Tag Archives: Phibro Energy

Confucius Say: Your Case Studies are Worthless

confuciusThe most noteworthy article on B2B selling was published in a 1966 Harvard Business Review article (#66213). In “How to Buy /Sell Professional Services,” author Warren J. Wittreich explains the differences between extrinsic and intrinsic selling.

Extrinsic selling occurs, according to Wittreich, when a B2B seller relies on successful work that’s been performed for other customers, as a means to validate the seller’s capabilities and potential ability to perform for a prospective customer.

The weakness of extrinsic selling is that it requires a prospective customer to make a leap of faith: to believe the service provider will provide a level of success that matches or exceeds the work performed for the seller’s past or current clients. Extrinsic selling is a “trust me” approach, employed by a great number of B2B product and service providers.

Conversely, intrinsic selling does not require a prospective client to base its selection of a seller based on work done for others. No leap of faith required. Instead, it engages the prospect in a meaningful dialogue that (1) addresses their specific situation; (2) demonstrates — on an immediate, first-hand basis — the seller’s understanding of the situation; and (3) validates the seller’s ability to help the potential buyer. Intrinsic selling provides buyers with a significantly higher level of confidence in the seller’s capabilities, and leads to an engagement or sale far more frequently and rapidly than extrinsic selling.

The B2B marketer’s task is to equip the sales force with methodologies and tools that help initiate and facilitate intrinsic selling. This goal is rarely accomplished through anonymous or identified client / customer “case studies,” which are widely used, that prospective clients rarely read, and often carry the same level of credibility as references on a job applicant’s resume. (Would a company ever publish examples of its past work that were not portrayed as highly successful?)

Create Tools to Engage Prospects

One example of effective B2B intrinsic selling involved Phibro Energy’s introduction of energy derivatives…which enabled large companies to manage price risk related to gasoline, jet fuel and heating oil. To capture the attention of CFOs of those companies, and to convince them that energy derivatives were a viable risk management strategy, Phibro’s sales force needed more than brochureware. A prospective client needed to understand exactly how energy derivatives would benefit his company.

To establish an intrinsic sales dynamic, Phibro equipped its sales reps with a worksheet that calculated the range and depth of the prospect’s energy price exposure. Then, by applying a sophisticated algorithm, the sales rep was able to show exactly how energy risk management could improve the CFO’s company’s balance sheet.

Phibro’s energy exposure worksheet not only enabled their sales reps to establish an intrinsic sales dynamic, it cast the sales rep in a consultative role, and positioned Phibro Energy as a resource that could help reduce economic risk and lower operating costs.

Marketers at most B2B businesses, as well as many B2C firms, have similar opportunities to build interactive disciplines and tools — both online and offline — that can empower their sales reps to leverage the power of intrinsic selling. In taking this approach, they also benefit from the wisdom of the marketing master, Confucius, who purportedly wrote:

 I hear…and I forget.

I see…and I remember.

I do…and I understand.

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Peter Drucker on “The Four Roles of the CFO”

Dr. Peter F. Drucker, Management Thought Leader

In the early 1990s, Highlander Consulting was engaged by Phibro Energy to help introduce energy derivatives to Chief Financial Officers at corporations with substantial exposure to fluctuations in oil, gasoline and jet fuel prices.

As part of an integrated marketing strategy, management legend Dr. Peter F. Drucker, then serving as a professor at Claremont Graduate School, was engaged to serve as keynote speaker at the Phibro Energy Risk Management Forum, held at The Metropolitan Club in New York City.

Dr. Drucker, who passed away at age 95 in 2005, chose to speak on what he called, “The Four Roles of the CFO.” His remarks before more than 200 CFOs appear to be as relevant now as when he spoke to them nearly 25 years ago.

Here are some highlights from Peter Drucker’s presentation, which can not be found in any one of his 39 books:

The CFO as Information Officer:

“The original role of the CFO was to be the information officer of the business…Accounting, which is information, is changing today more than it has changed in the last hundred years…CFOs will have to make an important decision for their companies not very far down the line, on how to get rid of the pernicious rift between information that is concept-focused, which is accounting, and information that is transaction-focused, which is computerized information…

“The notion that you should split these two universes of information between the Chief Financial Officer, who is responsible for financial information, and the Chief Information Officer, who is responsible for non-financial information is not a good idea…

“The only reliable information we have available to us basically is “inside” information, mostly in our accounting systems. And yet, the events that really determine the success of business do not happen on the inside…So CFOs have a big job ahead: bringing together information channels, and learning an accounting system that’s going to be very different. It will require an ability to get “inside” information by manipulating figures quickly, and combining it with “outside” information, which is largely anecdotal today.”

The CFO as Financial Advisor:

“The Chief Financial Officer must think about the financial consequences of projected policies and actions, not only in terms of costs but in terms of the allocation of scarce resources…So the chief financial adviser’s job is to think about opportunity costs, and most CFOs don’t do this…As a CFO, you must think about what a policy or project is likely to return. Also think about the consequences if it doesn’t work…So the chief financial adviser basically is a conscience, a financial conscience.”

The CFO as Productivity Manager:

“There is a third CFO function, which is managing money for the business. I’m not talking of the treasury function; that is only a small part of it. The biggest part of this involves managing the productivity of capital…It’s my view that you can increase the productivity of capital in any organization three percent a year compounded, by just plain hard work, provided it’s allocated properly. And this is a function which is not, bluntly, on your professional agenda today…

“Top management doesn’t think financially. They think in terms of next quarter’s dividend, and that’s not thinking financially. They don’t think in terms of the financial impact of business decisions and the business impact of financial decisions. And that, I think, is your biggest educational job ahead.”

The CFO as Asset Protector:

“The fourth dimension of the CFO’s role is the preservation and protection of assets. This is a duty of a company that benefits not only the shareholders, but also society…The stupidest thing you can do is attempt to predict the future. Brilliant people have seen that those who predict eventually come to grief. Truly brilliant people understand that they must make external fluctuations irrelevant to their business…

“The protection of assets involves making sure that the risks over which you have no control are managed, and do not interfere with the conduct of the business. Losses based on fluctuations of commodities are no longer permissible, any more than it is permitted to have a factory burn down without insurance coverage. These are manageable risks.”

If you’d like to receive a copy of Peter Drucker’s complete remarks at the Phibro Energy Risk Management Forum in 1991, just shoot me a note.

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