B2B: What's Your Cost of Doing Business?

Do you know it? Is there a system in place to capture and measure it? Your already know that it is important to know. What's more, often the processes you put in place to generate leads are inside-out and may be out of alignment with the buying processes of the organizations you are selling to. This is the subject of my post at the Marketing Prof Daily Fix -- is your cost of sales skyrocketing?

It's meant to be a departure for a conversation, of course. The bedrock and foundation of business transactions should be value as weighed against needs. The reality is that in many organizations the people doing the purchasing and evaluation of vendors are stretched beyond the point of pain. And they are very smart and well rounded -- they have to be to wear the many hats they wear these days.

Considering that potential customers are treated like targets, when they are in fact people just like you, working on being productive and making their buying effective, is it any surprise that when pressed they would create counter measures by hiding behind procedures and requiring complex RFPs? Filling out a lot of long RFPs, by the way, is on the cost column of doing business -- effort and time that may be better spent building relationships vs. starting from scratch every time.

Some other thoughts for consideration:

• Allow unstructured conversations to inform your service or product offerings as based on direct and real time customer input.
• Help build communities of buyer and customer peers where people can swap opinions of your company.
• Think about where partners fit in your business ecosystem. Anne Libby has an excellent post about business partnerships where she talks about having compatible goals and values for the relationship to work.

In any case, the model needs to work from a financial standpoint. Simply put, if you spend more (and effort and time are an expense, too) acquiring business than you make, you may not stay in business long. Knowing how to measure your hard and soft costs is a step in the right direction.

Comments

[Ignacio]

I remember my first job out of college was with a really small business, and the owner knew, by the penny, how much money he needed each day to open the door for business. All costs (payroll, real estate, etc) were included in a "per day" number. I just remember being impressed by that. He just knew exactly how much each day of his business cost. Since then, with many other jobs I've had and interaction with business onwers, many of them didn't know how much it cost to open their shop each day.

Ignacio

[Valeria Maltoni]

Ignacio:

I love those stories as they really drive home the importance of earning a good day living for sustainability. The other (related) thought you prompted with your comment was how long before one should expect to go from red to black when starting a new business?

My mentor feels that a business should be profitable (in the black) from day one. I tend to agree, but know it is not (almost) always the case.