I have been recently invited to help a Company willing to enter the Oil & Gas industry.
The discussion with this Medium Size organization, with a long heritage in marine technology development, outstanding engineering capabilities and strong international reputation and brand has touched some points I think are worth summarize.
They are propedeutical at designing and deploying one of the 3 B2B Sales Funnel strategies that I use in my Go-To-Market projects.
Someone may think that the Oil & Gas industry appeal is in the “money”. This is undeniably a factor. But for a technology driven supplier, what it makes really watering your mouth is the tremendous high level of complexity that this industry poses in front the engineers.
Whether equipment and services suppliers are trying to help Customers exploit deep off-shore basins, with their extreme technological challenges, or onshore unconventional resources and their thirst for efficiency, they are confronted with Companies capable to pull a widespread network of suppliers and integrate their capabilities into a single effort.
The competition is high and the bargaining power is definitively low, unless you can offer an outstanding performance, capable to displace alternative solutions in terms of reliability, convenience and price.
NEW: sharpen your commercial team with our:
Shaping an offer requires to full understand the job the Customer has to do. Possibly before competitors do it: Oil & Gas the End Users have very consolidated relationships with a crew of suppliers already jumping on the problem.
Only exceptional occasions force the Client to look for new contributors. Capacity constrains, strict budgets, special problems, may push the client try new sources.
For a new entrant in the Oil &Gas industry this is not an easy task: he lacks of the experience, culture, trust, and proximity, necessary to let the information flow from customer to supplier.
One of the solutions to overcome this obstacle, may be a M&A operation, or the hiring of specialized personnel, capable to bring into the Company the portfolio of know-how and relationship necessary to un-lock the opportunity.
(In case of needing more ideas to enter a market, see my post on 4 ways to innovate in the IoT era)
Other 4 ways to enter a market
A SME can offer value along 4 performance trajectories: Technological Performance, Reliability, Convenience, Price. If in some way a Supplier have been able to understand and design a solution for the job-to-be-done a Client has been willing to share, the next obstacle lays in assuring the reliability an Oil & Gas installation definitively requires.
The reputation of the supplier in other fields is not worth too much, and the offer must undergo a strict routine of certification, qualification, and pilot tests that can last years.
Nobody wants to be the first to use a new product and service, especially if it is not backed up by the resources of a large organization.
Our offer should respond
to one of the 4 needs of the market
The upside in being a Newcomer is that the chances we can bring a fresh perspective to the problem our Customer is willing to solve, are in our favor.
If we are not a part of the Oil & Gas family, we are also naturally inclined to see things in a different way our new competitors and customers do. Finding an out-of-the box solution, that re-invent the paradigms used till now to answer the challenge, is something where a fresh-man can make the difference.
If we are not able to bring "performance" on the table, (and reliability is out of discussion given our lack of references) We have been left with just two cards to play: Convenience and Price.
And because we are Engineers, and are looking to deploy our skills to solve customer challenges, we are probably going to dismiss the “Convenience” one. Making it simple, accessible and no-frills is not something that complicated people like engineers do easily.
This brings us to our last chance: Price. Even if "Pricing" is not the sharpest tool of an engineer. We are naturally driven to make a cost plus calculation of our efforts, in order to ask our rewards:
...Value selling is still a hard concept to digest...
If you need a framework to use to design your offer, this post about Picasso (the painter) and the Minimum Viable Product could help you:
Picasso was an artist in stripping down an idea
to the core elements
In selling technological solutions to the Oil & Gas Industry, you should tailor your strategies to the phase at which your “product introduction plan” has arrived. (refer to: "Crossing the Chasm - Moore", for more )
If you are targeting the Early Majority of your adressed segment, there are only 3 strategies you can adopt and they depend whether you are promoting:
In the table here on the left you may get a glimps of the 3 B2B Sales Strategies.
For the full article about the key element of building a B2B sales funnel, visit this post on my blog:
There are only 3 funnels
to the mainstream market
Willing to play the Oil & Gas industry Game therefore is difficult but not impossible. SME need to understand that it requires strong upfront investments in commercial operations, marketing, business development, to become part of the “Oil & Gas Family”.
But that can also offer huge rewards, in case they have been able to communicate to the Tier 1 system integrator that a new-comer may be an healthy carrier of innovation and cost reduction.
If you want to get some more hint about how to position your offer, you may find them in this post, where I describe the 4 fundamental positions for any B2B offer:
Your communication should consider
the 4 key B2B Positions
If you are a newcomer, the temptation is to take one step at time and find your way into the industy. Correct. Take one step at time, modify according the customer response. But do have a plan. Entering a new market requires:
If your company wants to enter the market can not be on a "tentative" base. Must have sound up-front planning, (deep pocket) budget, and dedicated resources.
About resources: my experience is that, being Oil & Gas industry a USA DNA industry, when you select your front-runner, you may want to look at a British or American professional. These people has the standing, the commercial acumen and the vocabulary of the industry at their fingertips. They are more easely accepted, introduced in the lobby by their peers.
Here are my 18 Lessons of an industrial marketer".
(I failed tons of times,so I can now list a few of the errors I made or I witnessed to happen to others.)
Yes, I screamed in horror more than 1 time,
looking back to my mistakes...
A last consideration a would give to the "timing". The Oil & Gas industry is a tight one. strong entry barriers made of certifications, supplier approvals, political precedences, undermine any new-comer effort.
Unless: the Customer/Segment/Application/Market has run out of supplier capacity for that specific offer you are tackling.
So think twice before to try enter the Oil & Gas Market when (target) demand is low. But be ready to exploit the need of extracapacity that can arouse. Even only just to conquer a reference.
It may be your market Pass.
To talk about this, contact me at the numbers below.
Flavio Tosi is an expert in designing marketing plans targeting the Oil & Gas, Energy and Aerospace industries. His ideas about innovation go to market have been featured on "Impiantistica Italiana" -the ANIMP official organ - and adopted by SMBs, Startups and Spin-offs in Italy, Austria, France and U.A.E.
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