Five Critical Considerations for Effective B2B Engagement with Automotive Companies
B2B sales to large automotive companies can be a long and complex process, with multiple decision-makers involved. In this industry, success is not just about having a great product or service, but also about understanding the nuances of the decision-making process. In this blog post, we'll explore five surprising facts about the success factors in B2B sales to large automotive companies that nobody tells you.
Timing is everything
When it comes to B2B sales to large automotive companies, budget timing is key. The timing of a company's budget cycle can indeed impact their purchasing decisions, as companies may have allocated budgets that they need to spend by a certain deadline. Typically, year-end and the beginning of the year are crucial times when budgets become available. Large corporates, like BMW, Mercedes, and Volkswagen Group operate like this. Planning for these budgets usually starts 1-2 quarters before. As a sales professional, you need to make sure you hit the right windows of opportunity to secure the deal.
However, it's important to note that not all companies follow the same budget cycle, and some may have more flexible budgets that are not tied to specific timelines. For example, Microsoft’s fiscal years begin on July 1, the fourth quarter of each fiscal year ends on June 30. Furthermore, even if a company has a budget available, that doesn't necessarily mean they will spend it on your product or service. As a sales professional, it's important to understand the specific needs and motivations of each potential customer.
Decision processes are complex
Decision-making in large automotive companies usually involves committees and written proposals that go up the ladder. This means you need to provide the right information and keep it crisp and condensed. Provide individual decision-makers and committees with the information they need, when they need it, and make sure you understand the decision-making process.
Some companies may have more streamlined decision-making processes, while others may have more bureaucratic structures. It's important to do your research and understand the specific decision-making process of each potential customer. Board-level proposals at large automotive companies are typically put together based on a combination of slides and pages with a fixed structure of inputs and commentaries across different internal stakeholder groups. At Amazon, no decision is made without a well-written and neatly organized doc. As always, know your customer!
Surprise with progress
As a startup, you need to surprise your potential customers with progress at every new meeting. Don't wait for the client to tell you what's next. Most times, they don't even know themselves. Instead, be proactive and show them what you've accomplished since the last meeting. This will build their confidence in your company and help move the process along. A senior executive at a large tech company in Silicon Valley told me that they prefer to work with startups that show technical progress from one meeting to the next one, pushing the boundaries of what might be expected from a supplier in general.
Certainly, make sure you strike a balance between showing progress and not overwhelming the potential customer with too much information. It's also important to be realistic about what progress can be made within a given timeframe, and not promise more than you can deliver.
Importance of risk-free trials and proof of concepts (POC)
Risk-free trials and proof of concepts (POC) are critical in B2B sales to large automotive companies. Most companies are risk-averse and want to see proof that your product or service works before they commit. Keep entry hurdles as low as possible to avoid creating unnecessary barriers to entry. By providing a low-risk trial, you can demonstrate the value of your product or service and increase your chances of success.
However, keep in mind that these trials entail their own costs and risks. Avoid undervaluing yourself or appearing desperate. We recommend charging for POCs to establish a commercial relationship without offering too much for free. It's crucial to be strategic about which potential customers are offered trials and to ensure that the trial is arranged in a way that benefits both parties mutually.
Know the purchasing limits
Every level of hierarchy in large automotive companies has different purchasing limits. This means that the value limits your economic buyer is able to sign off on may vary. To ensure success, you need to know the limits of each level and make sure you're providing a solution that fits within those limits. At large corporates, (S)VP-level executives might easily be able to sign off on 100k EUR projects themselves. More complex decisions require involving purchasing, finance, HR, and other stakeholder groups.
And one thing is clear, purchasing decisions are not always made based solely on the dollar amount. The strategic importance of the purchase and the potential return on investment generally come into play and must be addressed by the seller. It's also important to keep in mind that any limits may be flexible and negotiable, depending on the circumstances.
In conclusion, B2B sales to large automotive companies can be challenging, but by digging deeper into the above components, you can increase your chances of success. Timing is crucial, know the purchasing limits of each level of hierarchy, understand the decision-making process, surprise with progress, and provide risk-free trials and proof of concepts.
And despite playbooks, streamlining and common frameworks, make sure to approach each potential customer on a case-by-case basis and not rely too heavily on a one-size-fits-all approach. Doing your research and understanding the specific needs and motivations of each potential customer can be the key to success.
