New post from The eCommerceFuel Blog:
Business-to-business sales can sound like the ultimate dream for most eCommerce business owners. But the reality of B2B is significantly different than what most think, and the process of setting it up can be daunting without a guide. Ben Camerota of MVP Visuals shares the nuts and bolts of his B2B sales process and offers an inside look at how to set up your model and your team for business-to-business success.
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The Full Conversation
(With your hosts Andrew Youderian of eCommerceFuel.com and Ben Camerota, of MVPVisuals.com.)
Andrew: Today on the program, I’ve got Ben Camerota of MVPVisuals.com. He’s an eCommerceFuel member, also a man who has a lot of experience with B2B sales, both in the traditional corporate world, and also in his own business, MVP Visuals, which I mentioned. We’ll get into the nuts and bolts of B2B. B2B, I’m guessing almost everyone listening to this is going to know what that is, but it refers to business to business; so selling specifically to other businesses, governments, to big organizations, versus selling B2C, where you’d be selling to individual customers on at a time. So it has a lot of potential for really being able to ramp up your order size, your overall revenue, your profits of course, but it’s also a different beast completely than B2C sales.
In my business at least Right Channel Radios, we’ve definitely taken a shot at the B2B approach. I wouldn’t say we’ve totally mastered it; it’s something that we’ve definitely tried a lot of approaches with I don’t know if we’ve really nailed it, but it’s great because I get Ben on some of those things in terms of different approaches, what works for him, and tips for you on how to make it work, and if it makes sense to work for your business. So we’re going to go ahead and get right into today’s discussion with Ben.
Ben’s Sales Background
Andrew: Ben, so can you tell me a little bit about your background and specifically how you got into MVP Visuals?
Ben: Sure. I started out of college, entry level sales, literally pounding the payment working for a payroll company. I did that for about a year, and then pretty quickly transitioned into medical device sales. I was working in large hospital systems primarily in sales capacity and in operating rooms. So, really interesting stuff in terms of getting to work with surgeons and nurses, and then the flip side of that and working with purchasing departments as well. I truthfully spent my last two or three years there looking for entrepreneurial opportunities, and really trying to figure out, “Do I want to start a business, do I want to purchase one,” and also determine what kind of niche I wanted to get into.
Andrew: So when you say pounding the pavement, are we talking cold calls, are we talking literally you’d show up to a hospital where they don’t know you and try to make connections. Did you have a lead list that you were working from?
Ben: Great question. When I was 21, 22, literally pounding the pavement, selling payroll, going door to door, having a couple of towns as a territory, yeah knocking on doors and not really having a lead list, and of course, expected to make sales and have a quota. When I went into medical device sales, it’s funny; I worked for a large global company, great culture, all kinds of money, but at the heart of it, it was, “Hey, go into this hospital system and get to know people.” So it’s funny that no matter where you are in terms of sales, even starting a business, eventually at some point, the rubber is going to meet the road — no pun intended — and you’re going to have to knock on some doors and cold call, and ask some people if they want to chat.
Andrew: When you were actually going door to door, that was to sell payroll services?
Ben: Yeah.
Andrew: So you’re beating on business doors, you’re going up to people. The nature of the business, people generally don’t like solicitors. It’s like, “Who’s knocking on my door, who’s trying to sell me something?” That’s a hard thing to do for anybody, even someone who’s confident, who’s got sales experience. So how would you disarm people? How would you in 15 seconds… because you probably only had a tiny window to try to get them to not say, “Hey man. I’m sorry, this is a terrible time,” and slam the door on you. How would you build rapport in that tiny window where you had to try to make a connection to be able to get to know them and make the sale?
Ben: That’s a fair question. To take a quick step back, in college I was actually involved with running a painting company, one of those deals where the college student runs the business and gives the estimates, but they have a professional painting crew working for them. Compared to wearing a tie and working for a real company, that was gravy compared to walking door to door and trying to speak with the owner of the home and babies are crying and they’re thinking, “What the hell are you doing here?”
But in terms of disarming, I think a lot of it depends on who you’re speaking with. Also I was 22 and probably looked like I was 14, so I think that helped a lot in that I probably had a trusting face. But look, I wouldn’t recommend that for people starting out. It’s really not a way to build a book of business. But it’s funny; my cousin who’s 19 or 20 now has that same job in terms of the painting. I told him, “Hey, man. At the very least it’s always a good thing to get your teeth kicked in a little bit when you’re younger.” So if anything, it gave me a sheet of armor here to protect myself against the million “no’s” that I would hear over the next decade.
Andrew: So you ended up, of course, buying MVP Visuals, correct?
Ben: Yes.
The Business Model Behind MVP Visuals
Andrew: And so for people who don’t know, what’s the business model? Can you give us a sense of your team, your revenue, things like that?
Ben: Sure, great question. We are an online supplier of custom branded displays. We sell everything from table covers and tents to retail displays and back walls used in trade show environments and sporting events. In terms of our model, we are primarily drop ship. So we work with a network of about 20 manufacturers here in the US, depending on the type of collection and product, and then 5 or 6 overseas in China. In terms of our team, we’ve got a pretty lean and mean bunch here. We’ve got three full-time employees other than myself. What’s interesting is that when I purchased the business, Andrew, I had to move it about an hour north. So what that meant was I had to hire an entirely new team, which was a daunting task, but it was great because I got to build everything from scratch again. Each of my employees here handles both client services along with graphic design. It’s unique in that we can give really great customer service because whether you’re getting an estimate or getting an art layout, it’s going to be working with the same person.
Andrew: And roughly what are the revenues you guys do per year?
Ben: We’re between $1 and $5 million. I don’t want to get too specific, but I’ll be honest, we’re really starting to hit our stride. I purchased the company in 2012. This year we’re up about 45% year over year in top line, which is great. We’ve really been able to leverage some of our relationships with some larger brands, so although we may not be increasing our number of orders, our average order has gone through the roof.
Andrew: Congratulations. We purchased for eCommerceFuel Live coming up, the big photo backdrop that you see at conferences and events people have with the logos, we got that from you. I’m excited to see how that turns out.
Ben: Yeah. Thank you for that.
The Downsides to B2B Sales
Andrew: Yeah, thank you. It will be fun. Ben, B2B sales sounds really glorious at first glance. Your customers are businesses, so they have more money to spend. A lot of times they’re repeat purchases, which is gold to business owners when you get someone who buys over and over again. But I know from personal experience and also just from a hunch that it’s not quite as sexy and without warts as you might believe just looking at it from those two perspectives. So what are some of the really big downsides to B2B sales that people don’t think about that they maybe underestimate when they get into a model like this?
Ben: Sure. I think for us we found out pretty quickly that we had limited marketing channels. One example of that would be social media. So we found out really quickly that social media was not going to be a driver. I read everywhere — B2B and B2C, you’ve got to be on social. The reality is that’s just not where our audience and where our prospective customers hung out. Because of that, it’s more difficult, I think, to drive and enforce brand loyalty. Here are people who are working for businesses, generally they’re not owning the business, it’s not their money. I think it is much more difficult to create a loyalty to a brand when you’re working within a budget rather than spending your own hard-earned dollars.
Andrew: So how do you do that? I know for example Uline — I think they do, correct me if I’m wrong — they’re a classic B2B company. They sell packing supplies and boxes and all sorts of really boring things that businesses need. One thing they do is they let the people who order pick out free gifts for themselves, which is brilliant because if they’re spending the company’s money on stuff they don’t care about but, “Hey, if I hit this certain threshold, I get a free cooler or a golf set,” or something like that, you’re pretty much bribing the decision makers to keep coming back to you. Do you guys do something like that? Is there a term for that? Is that pretty standard, or is that just something that Uline does particularly well?
Ben: Yeah, great question. We don’t get have any bribery going on here, but it does sound like a great idea. I’m aware of larger players in our industry getting involved in a little bit like that. I think I’m pretty fortunate. You don’t know what you don’t know, Andrew. When I bought this company, what I didn’t realize is that it was really ripe for disruption. The trade show and event industry is primarily pretty backward. I think that extends into website presence and even customer service.
You talk about how can we get people to come back again and again. We’re generally working with marketing individuals that are under really tight time constraints and are being pulled in a million different directions. I think the value add that we bring is our customer service is so great that they know if they come to MVP and they have an issue or a question, it’s going to be solved immediately, and they don’t have to think about it. So in a way that’s our form of bribery. It’s like no one is going to be easier to work with than us.
Finding The Right Contacts at Big Companies
Andrew: How do you find the decision makers at a big company? Sometimes you look at… it’s one thing if they’re inbound; it’s easy if they’re in-bound. But with a lot of B2B, a lot of times like you said, you don’t have as many marketing channels. So I’m guessing there’s a lot more hustle in trying to go out to customers versus B2C when you’ve got a larger pool of people. How do you find the decision makers in a big company? That can be difficult. You’re likely going to have one person who makes the buying decision, but finding them is difficult. I would assume you can’t just call a company and say, “Who’s responsible for buying X?” Or can you? How do you do that?
Ben: Great question. Boy, I wish I could say I had the four-hour way to get to the top of every company. But I think like a lot of things in business, it’s just time, it’s just building relationships. One of the things that I do here as the owner is I’ll take our list of a couple of hundred clients each month and honestly just go through them, look at their website and see who they are because I’m not touching them individually on a day to day basis, I’m not handling the orders. And then I’ll strategically reach out to them. I’ve got an email list that goes out and I’ll follow up with phone calls. And really the objective there, Andrew, is that these are companies that I know whether it’s different departments or different individuals could be doing a lot more business with us.
Once I get on that initial phone call after they’ve already, presumably, had a positive experience, I’m just working my way up the chain. For me, it hasn’t been easy, but it has certainly been effective over a longer period of time.
Andrew: So it sounds like your biggest pool of leads isn’t necessarily cold call; it’s the call existing customers that have ordered from you, get to know them and figure out how their company works, where they can use you more, and really grow the revenue per customer versus trying to bring new people in.
Ben: One hundred percent. So when I came in I was new to eCommerce, I was new to the industry, so I just threw everything against the wall and saw what stuck. In terms of phone lists and buying email lists and even reaching out to local companies that I may have had an “in” into, it just didn’t work. It’s such a timing thing, especially with what we sell. You either need this stuff or you don’t. It’s not a consumable good. I found out after about a year of trying a number of different methods, it was, “What are you doing?” You’ve got a pool of thousands of companies here, hundreds of which are ripe for opportunity.
So for the last couple of years, I’ve just strategically been — for lack of a better term — picking them off and going one by one. Sometimes it involves flying out and meeting with them, but a lot of times it’s just over the phone and via email. To be honest, I don’t think a lot of our competitors… I don’t think the owner of that company is calling up their customers and saying, “How can we make your life easier?”
Andrew: That ties into the sale cycle and B2B is known as having a much longer and more involved sales cycle because usually they’re bigger purchases, it’s harder to get the sale, those kinds of things. What do you do specifically? You mentioned and touched on calling people up, but is there a… I don’t know if formula is the right word, but is there a very specific process that you go through? Do you have a system in place where you call everybody once a quarter and then you follow up after every order? Is there something that you always do for every ordering customer, or is it more just checking in periodically and it isn’t something that’s quite as important to get exact, but you just make sure you go through every six months and call people?
Ben: Great question. One of the interesting things was, when I purchased the company, the previous owner hadn’t done any marketing. So they delivered great service when they were on the phone or via email. But from 2006 to 2012, not one email went out, or one phone call saying, “Hey, thank you for buying,” which was super interesting because when I was looking at the business, there were all these great brands and universities and local governments and sports teams that were buying from her. It may have been in smaller quantities and volume, but there was never a reach-out. So one of the things that we immediately did was, one, institute the plan that I had just talked about with strategically reaching out to target clients, but then really just setting up a pretty basic email marketing program.
So we’ve got of course the sales confirmation and then we’ve got a 30- and 90-day check-in via email that gives a discount code and says, “Hey, we miss you already.” Then we do the same thing at about a year because we found that we have a lot of event-driven clients that are annual events. But really, it’s a fairly basic email marketing program that, like any company my size, we’re just trying to stay top of mind so that when they do have a need, we’ll be there.
The Importance of Pricing
Andrew: How crucial is pricing? Maybe it varies based on business to business; some consumers you get are crazy price sensitive, others won’t check anything and they’ll easily spend twice what your price quote had been. Is there a general rule for a lot of the B2B customers that you have, or is it all over the place just like it would be in a B2C market?
Ben: Yeah. We’re an interesting company in the sense that we’re ecommerce based, but half of our business comes offline, whether it be a custom size or a custom volume. So I would say that the competitors that I deal with, we’re pretty price sensitive in terms of what’s being sold through the website. I think where there’s a little more wiggle room is for larger volumes. So we absolutely have volume breaks in place, but we’re not necessarily putting those online. We really want the customer to call in, request a quote. We can touch, feel them, get to know their business, and really give them exactly what they want. But yeah, in terms of our industry and B2B as a whole, certainly the larger volumes, price matters more, but discounts are a huge part of what we do.
Andrew: What percentage of your customers pays net 30? For those that may not be familiar, net 30 is when somebody doesn’t pay with a credit card or a check upfront. You pretty much ship them the product and then within 30 days… and you ship them an invoice, a bill more or less, and they have to pay you within 30 days. What percent of your customers pay net 30 versus paying with a credit card?
Ben: Yeah. So it’s actually a really small percentage. We probably only have a couple of handfuls per month, and the reason is we’re not selling a handbag or a pair of Nikes, right? Everything that we’re selling has a custom-branded logo or artwork on it. Unless there’s a manufacturing defect, we’re not taking back returns. So for that reason, it’s pretty well understood and costumers seem to be okay with it, that they’re going to pay upfront.
Now, as we’re heading into different markets and working with universities, local governments and these larger brands, they’re absolutely expecting those net 30 terms. So internally, I’m wrestling with that now. I’ll go back and forth with customers. If they’re a first time customer, we don’t do it. If they’ve ordered with us a couple of times, then we’ll allow it. But we really try and limit it just for cash flow purposes.
Andrew: It really gets down to extending credit. So you won’t extend credit to a customer for net 30 terms unless they at least have a one or two order track record with you prior to that.
Ben: Yeah. When I first started, I was like any new business owner, really scared that that was going to scare them off. They might have heard other people say, “Well, you’ve got to extend terms. How can you expect to work with some of these businesses?” And the reality is every company has a credit card. Even if it’s a college who says, “Oh no, we need net 30,” they’ve got a department credit card.
What we found is by giving a gentle push, if they say, “Hey, can we extend terms,” and say, “You know what, we don’t really offer that,” more often than not, they’re okay in paying with a credit card. Then at other times, we’ve gotten creative. So we might say, “We’ll start production, but we’re not going to ship it out until we get the check,” or, “You can pay 50% down beforehand, and then we’ll give you 50% due upon receipt.” So depending on the client, I think it’s more important that you’re showing that you’re willing to work with them rather than just saying no. But we haven’t run into a whole lot of, “It’s got to be net 30 or bust.”
Andrew: The net 30 thing has always puzzled me a little bit because as a consumer… from a cash flow perspective of course, it’s nice to be able to push what you have to pay out by 30 days. But if you put something on a credit card, really it’s net 30 anyway because you have to pay that credit card in 30 days. You get points for it. It’s way more convenient. I would much rather give a credit card to somebody at the time of purchase, have it done, I don’t have to worry about it anymore, and I don’t have to write a check or mail something in; it’s done. Why is it you think that so many people — especially businesses — want these net 30 terms? Is it just out of practice? Are there that many companies that really just need it for the cash flow? Do you have any insight into that?
Ben: Yeah. I think it’s probably a mix of things. You and I, Andrew, we’re running small businesses. We’re the sole owners, right? I know you have a partner in one of your businesses, but . . .
Andrew: No partners.
Ben: Oh, no partners.
Andrew: Hopefully not; at least equity partners. Otherwise, I’m going to be in trouble. Somebody hasn’t been getting paid.
Ben: There you go. So then even more so. With the small businesses that we own, we solely stand to benefit from — you name it — Southwest flight points, free gift cards. If you’re a local government and you’re working in a purchasing department, who would get those points? I don’t even think it’s on their radar. Also, they have departments of people that do the accounts receivable, and it’s their job. So I think partly it’s built into the system; it’s built into these larger customers. Also, yeah, I think probably they’ve built their businesses around structuring their cash flow so that they have 30 days to pay their bills.
Tips on Working With Government Agencies
Andrew: You mentioned government customers. And government, man, you’ve got B2C is pretty straightforward. B2B is a little more complex sometimes. When you get into government customers, you’re dealing with almost always net 30 terms. You’re dealing with bidding stuff out, submitting bids and then you’ve got to compete against people. It’s a different ballgame. Do you have any tips for best ways to maybe work with government agencies, and even more than that, increase the likelihood that you can be the place that they come back to over and over again?
Ben: Yeah, great question. This is actually a topic for potential future podcasts. The only reason why I say that is I’m just really starting to dive deep into that. We’ve always worked with local governments, so it might be a town that’s buying tents and table covers for their recreation department. They’re not always net 30 terms, and you’re not really dealing with bids, but we absolutely are now starting to get into these larger federal government bids and working with branches of the military.
All I can say now is it’s an absolute jungle. I can’t believe how much red tape and how many hoops they make you jump through. I was just laughing with a representative from one of the government agencies yesterday where I said, “Look, I feel like I’m going to win the race just by going through Sam, and going through all the government red tape,” because it takes months to do this. So who’s going to be crazy enough to go through all these different steps? So hopefully I am a rare breed and just crazy enough to keep on doing it and it will bear some fruit in the future.
Andrew: Yeah, maybe we’ll have to do a follow-up on that; a year in “The Secrets of Siphoning Money Off of Uncle Sam” and outlasting all the other people until they fall parched in the desert and aren’t willing to stick with six months of red tape and bureaucracy.
Ben: I’ll take it.
Andrew: Ben, it has been awesome. Thanks so much for coming on. I’m really looking forward to meeting you in person at eCommerceFuel Live here in the very near future and looking forward to seeing you around the community. Thanks, man.
Ben: Thank you very much. Take care.
Andrew: That’s going to do it for this week. If you enjoyed the episode, make sure to check out the eCommerceFuel private forum, a vetted community exclusively for six and seven figure store owners. With over 600 experienced members and thousands of monthly comments, it’s the best place online to connect with and learn from other successful store owners to help you grow your business.
To learn more and apply, visit eCommerceFuel.com/forum. Thanks so much for listening, and I’m looking forward to seeing you again next Friday.
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Photo: Flickr/Alexandre Normand