There is a lot of talk about customer value in business-to-consumer (B2C) organizations, but what about business-to-business (B2B) companies? How are B2B organizations managing and building customer value?
The surest way to create value for a customer is to earn and keep the trust of that customer. Research shows that trust is the single most important decision-making variable whenever a customer is deciding whether to buy from one competitor or another in any developed market where product price and quality are roughly comparable. Companies that can be trusted by buyers to act in the buyer's interest are few and far between. Whenever a customer finds a company that can be trusted, it is worth some investment to ensure that the relationship continues.
In the business-to-business (B2B) space, buyers may actually compete with other buyers, and depending on the business, the most effective strategy for ensuring that an effective buyer-seller relationship continues is to focus on constantly improving the trust, mutuality and openness of the relationship. This means not just respecting the individual interests of each buyer, but also protecting the commercially confidential information provided by each buyer.
There are several important ways in which a B2B situation differs considerably from a business-to-consumer (B2C) situation, and most of these differences make it even more critical for the B2B organization to develop a trusting relationship with their B2B customers. We used these B2B principles when we wrote our book One to One B2B: Customer Development Strategies for the Business-to-Business World, which first appeared in 2001 and is still available at Amazon and other online book retailers:
Relationships within relationships. The first and obvious difference between selling to an individual and selling to a business is that a consumer is a single decision-making unit, but a business is not. A business is composed of a number of distinct individuals. Many different people will likely have an influence on the decision-making process. So the B2B company is constantly trying to dig deeper, to probe beneath the surface of its relationship with the organization, as a customer, in order to uncover its relationships with the individual decision-makers and influencers within that organization.
Account development selling. Because of the complex nature of organizations as customers, a B2B company is much more likely to view success not just in terms of how many new customers it can acquire, but in terms of how deeply it can penetrate its current customer accounts. A B2B company will pay attention not just to the sales volume with a particular customer, but also to the "development" variables, such as how many of the customer's divisions it does business with, or how many of the customer's executives it knows, and the importance of their influence within the customer organization. Account development strategies are a kind of "share of customer" marketing, and this has always been a natural activity for B2B organizations. What has changed recently, however, is the sophistication with which a B2B company can pursue its account development strategy, because of the array of computer-based tools now available, including sale sforce automation (SFA) systems, contact management software and database analytics. The principal goal of an account-penetrating B2B organization is finding products for its customers, not finding customers for its products.
Just a few large customers. While a B2C marketer is likely to sell to hundreds of thousands, or maybe tens of millions, of consumers, the B2B competitor often sells to just a few dozen customers. So a B2C company can usually rely on a statistical analysis of its customer base to figure out what's going on at any point in time with any particular "type" of customer, but it's often much more difficult for a B2B company to generalize about its clients in any way. Instead, the B2B must look at its customers individually and make what may amount to highly subjective judgments about each one.
Infrequent purchases. Because B2B products and services are often "big ticket" items, and this usually means the purchase cycle is long, there are sometimes lengthy periods of inactivity between actual purchase events. So, more than is the case in a B2C environment, a B2B company must constantly be seeking to fill in these gaps by selling services or by subscribing its customers. Subscribing customers to your product (by turning the product at least partly into an ongoing service) is a good way to operate.
Complexity. For a B2C organization, managing customer relationships often involves important channel issues, such as the company's relationship with its own dealers or with the independent retailers that sell its manufactured product. However, for the B2B enterprise, these same channel issues can be quite a bit more complex. Because the B2B product is often a more complicated and difficult product to install or use, the channel members in a B2B situation can often add a great deal of value to the overall process. In addition to the external selling channels, it is often the case that the "channel" organization is actually within the business customer itself. Because of the division of labor within any large business customer's own organization, purchasing agents and procurement departments often amount to nothing more than captive channel members, owned and operated by the business customers themselves. So a B2B company should want to create the same types of channel relationships with the members of a customer's internal channel as it would create with external channel members.
Knowledge-based selling. Precisely because the products and services sold in a B2B context are sometimes highly complex, it is often advantageous to base the sales process on educating and training the customers. More than is the case in consumer marketing, the complex nature of a B2B organization's products means that the B2B enterprise must educate its customers. A B2B will often find itself in the position of having to teach business customers how to use its product or service more productively, and sometimes even having to teach customers why its product or service is beneficial at all.
Helping clients manage themselves. Ultimately, the strongest and best type of relationship with a business customer will be one in which the seller is actually helping the buyer to manage its own business. Businesses are not usually simple operations. As customers, businesses often have problems that a selling organization can help with. It is our belief that in the broad arena of B2B commerce, organizations will rise or fall on the basis of their ability to cultivate one-to-one relationships with their customers.
Hear more in Creating Customer Value, a SearchCRM.com monthly podcast series with Peppers and Rogers.
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