As a well-known consultancy focusing on the B2B industry, we get calls every week from Taiwanese companies looking for help dealing with the 'red ocean' of relentless competition. Sometimes they have very specific ideas of how we can help them, perhaps a new CIS to improve their image, a corporate film to communicate their quality, a marketing strategy to get the word out, etc.
However the most interesting cases are where we work with a company to totally revamp their strategy and value proposition and work with them to craft a way forward.
Geber tends to work with a lot of B2B companies. It is what we're interested in and what we're experienced in. Our Managing Director and founder, Richard deVries, worked in B2B chemical sales and marketing in Canada before making Taiwan his home. As such we follow the global B2B strategic trends and can help 'cross pollinate' ideas from different regions and industries to those in Taiwan.
One of the most challenging strategic transformations that we help Taiwanese companies make is going from a relatively straightforward manufacturer, selling products or following OEM directions, to 'solution-providers' that add higher added-value to their customers and hence higher profit margins to boot.
Sounds straightforward right? If you follow the right roadmap it can be. Also, I'm not going to lie to you and say that it is easy. Creating logos, making films, creating marketing plans, those things can be done by your marketing department with an agency such as ours or others. However, to create a real B2B solution brand you'll need to go deeper. You'll need to transform, dare I say improve, the very essence of your company. But it will be totally worth it.
Now is the time to think about making this shift. I know many of you may think it may already be too late, but that is the wrong way to think about it. Yes, the best time to do this may have been five, ten years ago. But the second-best time is today.
With the massive changes and disruptions that have happened in the last couple of years the time is ripe for Taiwan's companies to re-think what they're doing, for whom, and how to go about it.
Should you become a solution provider?
First, not everyone should or does want to be a solutions provider. If your company has a product that is selling well, and your business model is operating as it should you may be happy with being a product-focused company.
For example, we have a client that makes a key component for the medical imaging industry. This keeps things relatively simple on the sales and marketing side of things. They've got a stable customer base who know exactly what they need, and our client just needs to keep quality high and innovate on the product side of things.
However, this is not the case with a lot of other companies. Or if it is the case, it is only with certain customers. For example, a company could have some customers that know exactly what they need but others that do not. Or even the same customer could have some areas where they know exactly what they need and others that they do not. Thus, when working with a client, we first start off by taking a close look at their customers and finding out their pain points.
We do this by talking with our client's customers, face-to-face or via video conference if that isn't available.
Our Taiwanese clients often have customers from around the world so it’s good that we also have people able to speak in many languages. Through this process we can see what challenges our client's customers are facing to bring us to our next step, whether to be a solution provider or not.
If so, why?
As mentioned above, after this process we know what type of branding strategy to recommend. If our client's customers are facing tough challenges themselves, for example how to overcome a design constraint in a new product, this can be a good reason to position them as a solution provider. As a solution provider you emphasize how you can help solve a challenge (a nicer way of saying a problem). Companies are willing to pay a premium if you can help solve a difficulty they are facing.
One of our clients in the medical implant sector faced this issue. They're a large maker of medical implants (knees and hips) where the actual products were hard to differentiate. There really wasn't any difference between their products and the competition - they all must meet stringent quality standards and it’s a relatively mature product. After speaking to their customers, including surgeons and distributors, we found out that the real challenge they face is getting the right surgical tools for implanting these knees and hips.
People in Western countries have different bone sizes than those in other countries (I guess we drink a lot of milk!). We went back to the drawing board and crafted a new positioning and strategy for this client that emphasized their ability to provide the right tools at the right time to provide the solution to the surgeons' and distributors' problems. Now they are a solution provider that is differentiated from their competitors and the actual implant pricing becomes secondary.
As competition gets more and more intense and products become more difficult to differentiate from each-other, it is the other things that you can offer, such as after-sales service, reliable delivery, or in this case, helping them create a solution, that will make you stand out. It is also what will allow you to charge more. This is especially true when your product, component, service, etc., doesn't make up a huge part of their cost, BOM, etc.
By becoming a solution provider rather than just a seller of products, you are saying that you can add extra value for your customer.
Do you think you need to go down this road? This is where it gets interesting and/or tricky depending on how you look at it. You need to transform some parts of your company to make this shift and that's what we'll be looking at in future segments. Some of these will include:
Pricing strategies for solution providers: product price premiums, consulting fees, etc.
How to make sure they don't 'cherry pick' your offerings. That is, that they don't come to you only for the challenging parts and go to a competitor for higher volume products.
How to show that you are a solutions provider, through your branding and marketing efforts, etc.
Internally, what does it really mean to be a solutions provider? How do you walk the walk?
Some good case studies of companies moving from product to solution.
Looking forward to seeing you again.
Article written by
Richard H. deVries
Richard has over 20 years of consulting and sales experience in North America, Taiwan and China and is skilled at helping Taiwanese companies expand overseas. He graduated with a BA from University of Waterloo in Canada, an MBA from National Cheng Chi University (NCCU) in Taiwan, and recently completed his studies in AI (Artificial Intelligence), machine learning, and robotics from MIT Sloan.
You can connect or follow Richard on LinkedIn at www.linkedin.com/in/devriesrichard