Agritech business seminar series - Driving Bigger, Better, Faster, Sales

Video Transcript 

Peter Smyth: Welcome to the ‘Driving Bigger, Better, Faster Sales’.  I’m really excited about this little seminar.  It’s a topic that’s near to my heart, because a lot of exporters really could do a little bit better and make a huge difference to their sales process.  So we’ve got some awesome speakers.  Jodie is going to come up first.  She’s running our sales program.  She’s got a lot of sales experience and loves generating extra revenue.  She’s worked internationally, she’s worked with existing sales channels and made them bigger, better, and she’s created new ones.  So she’s got a whole bunch of ideas.  And in her spare time she’s very nautical.  So Jody.

Jodie Kirkwood, Programme Manager Sales, New Zealand Trade and Enterprise: Thanks Peter.  Good morning everybody.  Thank you for coming, and I hope you’ve had a chance to get a nice cup of coffee and something to eat this morning.  As Peter mentioned, one of my big passions is sales.  So whether I’m sailing on the water or helping people sell things bigger, better and faster, that’s what I’m here to do today.  So when I look at my role at NZTE, I get asked a lot of questions.  And some of the things that we want to cover today are around pitching, managing distributors, making the most of digital media and analytics, so I hope that you stay with me as I provide some insight into what you can do to help drive your sales bigger, better and faster.

One of the big things in terms of pitching is that pitching has changed.  When I look at the sales conversations that we have today, and the way that buyers are engaging with sales people, it’s very different to what it was even five or seven years ago out there in the market.  What we’re seeing is that buyers are better educated than ever, and they’re engaging with sales people later and further down the buying cycle.  So when you look at it out there and you think about a typical buying cycle, you go from someone who is unaware that they’ve got a need or a problem, through to the fact that they’re actually actively researching through to decision making and right through to actually engaging to buy that service or that product.  

What we’re seeing, and the internet plays a huge part of this as does technology, is that people will do their research first.  So when I’m thinking about what you’ve probably experienced already on the stands, and I was looking at what that might look like for you.  Who’s been on a stand this week, hands up?  Yep.  How many of you are finding that your customers are actually coming to you better educated and asking specific questions?  Yeah.  So when you’re standing up there and you’ve got people talking to you, so when I talk about pitching, there’s two ways of pitching.  We’ve got the informal piece that you’re standing here on a stand today, when someone’s walking up to you.  

So pretend I’m a tractor salesman.  You know, tractors are pretty safe here at field days, there’s probably a few running around, and not too specific.  And I’m standing there and I’m saying “Okay, well”, you walked up to me and you’re looking at a tractor, and I say “Oh hi, how are you?  How’s it going today?”, and you’re like “Yeah, great, just looking at this tractor”.  And I’m standing there and I’m saying to you “Wow, isn’t it great, it’s got shiny tyres and it’s got windscreen wipers, and you know what, we’re a family owned business”.  And I’m going to pick on Australia here for a moment.  “From Australia, and we’ve been a family owned business for 50 years.  We make the best quality tractors in the market, and our harvesting capabilities are second to none.  This tractor that you’re looking at right now, you know what, it’s got 400 horsepower, it’s one of the top of the line, you can customise it, you can get heated seats, it’s got GPS, all this great stuff.  How does that sound to you?  Shall we get you one in six months?”.  Well, I can tell you that if that buyer is standing there looking at you today, they’re probably thinking “So what?”.  And it’s a bit of a hard statement, but it’s incredibly true.

So those customers, because they are better educated than ever, they’re coming to you and they’re actually wanting you to find out and draw out of them what they’re actually looking for.  So you don’t know with that person walking up to you on the stand about the fact that actually they care about heated seats.  You don’t know whether or not they actually worry about the fact that there’s GPS on that tractor.  You actually don’t know whether this tractor they’re looking at is high on their wish list, or just their maybe list.  They might be just browsing, it looks really great, they know that the decision maker may be the wife or whoever else that might be out there, is probably going to say “No, actually we can’t afford that tractor, we need to go for the smaller model”.  But unless you’re actually actively engaging with that customer in that process, you’re never going to find that out.  So what we’re looking at today is around how you can actually change that.  Because the traditional methods of actually just turning up and having that conversation with them without any insight just doesn’t work.  Buyers are more sophisticated than ever.  

So if we look at how you actually do this.  Have you guys seen this slide before?  Throw up and show up?  I know a few people in the audience might have.  So what I demonstrated before is an example of showing up and throwing up.  I’ve turned up, I’ve looked you in the eye, and I’ve just told you everything that I think you want to know.  I haven’t actually engaged in a two way conversation with you, and I haven’t actually found out from you what you are really looking for.  

So when I look at pitching there’s two main areas.  One is on the stand when you’re walking and talking to them, and one is in a formal pitching environment, so tenders et cetera.  So the principles of those are the same, whether it be a smaller interaction one on one, whether you’re running into somebody in the street, you’ve got someone on a stand, or whether you’re being asked to actually pitch in a formal environment.  

So there are two key areas I want to focus on today.  The first is the pre-pitch preparation, and the second is what you say during the pitch.  So if we look at the pre-pitch preparation, the majority of time has to be spent here.  And you need to engage with insight.  And when I say insight, that is something that the person that you’re actually pitching to values.  And the only way you can find that out is through research.  So there’s a plethora of ability to find out that research, and to actually find out really what they need.  And what I mean by this around the value and the needs, is there are explicit needs and implicit needs.  And there is what they also call the need behind the need.  

So when I’m talking about this, if you came to me and said “Hey Jody, I need a hammer”.  Actually what you’re not buying is that hammer.  You’re buying what that hammer actually is going to do for you.  That hammer might mean that you’re going to put a nail in the wall and hang up the picture of your family.  So what you’re actually wanting to do is to feel that sense of family connection.  That hammer might mean that actually you want to go and actually build that deck, and that deck actually means to you that you’re actually going to have some time to spend with your family, put a barbeque out there and have a really great time.  So that is what I mean by a need behind a need, whether it being an explicit, or an implicit need.  

When we’re looking at all of this as well, it’s not just the ability to find out what people need and value, it’s about how that relates to their priorities.  So they might be sitting there, and they might go “Hey, look, I want this really great big tractor that’s fantastic”.  But what else could actually be out there that’s stopping them from buying that tractor?  It might be about the fact that actually they also need a harvester.  Or they’ve got some technology issues that they need to sort out.  Or you know what, one of your biggest competitions out there in selling is to do nothing.  So the part of actually finding out what is their ability to accept that change, and want to be motivated to move, is going to be incredibly important.

The other big thing around the research and the questioning in terms of pitching in terms of that insight piece, you need to make sure that you’re not asking the questions, especially in a B2B environment, that you can find the answers easily online.  So if I’m looking at what people are looking to find out from me, if they’re asking me questions that I can find out online, I’m wondering why they’re actually asking me these questions.  Haven’t you done your preparation, and don’t you value my time, before you turn up?  

So if we look at the research part of it and how this actually plays into the other piece of it, we want to make sure that during our pitch, or our opportunity to talk to our customer, that we actually talk with insight, and that my message gets through and it stays.  So how do I do that?  Every time you talk to somebody, your pitch has to be slightly different.  So there will be some key things that you know about your product or your service that is true.  There will be some universal truths, a key value, that you know is really important for you and what you do.  But every time you talk to someone, you have to adjust that conversation.  So you don’t say to everybody the same thing when you talk to them one on one, so why would you do that in a sales pitch?

The biggest way as well in terms of selling is that storytelling is huge.  So when we look at how that all works, and that you need to know how to stack up against your competition, but you never, ever badmouth them.  You need to make sure that the first impressions count, and you don’t actually have long to make that impression.  You’ve really got to get in there and you’ve got to make a strong impression very quickly.  And that’s about building that rapport and that sense of connection.  It’s not about standing there and thinking “I’ve got two seconds to tell them everything they need to know about my product, and that’s it”.  It’s not that at all.

So let’s look at storytelling.  Storytelling is a way that we can actually make sure that our stories and our message sticks and lingers.  I know that we talked about this yesterday, for some of you who came yesterday to some of our presentations, we touched on storytelling yesterday afternoon as well.  So let’s have a look at that in terms of Our New Zealand Story.

Our New Zealand Story is a government initiative, and it talks about our New Zealand advantage.  And that’s incredibly true for us here in the agricultural sector, because we want to make sure that your story is going to be as unique as your business.  So when you weave in the values that make us unique as a country, being New Zealand, that’s when it becomes a New Zealand story.  Tapping into what makes us special will not only help you drive demand for your business, but it will help make New Zealand famous for more good things.  And you know what, that’s good for us all.

So when we look at the New Zealand Story, and you look at it and go “Oh, okay, well how does that actually work for me?”.  Well, you know what, New Zealand Story have some great tools, insights and workshops to help you do that.  And that’s about helping you share your story with the world.  So if we look at the workshops for example, the purpose of the workshops that we run is to help you identify what it is about your product service, what you do, that you can actually look at how that relates to some of the New Zealand attributes that we look at as a country.

We talk about identification.  That’s probably the hardest part out of all of this.  So how do I actually choose all of these things that we look at?  We talk about how we see each other, ourselves, and how the world sees us.  So we look at this in terms of ingenuity, integrity, and kaitiaki.  And these are just some key attributes that we’ve identified as our New Zealand Story to bring it to life.  So there’s a fantastic website online, and it has a complete tool kit of professional images which are royalty free, videos, presentations, infographics and heaps more.  They have them in different languages, not all the languages, but some really great languages.  So if you’re an exporter and you’re looking to build trust and authenticity with consumers and distributors, then looking at this actually becomes very vital to make sure that you’re really leveraging all of the options that we have here being in New Zealand.  

There’s also the FernMark licence.  So I know that some of you may be familiar with that.  That’s also part of the NZ Story.  So there’s a licence program that helps you promote and protect New Zealand products on a global scale.  It gives licensees the right to carry the FernMark as a simple way to authenticate your connection to New Zealand, and at the same time leverage the positive reputation associated with New Zealand for your product and service.  So  Have a look online.  You can go on there and register for the workshops.  We hold them pretty regularly.  And also you can go on there and look at all of the tools and everything that we’ve got there for you today.

Okay, managing your sales pipeline.  I get asked a lot about how to manage a sales pipeline, and one of the key things that is fundamental and the hero to actually managing your sales pipeline is a sales process.  A sales process is an underlying fundamental key part of being able to manage your pipeline, and it has to relate to the customer’s buying journey.  So we touched on it earlier about the customer’s buying journey, from when somebody goes from being unaware to aware, right through the consideration, decision making process, to actually saying “Yes, I want to work with you”, or “No, I don’t”.  

So when we look at all of this, our sales process has to be in alignment with that customer’s buying cycle, because otherwise what you’re trying to do is force them into a more unnatural fit.  So what you’re looking to do is to find that balance between your company’s ability to sell a product, and the buyer’s wish and desire to buy that product.  And a key way we look at that is whether or not you’d put a channel online.  So when we look at how customers engage with us, we think about all these different channels to market, which is my next part of all of this.  And they might be looking to engage with us in a retail store, they might be looking to engage with us online.  They might look to engage with us through other distributors and partners, especially offshore.  So let’s have a look at one that we’ve done earlier, and hear from one of our customers.

[Video plays]

Martin Vogel: I’ve been involved in Hansa for 13 years.  It was just the two of us when we started, we’ve got a team of 33 people now, and we export about 60% of what we manufacture.  

Hansa Chippers’ purpose is hansforming landscapes for good.  One of our beliefs is to have the ambition to build a sustainable future and give back to the Earth.  That’s why we already sell a range of, the smaller range of product into Australia through a distributor selling direct for the larger tree care commercial range for the different route to market.  We made the decision to do that directly ourselves and get the sales.

So we looked at our sales pipeline through from the initial contact of customers and then through to the quotation stage, demonstration and proposal, and then finally closing the deal, and then combining that with the historic data that we had of each of those stages to understand how many leads that we needed to generate to actually satisfy the sales demand that we were targeting.  

Chloe Leung: Through the sales process we do identify gaps, and opportunities for how we can do business.  A lot of that is now around making the experience more enjoyable for the customer, and selling to them in a way that they want to buy, as opposed to pushing them towards how we want to sell.  

Martin Vogel: The sales process allows scalability within the business, so once you’ve got that process set, then you can a lot more easily add additional people.  It retains the information within the business rather than in a salesperson’s mind, so if someone leaves, it’s less impact to the business.  It gives much stronger visibility and forecasting within the business throughout the different departments.

Chloe Leung: Having the sales process set really helps as the foundation of how we can do business as we enter these new markets, and instead of building over 30 years, we can potentially shorten the time to market.

Martin Vogel: The sales process is a great self-assessment tool, not only for when things aren’t going to plan, but also equivalently as powerful as when they have gone well, to actually analyse that using that process to understand why the deals have been won, and then leveraging off that moving forward, so that you get even better results.

[Video ends]

Jodie Kirkwood: So some of the key areas that Martin touched on was around some of the value that we had with the sales process.  So he talked about the fact that it becomes a lot more consistent, that he has a process that can be replicated, that he’s able to bring on new people into his business and actually make them more productive, faster.  He has consistency now in his sales team.  From when we met him to where he is now, he’s added a couple more sales people.  And when we talked to him about what that looked like, he was able to bring them on a lot easier than he could do in the past.  

And one of the great things that a sales process also does, which is incredibly important for smaller organisations, is it takes some of the emotion out of it.  So when we look at when we’re doing a sales process, and we’ve got a tight team of people that we know really, really well, and we’re looking at their performance out there with how they’re actually delivering, sometimes it’s really hard to have that conversation with them about “Hey, actually, we need you to be doing something different.  It’s not working, and how do we do that?”.  So a sales process is actually a really great way that you can take actually all of that emotion out, because when you’re looking at what’s happening, you’re actually looking at how you relate to the process.

So what I have up here is an example of a sales process.  So this is from our friends at Salestar, it’s a free downloadable template, you just go onto their website and you can actually go in there, it’s a writeable pdf.  And it’s really great example of actually where you start from.  So if you’re an early stage business and you don’t have a team, you might want to start with a success journal.  So if you’re actually in that space of being able to understand and identify what is working for you and maybe what is not, and actually capturing that down, then you’re in a position to be able to start to translate that learning when you start to get your team, and your ability to start creating your own sales process as you go along.

If you’re in a business that has a sales team, and you’re out there actually working, then having a look at the different stages and all of the key aspects that you’ve got in there is really going to help you.  So if I go through this process.  The top of it is our heading, so those are the key blocks of activities along the process which will be in alignment with our buying journey.  The probability across there is at each stage how likely is that opportunity when you’re looking at it through that pipeline to actually close as it moves through the deal? 

The velocity is around how long it takes, and the KPIs are actually how we’re going to measure that.  The reason it’s really important to put all of that out there, is that when you’re in an inspection mindset and a curiosity mindset, you’re actually able to look at how you’re tracking against it.  So if you’ve got nothing out there in terms of a framework or anything to measure against, it’s really hard to know, apart from a gut feel, whether or not it’s actually working or not.  So if you actually have a framework and a process to look at it, you can look at it and go “Okay, well, on average I can see it takes me a week to do this activity”.  If it’s happening faster than that week, then you know “Actually, this is probably a really good sign”.  If it’s taking a lot longer than that time, you’re thinking “Well, actually, this maybe is another indicator that there’s something going on, maybe I’ve missed something, and actually I need to pay extra attention to this, because it’s probably not a good indicator”.  The same with when we’re looking at some of the objectives and the steps and actions that are in there.  

So when we look at this you can see that there is a high level objective of what we’re looking to achieve.  And underneath that there are all the steps, resources and actions, and I’ve just put a few in here of all the things we need to do.  So when you’re talking about it as a manager, you’re able to say “Okay, well, if I’m seeing this at this stage, then I should be confident that that person has done all of these great things to get us to this stage”.  And it’s really important with alignment within an organisation, because that helps the finance people go “Okay, well, I know that that forecast is more likely to be delivered upon, because there’s some science behind it, and we’re doing all of the things, and not missing steps that matter”.  

When I look at it in terms of manufacturing, in terms of production, we’re actually looking at how that relates to my ability to tell the production guys that I’ve got some sales coming through the pipeline, and I’m going to be able to deliver on them in time to make good on the promises that I’ve made.  So if I’m saying to you “Look, I’ve got a sale that’s a 50% chance”, then that production manager can sit there and go “Okay, well, in line with what we need to do for our manufacturing, I know that that’s likely to come through, I can see how long that might take on average, so therefore we can start getting ourselves organised with factories and everything else we need to do to make sure that we can fulfil that order, and make sure that that sales person is not making empty promises for our customers”.  

And right at the end in that, this is the qualifying checklist.  This is the check-in piece, going “Okay, well, have I actually done everything I need to do to be able to move through to the next step?”.  And if the answer is no, go back, go back and make sure that you’ve actually done it.  So this is one of the reasons why it’s such a hero piece, in terms of managing your pipeline, and such a key fundamental when you look at a sales operation.  

When I look at how this translates into the big world, and I’ve just come back from a huge sales conference overseas around the future of selling, they talk about sales enablement.  And this is the big kahuna, this is the one that sits out there, and sales enablement is the total sum of all of the parts that you need to do in terms of content, people, resources, processes, technology, to actually enable an amazing sales function in an organisation.  And this is where the big globals are going.  In order for you to get that stage, you have to have a sales process.  So this is one of the key fundamentals.  

When you look at the evolution and maturity of a sales organisation, you go from an ad hoc process, which is basically when you’re testing it out, you’re figuring out what works, and people are just doing what they know to be best.  They move then into an informal sales process, which is when you’ve actually got the ability to have some science behind it, you’ve mapped something like this out, but probably it’s not being done by everybody.  So you might have a piece of paper, it might be sitting in the bottom drawer, but you don’t have a leader who’s saying “Actually, this is really important guys.  We need to be doing this every time, and there’s no excuses for you not to be doing it every time”.  There needs to be buy-in, and if it’s not working, it’s not the right process.

So when you start off with something like this, you might start going “Okay, what do we do?”.  And when you map it all out, you go, “Okay, that’s really interesting.  Are there any gaps in this for me?  Is there anything in here that actually doesn’t make sense, and how does that relate to our customers?”.  And that’s a really great opportunity not just to map what you have been doing, but to look at what you should be doing, or want to be doing, and looking at what that gap is moving forward.

So when we look at all of that, and we get into a formal sales process, which is when an organisation is all doing the same thing, and you have that consistency, then you’re able to go into an agile state.  And the impact of going into an agile state or sales process in terms of an organisation, the lift in terms of the ability to close your deals, and the success rate that you enjoy from doing so is amazing.  You’re in that process where you’re actually being able to be flexible with what you do, you’re really being customer-centric, you’re really listening.  But until you have something to hang your sales process on, a framework, you’re not able to get to that stage.  This is why it’s such an important place and stage in the evolution of selling.

So how does that relate to channels?  So most of our exporters overseas and that will work with distributors, whether they be partners, resellers, the like.  And one of the first things I wanted to touch on today was why would you choose an indirect channel over a direct channel?  If it’s not cheaper for you, why are you doing it?  If they’re not giving you the capacity and the market access to those customers and that really solid insight, why are you doing it?  You should only be using your direct channels if they meet these criteria, otherwise you’re looking at indirect.  There’s obviously pros and cons with direct and indirect.  Direct you have a lot more control over.  When you go into the channel space, there’s a whole lot of other pieces that you need to consider around all of this, and this brings me to my next point.

A channel partner is not a customer.  They are not customers.  You cannot treat them the same as customers.  They have different needs.  I’m going to say that again.  A channel partner is not a customer.  When we look at the sales collateral, all of the support that they need, they have different drivers, because the difference between a customer and a channel partner, whether they be a distributor, a reseller, or any of the above, is that you are asking them and needing them to sell for you on your behalf.  

So when I’m sitting here and I hear conversations about “Oh, I need a new channel distributor, the one that we’ve got hasn’t worked out”, and you go “Okay, well, that’s really interesting, what does that look like?”.  And you hear the story about customers that go into market, and they’ve either been approached by a channel partner offshore, and they’ve gone and sought one out.  And they go “Great, my job is done.  I’ve signed on the dotted line, woohoo, we’re good, we can set and forget and walk away”.  The reality is that’s not the case.  You have to be able to work with that channel partner and put the hard yards in.  And one of the other key pieces of all of this is a channel manager is not the same as a direct sales manager. 

This is a great slide I think that really illustrates the point, that there are different things that we require from a channel management process than we do from a direct sales process.  When we look at this, and we look at why channels are not working, we look around unclear expectations.  So you’ve gone into market, you’ve signed up that channel partner, you’ve thought “Great, my job is done”.  How much work was done at that stage when you were negotiating and setting them up for success to make sure that you were really clear about what you are doing and what they are doing?  And when we look at all of this, you don’t want an over-reliance of that channel partner to be relying on you to do all the heavy lifting and the hard work for them.  You don’t want to be sitting in there and thinking “Well, actually, they’re always coming to me for collateral, they’re not buying in, they’re not doing any marketing spend, and it’s just a really big time suck”.  You don’t want to be sitting in there thinking “Well, actually, I’m spending all this time and effort, what are you doing?”.  Or on the flip side you’ve got a channel partner out there going off doing their own thing, because you’re not giving them what you need.  There’s nothing more frustrating than walking into a market, and you’ve discovered that you missed a key piece of information or a need that they had because you hadn’t set that clear expectation and uncovered it, and they’ve gone off and made their own collateral.  And it’s not on brand, saying a whole lot of other things.  

And when we look at the management or the incentive side of things, it has to be driving the correct behaviour.  So if you look at sales people by and large, they are driven by money.  But when we look at the incentive piece that we work on, you want to be looking at the behavioural side of things.  So if you were incentivising your channel partners purely on revenue, you’re going to end up in a situation where your big guys are getting bigger, and your small guys are getting smaller.  So it’s really important to know what is it that you’re looking to achieve, and how you’re actually going to do that with your channel partners, and make sure that your incentives are aligned with that.

So if we’re going to drive bigger, better sales, and we’re looking at digital, how do we leverage it?  The best thing for me about field day so far has been the new app and my ability to pin my car on it so I don’t get lost going home.  I know that’s really sad, but it’s true.  I love the fact that I can find my car at the end of the day.  So when we’re looking at this reliance on technology, and that you’re going onto field day stands, and there’s a lot more technology that you’re using yourself, and events like field days are using out there.  And we’ve already talked about the fact that people, how they interact is changing.  

So I want to help you guys set yourselves up for success, and look at where you start.  If we think about the digital landscape, there’s around 700 digital options out there to help with sales alone, which is a cluttered space.  What I wanted to touch on today was two key topics, which was around analytics and content, so let’s keep it simple.  So when we look at all of the things that are out there, there’s a whole million ways that you could look at different ways to achieve this.  

I’ve got a friend called Phil.  I’m going to tell you a story about my friend called Phil.  My friend called Phil has a technology company, and he is the salesperson and the founder.  Phil has his technology set up with his analytics, using Smarts, to know that when he sends out his digital proposal to his customers, that when it has been opened three times, that it’s a buying signal.  He knows this, because they have been tracking, they have been analysing and they have been iterating and testing what it is about how it works.  So he knows that when he sees that alert come up on his mobile phone, to say that that proposal has been opened for the third time, and whether that be over two weeks, three weeks, or in three days, he needs to give that person a call.  And that’s smart.

When he opens that proposal, and this is the role of technology in terms of creating that ability to analyse, he’s got it all set up because it’s all electronic, that he knows which areas of the content, he calls them a block, that they have been focusing on.  So when I look at this, and I said to him “Well, how do you know whether it’s a good or a bad thing, about if they’re spending a lot of time on this one piece of content, how does that influence what you’re doing?”.  And he said to me it’s through testing and iterating.  He looks at his response rate, he has just basically used that insight to create all of this.  So when I said to him “How does this change how you interact with your customers?”, he said “It’s taken the guess work out.  When I can see and track what’s actually going on for my customers about where they’re interacting, where they’re focusing their time, that allows me to really channel my conversation that I’m having with them in that time, it allows me to engage with insight”.  So we touched on this earlier, around being able to be insight-led, and what that means for us.

So when we’re looking at the fact that they’ve spent a whole lot of time looking at this one piece of content, I know that it’s either really important to them, there’s a question on it, or that I don’t actually need to go into too much depth, because they’ve actually got all of the information they already need.  So he crafts his conversation before he goes into that meeting with that person basically aligned to the fact that he knows what they’ve been looking at, when they’ve opened it, and when to call them.  And that’s a great way to start in terms of looking at how you can start to create your own digital insights.

So when we look at how that works in other mechanisms, we’re looking at things like webs, so there’s hot spot technology out there to show us where people are actually looking.  We’re looking at social, so you’re looking at where your buyers are actually hanging out and engaging, and crafting the message accordingly.  So when we’re looking at that, am I on Facebook, am I on LinkedIn, how am I interacting, and what is it that they’re looking for?

You’re looking at paid advertising, and how that relates through to it.  So if I go back to my friend Phil and I talk to him about his paid advertising and things like ad words and Facebook ads, he knows that if he gets a source lead that comes through from that online space, he needs to call them within five minutes.  And he knows this, because that person has come through from a method where they’re researching.  So they’re going to look at this top person and go “Oh well, Phil’s company might be able to help me.  Okay, so I’m just going to fire off a quick inquiry on that side of things”.  And that comes through to him.  And he knows that after they’ve probably clicked on that and flicked that one off, they’re probably going down to the next one and going “Oh, what have they got too?”.  And he knows from doing all of this that he gets a lot better response rate by actually making sure that he responds to those inquiries accordingly.  So he will go back and go “Okay, well, they’re shopping, so I need to make sure that I contact them incredibly quickly, because if I don’t, then who do you think the next person is?”.  

So when we know about where to play, and what messaging is working, we need to think about how to collect and harvest the data, so that you can categorise and label it to allow the technology to derive the insight.  So the story I talked to you about with Phil as a start in terms of where things are going.  So when we look at data and why it’s so tricky, the trickiest part out of all of this is knowing how to label it and the time it takes, and to label it accordingly to be able to be used later on.  An example of this could be a picture of a cat.  So if you think about cat emojis all over the internet, it could be a Hello Kitty cat.  It could be the cat’s going bad, there’s a whole lot of different ways in that.  So you need to know and understand about what type of labelling you need to put on your data to allow you to derive that insight from it.

When we look out there and we talk about big data, the challenge that companies have got, and you’re seeing a lot more people playing in this space, is how do they actually make it meaningful.  So when we’re looking at all of this, we’re looking to have that data moved from where we have been in the past, and we think about CRMs and all of the data that we did have, around it being looking in the rear view mirror.  So it has been backward looking.  We’ve looked at that data as a way to know what we have done.  And where we’re moving to now is about how do we use what we do know, and allow us to actually respond differently, to predict what we should be doing next?  And that’s where this data play is going.

And when we look at AI, that’s incredibly important.  So we’ve got Air New Zealand out there with their chatbots, and some really great organisations out there.  We’re looking at the role of AI, how does that work?  You cannot have the ability to put AI into your website or however you want to work with it, if you don’t have the ability to label and categorise your data.  So one, you need to collect it, so you think about how people engage with you, whether that be on the stand here at field days, whether it be on your website, whether it be through Facebook or LinkedIn, who’s actually engaging with you?  So you need to be actually starting to think about not just where we engage, but how do we actually collect that data to move forward.

I’m going to finish now with a little bit of a war story, which is about ‘don’t be creepy about it’.  So I’m not sure if you’ve heard of this story, it’s been in Forbes.  Target in the US.  Target, the retailer in the US, thought that they were doing a really great thing, and they started collecting some really great data insight.  And every time that you go in there and you swipe your card, they started to build up a buying pattern of everything that they bought.  And they realised that that buying pattern would indicate different things.  So maybe they’re buying unscented moisturiser or lotions and things like that, so not really direct things.  So it was quite interesting about this picture that was being painted by what people were buying.

And what they realised that through this process they could actually assign a shopper a pregnancy prediction score.  So quite interesting going through pregnancy, I know that we’ve had Jacinda here this week and a few farmers offering their help around that. So as they went through all of this, not only could they assign a pregnancy prediction score, but they could also predict at which stage of the pregnancy this person was in.  And they thought “Oh my God, this is great, how good is this?”.  So therefore we could actually start targeting our customers incredibly well using insight to provide value around where they are in their pregnancy, and start to send them coupons about how this is going to be able to allow them to come back and engage with us back in the store.

So all going well, thought they were on to a real winner.  And then this man walks into the store.  And he was pretty upset, pretty angry, and he demanded to speak to the manager.  And he said “What the hell are you doing?”.  And he’s like “Oh, I’m not quite sure what you’re talking about”.  He goes “My daughter got this in the mail.  She’s in high school.  And you’re sending her coupons for baby clothes, cribs.  Are you trying to encourage her to get pregnant?  What the hell are you doing?”.  He’s like “Oh, I’m really sorry, I don’t know what’s going on here, I’m so sorry”, and he apologised.  And he felt so bad about it, because his father was so upset in the store, he gave him a call a couple of days later to apologise.  And he got the Dad on the phone, and the Dad was a little bit quiet.  He said “Oh, I had a talk with my daughter.  It turns out that there’s been some things going on that I wasn’t quite aware of.  She’s due in August”.  So the lesson out of all of this is don’t be creepy.  Use it with insight.  Know what’s going to be valuable to your customers. 

And just to finish, NZTE have a number of services.  Sales is one of them, which is why I’m here today.  And we can help you with growing your business.  So one of the things in that that I would recommend out of all of this is to have a chat with us, so whether that be your customer manager, I know we’ve got a couple in the audience, if you want to put your hands up, all the customer people, yeah, look at them, all excited about that, to help us get you those experts in.  So when we look at all of this, it can be overwhelming, and I’m hoping that I’ve broken it down into some manageable pieces for you today.  But we want to help you move faster, to save you time and money in the long run.  So we help you focus on what’s really important, and make sense of the chaos that business can feel like at times.  So driving bigger, better, faster sales is much easier when you have good support.  So please stick around and talk to us after.  Thank you.  Here’s Phil.

Peter Smyth: Thanks Jody.  And I know that was an impossible task, and so each one of those little topics, there’s a lot more depth to it.  So I hope you got something out of it, and by all means carry on and interact again.  So thank you Jody.

So Phil is from the Export Credit Office, which is part of Treasury.  They help fund exporters’ growth in a number of different ways.  So funding bonds, or guaranteeing bonds with banks so that you can actually deliver bonds without pressure on your balance sheet.  Actually offering terms to your customers, offering terms to your suppliers, offering terms to even customers can pay for capital goods over a number of years, take labour out, and it’s effectively no cost to them.  So Phil’s going to tell one story about how an Agrotech customer has used the Export Credit Office.  Thanks Phil.

Phil Quinn, Head of Business Origination, New Zealand Export Credit Office: Thanks Peter, and thanks for inviting us to talk at the seminar as well.  You’ll be pleased to know this is the only slide I’ll be looking at today, or using.  So I think we’ve all seen enough PowerPoint slides in this last few days, and it’s late in the session now as well.  So I’ll talk more to a story, but I’ll just explain what we do.  

I mean, does anyone know, heard of the New Zealand Export Credit Office before, or had exposure to them?  I think there’s a couple of nods over there, and I think, yeah, Tina might do as well.  Just a couple of minutes on what we do, and then we’ll cover the story off.  As Peter said, we’re part of Treasury.  We’re an operating unit within Treasury.  We exist for three purposes really for exporters.  One is to help them mitigate the payment risk, our second purpose is helping secure overseas sales, and the third is accessing trade finance.  And a range of products, which is pretty much around trade credit insurance and guarantees, ensures those three outcomes.

Important to mention, there’s private sector providers who do what we do, so we’re not here to compete with the private sector.  We complement them.  So in other words, what that means is we need to be invited in by the private sector when they can’t cover a transaction, for whatever reason it might be.  So it’s important to know that.  And the other thing too is we charge for our services based on the risk we’re encountering.  So our support can’t be seen as a subsidy for exporters as well, so it all has to be done under the right rules.  

Just touching on Jody’s presentation before, I saw one of the things there was that 75% of exporters expect their buyers to be more demanding and push back, and she also mentioned that the power is going from the seller to the buyer.  So what that might mean is that buyer might be demanding longer terms, or just pushing back, particularly it may not happen so much in the New Zealand context, but offshore you might find that a buyer’s pushing back on your terms and it may not suit you, or you may not be able to take that risk.  And that’s where we come in. 

So I’m just going to tell a story about Te Pari Products Limited.  They’re an Oamaru-based firm, they do livestock handling equipment, dosing guns, weighing equipment, and they had a contract with a distributor into the UK, Shearwell Data.  And they’ve been trading with these guys for a couple of years, all going well.  But one of the things was that the trading terms didn’t quite suit their distributor, Shearwell Data in the UK.  They required more generous terms, and a bit longer to pay things back.  Whereas Te Pari, from their point of view, they wanted as much deposit as they could up front, and shorter repayment terms.  Because quite often if you want to extend your repayment terms with your buyers, it’s going to open you up to more risk, your bank may not like it as well.  So risk is something that needs to be encountered and dealt with and mitigated, and with trade credit insurance.

So what we did for Te Pari, they actually attended one of these seminars last year, and they thought the trade credit insurance product would give them an opportunity to actually, with their distributor, to ask for maybe a lesser deposit, and offer double the repayment terms, from say about 60 odd days to about 110 days.  And one of the reasons they wanted to do that is one is the distributor was asking for it, because it suited their working capital cycle.  So it’s important to realise you don’t want to be distorting what the norm is in your market, if normal repayment terms is 30 days, 60 days, 90 days, we’re not here to distort the market.  But if you have an end buyer who for cash cycle reasons wants to actually extend that period out, then don’t be afraid to offer those terms, but you also want to mitigate that risk as well.

So we assessed their buyer, we knew they had a good relationship, they’d been trading with them for a few years, it was a good record of sales.  We looked at Te Pari, we knew Te Pari as a well established brand, they know what they’re doing, there’s no problems about their ability to deliver.  So we offered our trade credit insurance with Te Pari.  So what it enabled them to do is offer better, longer terms and a lesser deposit. 

But what trade credit insurance also enabled Te Pari to do, and it’s worth thinking about as well, so not only do you want to look at your risk mitigation, which is the risk that you’re not going to get paid.  But sometimes you might think “Okay, if I’m offering these longer dated terms, I kind of need that money a bit up front, because I need to cash flow my working capital cycle, I need to pay for the capital items myself, or pay my staff, what do I do about accelerating my working capital?”.  Well, trade credit insurance can also, what Te Pari used in this case, not only was it mitigating the repayment risk, and allowing them to secure that sale with their end buyer, but also they used it as a means of security to their bank.  So the very fact that you’ve got trade credit insurance in place, a bank will like that, because it enhances the security, it means if for whatever reason the exporter, the New Zealand firm doesn’t get paid, then a trade credit insurer like ourselves will pay.  And so a bank can offer you a trade finance facility on the back of that.

So therefore what Te Pari did, they’re offering these longer dated terms, say 120 day terms to their buyer, but they were actually getting paid up front, because they had a trade credit finance facility, they could draw down a week after these shipments left New Zealand.  So they’re getting paid up front, and there’ll be a fee to pay for that for a bank, there’ll be an interest rate on those facilities, but they’re getting paid up front, so they had the working capital up front, they’re offering their end buyer 120 days or more, 120 days to actually pay for this, so the end buyer was happy.  And they were getting funded as they went along.  And then after the 110 days’ period expired, then Te Pari got paid.

So it enabled them to achieve three things, mitigate the risk, secure the sale, because the very fact that they could offer these terms meant they got a sale that otherwise might have gone walking.  And the third thing that they got from this is they accessed the trade finance, because by the very nature having trade credit insurance in place and being able to offer this, it acted as a security enhancement to the bank, they could actually get their working capital up front.  And having working capital up front is key, it’s king, and it meant they could use those funds for other means, or funding the particular orders.

So if you’re in these markets and you’re being asked for these terms, don’t be afraid to, it’s probably maybe not something that a lot of New Zealand firms think about, don’t be afraid to offer those terms, if you can.  Think about your working capital cycle as a means of accelerating that.  And it’s also a way of increasing those sales, it’s very important.  So don’t be afraid to push back on those things, or to actually consider those demands from your buyers, that’s what we’re here for, there’s other trade credit insurers that do that, but we can certainly give you advice and help with that and explain the range of products.  That’s our story, thanks for listening. 

Peter Smyth: Thanks Phil.  So you can see there’s some really practical things that exporters can do.  So are there any questions?  Jenny.

Audience: Phil, is there a minimum level of transaction you’re talking about?

Phil Quinn: No.  Look we’ve done transactions, our smallest is a $50,000 order.  Because if there’s a risk that the exporter can’t afford to take a repayment risk, then it’s something we can consider.  There’s minimum premium levels that we might have, or application fees.  But in terms of transaction [unintelligible 00:47:43], no.  We had a case, Natural Juice New Zealand, a Hawkes Bay-based [unintelligible 00:47:52] made orange juice, and they were exporting to a supermarket in Taiwan.  And it was only for about $50,000, and they wanted to get trade credit insurance, which they couldn’t get from the private sector, because it’s $50,000 they couldn’t afford not to get, it’s the difference between sinking and swimming.  So [unintelligible 00:48:10] two thirds of the customers that we look after are probably nought to $20 million turnovers sort of companies, but we look after the top end of town too.  So no company’s too big, no company’s too small, no transaction’s too small [unintelligible 00:48:24].

Audience: Do we have to be a New Zealand-only [unintelligible 00:48:33]?

Phil Quinn: Absolutely.  So the three criteria is you have to be a New Zealand registered firm, or it could be a subsidiary of a New Zealand firm.  So say you’re in an international market, you might have a subsidiary in Australia, and your Australian subsidiary’s offering terms to its end buyer, then that’s in scope as well, because it’s a subsidiary of your firm, we’re talking internationalisation.  And the other thing we look at, there’s got to be a New Zealand benefit, a New Zealand value-add.  So say for instance maybe you might be buying potatoes from South America and exporting them to Italy, it doesn’t touch New Zealand shores and there’s no value-add, it may not be a transaction we’d consider.  So we look at that, the New Zealand benefit is very important to us as well.  New Zealand [unintelligible 00:49:19] scope or their subsidiaries.

Audience: Are you guys stuck in Wellington, or how do we find you?

Phil Quinn: Have a look at the website.  I’ve got business cards here [unintelligible 00:49:34].  I’m based in the Waikato.  We have a [unintelligible 00:49:37] website as part of Treasury, but we have our own website, New Zealand Export Credit Office.  I didn’t put it up there, that was good thinking.  And we’re based in Wellington, but we are out in the regions.  I’m in Waikato once a month, we have Thomas over here, one of my colleagues, he looks after Auckland and the top of the South Island.  So if there’s an exporter to talk to or a deal to be done, we can move pretty quickly, and we’re very keen with a good appetite, so we’re always on the road.

Audience: How do you protect risk from currency fluctuations through extended payment terms?

Phil Quinn: We don’t look, we don’t actually offer the, the risk we have would be on the actual payment risk from the actual buyer.  Any risk around I guess currency fluctuations and all those sorts of things would be more of a banking [unintelligible 00:50:28] exchange limits, or they may well have some sort of buffer in their facilities there, that may be more of a banking risk.  We look at the actual transaction itself, in terms of the export [unintelligible 00:50:39], the currency, but the exporter and the bank would probably be more on the actual currency exposure side of things.  But we can offer policies in multi-currencies.  So if you’re receipt’s in US dollars, the policy is in US dollars.  If it is in Australian dollars, it’s in Australian dollars, or UK.  So we can set the risk in the actual currency off the exposure.

Audience: And the charges, is it percentage or is it set rate?

Phil Quinn: The charge would be if there’s a trade credit insurance product [unintelligible 00:51:12] there would be a percentage of the product.  So it would be based on three things.  One is the country, is it Australia or is it Afghanistan?  Who’s your customer, is it an SME or is it a corporate?  And how long do you want to have the insurance for?  Is it for 30 days, is it for 180 days, for 12 months?  So based on those three factors we would work a premium out.  And a percentage off the actual risk recovery itself.  If it’s one of our [unintelligible 00:51:43], I didn’t touch on our product, our loan guarantee, where we offer our guarantee to a bank for them to buy a facility, it would be a percentage of that facility itself.  It can be in 4 and 6%.  So it’s not necessarily the cheapest means, there’s always going to be a cost that needs to be factored in.  But if it’s a cost that can be passed on, [unintelligible 00:52:08] security or otherwise wouldn’t have happened, it’s a cost hopefully that the exporter can actually then pass on, or build into the contract.  

Audience: You mentioned that you take cases that are rejected by the private sector.  Does this mean that you take more risk, or you have better abilities to veto and check these buyers?

Phil Quinn: The reasons that they might be rejected by the private sector, look, we don’t necessarily take more risk.  We might have a different view, but if the reason, for instance let’s take trade credit insurance as an example.  One of the reasons it may be rejected by the private sector might be because often the private sector insurers will want to have a portfolio of customers, okay, so they’ll have minimum premiums, so therefore expect a certain number of buyers they want to actually insure.  But quite often, and the Te Pari case is an example, they just wanted their buyers to have trade credit insurance, they didn’t want to have a whole portfolio, so they wanted to have single buyer risk.  That might be one reason.  Another reason the private sector, say trade credit insurance might be rejected, it could be because they may have exposure, they don’t have [unintelligible 00:53:25] for that particular country, or for that particular counter-party, it might be that their limits are fully utilised, so they need to have a bit of a buffer, so we can provide a top up, or so we can actually spread that risk.  So that can be another reason as well.  But certainly it’s got to be a credit worthy decision, we’re not going to write insurance where there’s no chance of recovery if it goes wrong.  So we’ll do a lot of due diligence on that buyer.  

And I guess another thing to think about too, is a thing about with us, is if you’re into markets, it might be a market, and it might be a market [unintelligible 00:53:58] before a buyer you don’t actually know.  Think of it as another set of eyes.  Because it might be that if you’re coming to us for trade credit insurance because your buyers, they’re asking for repayment terms, and if we look at it, and we don’t want to offer trade credit insurance, it might be a buyer you don’t want to be dealing with.  So we can look at those sort of things, think of us as another set of eyes or workshop particular scenarios with us.

Peter Smyth: I think it’s also a situation like we have, I’ve got one of my exporters who demands 50% deposit because he’s got to buy all these capital goods.  Taking Jody’s point, getting to know your customer, that’s a big ask for some small companies who are food processors, and the ability to make them an offer that they can accept and use, by offering them say a 15% deposit, and have the gap bridged by the Export Credit Office.  It really results in extra sales.  So you can use it quite creatively in quite a few different ways.  I mean, it can be your bank, it can be their bank.  Are there any more questions?  I’m just conscious we’re almost out of time.  

Phil Quinn: Just [unintelligible 00:55:12], if you want to read about the Te Pari case study, I’ve got the hard copies here, so if you want to take it away and read it and absorb it, it might make more sense in your own time as well [unintelligible 00:55:22].

Peter Smyth: Awesome.  Well look, thank you Phil, thank you Jody, I think they’d just appreciate you showing your appreciation, thank you.