to sell the product.

The used tool can be found here

5 October 2014

Growth financing for Finnish SMB companies

Lately I have been contacted by several SMB entrepreneurs for bank loan challenges. Indeed, access to finance is a key obstacle to the growth of many Finnish small and medium-sized enterprises. If you do not have deep enough pockets, or, for one reason or another, you do not want to rely solely on bank financing, you might want to look into what kinds of instruments public sector and private investors are able to provide. Bank financing, services offered by insurance companies or bonds for SMB companies with the First North provided marketplace, are not discussed here. If a company is in a startup phase or finds crowdfunding opportunities attractive, other potential funding sources are listed here.

The focus is on company growth and, in particular, organic growth. Thus we are concentrating on situations, where a company aims to increase its product or service sales on existing markets, to grow revenues through international expansion, or to create more turnover by developing and bringing to market new products, services or business models. Growth paths that, for example, utilise acquisitions, ownership or industrial arrangements, are not discussed here.

Financing sales growth

Growing sales require financing for e.g. manufacturing and service delivery capacity, working capital or for marketing and sales machinery. On the other hand, significant new investments in product development are usually not required. From funding point of view, just boosting sales is, therefore, often not so sexy compared with internationalisation or innovation initiatives. This is not, of course, how it should be; if a company cannot reach its revenue potential with current products on its current markets, it will also fail with new products or on new markets. A good and credible plan on how to use the new funding and how it affects enterprise value, makes it considerably easier to secure financing.

Company development grants by ELY centres are the basic public sector tool for financing sales growth. A grant may be used for investments, e.g. in land, buildings, machinery, equipment and furniture. In addition, it may also be used to finance development activities, for example, to hire external experts to develop company's strategy or sales and marketing. A small business may also apply for a grant for wage and salary expenditures required to create new jobs or for other expenditures relating to expanding business.

European Regional Development Fund (ERDF) is running a programme that improves competitiveness of SMBs, granting funds for business development and job creation. ERDF also partially finances the company development grants of ELY centres.

Finnvera may participate in the financing of investments and working capital with loans or guarantees. Depending on the amount of the grant requested, Finnvera can either be the sole financier, or funding requires co-financiers, or sufficient amount of the total financing must come from the company itself.

Private investors like Bocap, Korona, Fenno Management, MB Rahastot and Noweco Partners are among the ones that offer equity, loans or other financing to grow company revenues. Besides credibility of the business plan, many funding players have preconditions for the size of the funded company, as well as for investment size and industry focus. Garantia is, in turn, guarantee insurance company that guarantees funding and other liabilities of Finnish companies, as well as insures risks associated with investments.

Financing internationalisation

International market expansion gets a lot of interest and attracts potential public and private financiers.

Company development grants of ELY centres and SMB competitiveness development programs of ERDF can be also used for internationalisation.

Finnvera loans and guarantees can be used to cover the need for working capital arising from exports or to finance the international operations of a Finnish parent company. Export guarantees, export credit and interest equalisation services protect companies against the risks associated with export customers, banks and countries and help in the funding of export projects. Equity investments can be made together with private entities in technology-intensive or innovative service enterprises that have the potential for developing into international growth enterprises.

Suomen Teollisuussijoitus (Finnish Industry Investment) makes, together with other investors, own capital based investments to companies going international. Investments can be equity, capital loan, convertible bonds or mezzanine financing.

Tekes supports planning for global growth; it gives grants, for example, to test a new concept or product to potential clients, to develop marketing strategy and to make studies on intellectual property rights and their protection. Applicable until the end of 2014, Tekes Team Finland Explorer program gives loans to purchase professional services for e.g. target market expansion studies or new market business plans. Under Young Innovative Enterprises (NIY) business development framework, it is also possible to obtain a grant or a loan for internationalisation.

Finnfund finance companies that operate or plan to operate in developing countries or in Russia: the instruments are equity, investment loans, mezzanine financing or their combinations, as well as in exceptional cases, guarantees. Business partnership support by Finnpartnership includes grants for establishing operations in developing countries, which can be used in project planning, development and training phases.

In practise most of the private financiers require that a company is engaged in and is seeking to expand international business. For example, Conor Venture Partners, Folmer Management, Helmet Business Mentors, Innovestor and Tutor Invest underline their willingness to finance companies going international. Besides industry and size preferences, investors have - depending on their background - varying preferences on internationalisation directions.

Financing innovation and commercialisation

Tekes has traditionally been the cornerstone of developing new things: its research and development funding provides grants and loans for developing products, services, production methods, business models and competence. A mere development project does not, however, create company growth, and Tekes has rightly been criticised for supporting only technology exercises. For this reason, it is now offering also loans for demos, piloting and commercialisation, which can be used for, inter alia, machinery and equipment rent or depreciation, materials or supplies costs and for other commercialisation costs. Commercialisation costs can be also covered by NIY funding.

Company development grants of ELY centres can be used, for example, for patent rights of technology transfer initiatives, licenses, know-how or acquisition of unpatented technical knowledge. ELY can also cover raw material and semi-finished product costs related to product development, as well as salary and wage expenditures. In addition, also ERDF supports creation of new business activities in small and medium-sized enterprises.

EU Horizon 2020´s SME Instrument supports growth-oriented, innovative small and medium-sized enterprises. The program assists in the development of new concepts and solutions, in testing and commercialisation. The programme has identified certain priority areas, such as ICT, biotechnology and sustainable energy and transport.

Private investors are more interested in the results of innovation and commercialisation than just doing something new. Most of the investors, however, do appreciate new approaches and consider well functioning innovation and commercialisation machine as a precondition for funding. For example, Auratum, Folmer Management, GTW Group, Joy Group, Nordic Growth and Vision Plus emphasise the importance of innovation.

More information on Finnish SMB funding

All of the above mentioned financial instruments and sources require an application and negotiation process, with always uncertain end results. By pinpointing the right potential funding sources that have strategies matching with the business situation and objectives of the company, and by running the application process professionally, the odds of success can be significantly improved.

More information on the sources of funding for small and medium-sized Finnish enterprises can be found on the webpages of financiers and by contacting them directly. There is also a summary of financing sources available with more information on general conditions of funding, as well as on possible company and industry focus.