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BUSINESS TO BUSINESS ("B2B") MARKETING AND BUSINESS TO CONSUMER ("B2C") MARKETING ARE VERY DIFFERENT. Communications are different, databases are different and sales methods are different. Most companies think of themselves as selling to one market or the other. However, the division between the two markets isn't absolute. |
Many consumer marketers also sell to businesses, whether they recognize it or not. It is common to start analyzing consumers based upon demographic data and find the biggest customers are not individuals at all.
In most cases where a company sells to both, the database, communication efforts and selling efforts are geared toward consumers. This often means the best, most profitable customers (businesses) are being treated like consumers -- and sales are likely to be lost as the result.
WHERE UNEXPECTED BUSINESS CUSTOMERS COME FROM
Businesses buy food, clothing, art, gifts and all kinds of items that consumers buy. Businesses are not limited to buying office supplies, industrial equipment or business travel. Consumers have jobs and if they see a good offer for their employer, they can take it to work. It is also common for businesses to buy for the first time through consumer-oriented direct mail, space advertising and general media advertising. If businesses can be enticed to buy through efforts not geared directly toward them, imagine what could be done with the right offer!
ACQUISITION COST AND LIFETIME VALUE
One of the reasons B2C marketers shy away from selling to businesses is that B2B prospecting is more difficult. When advertising costs are compared to sales by individual prospecting effort, it usually costs more to acquire businesses than consumers. As a result, many marketers don't try to acquire businesses at all.
To minimize acquisition costs for business customers, it is necessary to design offers that appeal to business clients and to aim them at the right business audience. However, finding the right audience can be a challenge if all previous marketing efforts were directed at consumers. Profiling existing business customers is a good way to find the best places to begin testing B2B prospecting efforts.
When lifetime value is considered for both B2C and B2B customers, the acquisition picture changes dramatically. Once they become customers, businesses tend to be more loyal and spend much more. Businesses often make a small order to test a product or service and then return with a much larger order. As a rule of thumb, businesses generally spend about 10 times as much as consumers after their first purchase.
It is important to consider repeat sales to business when investing in prospecting efforts. It can take less time to earn back the higher cost of prospecting to businesses than it does to earn back the lower cost of prospecting to consumers.
DIFFERENCES IN DATA CAPTURE
When a B2C database is set up, there is at minimum a place for the name and two address lines. However, there may be no place to put company name, mail stop or title of the person. When there is a company field, the customer service rep may type other information like "OK to leave on porch" or "Enjoy the gift" in that field if there's no other place to include a note.
"A place for everything and everything in its place", the saying goes, and it applies to databases as well orderly households. If a company sells to both businesses and consumers, capturing business data well enough to reach buyers properly is crucial. It is hard to clean up data that was improperly entered and even harder to get data that was not entered at all. For example, fax numbers and email are crucial in B2B marketing and must be gathered from the client.
For companies with many business clients, it will be necessary to make a distinction between companies and the contacts at those companies. With most databases geared towards consumers, this is not possible. A database that allows for designations of buyers, influencers and users at a single client company is a very different design than a database of consumers that are viewed as a single household. (See example below, and check out Data Hygiene - Database Bullets to Dodge.)
Title is important when selling to businesses because it tells the marketer what the contact person's job and authority is likely to be. Knowing a contact is in purchasing, receiving or management can help greatly in directing future contacts.
| Example
#1: Consumer vs. Business Data Fields |
|||
|---|---|---|---|
Consumer-oriented Data Fields |
Consumer
Address fits just fine... |
Business
address may be forced to fit like this |
...
or even like this! |
| Name | Jane Smith | Fran Jones | Director of Marketing |
| Address 1 | 1500 Main Street | 2000 Willis Avenue, Suite 200 | 2000 Willis Avenue, Suite 200 |
| Address 2 | Apartment 16A | The Acme Company | The Acme Company, Mailstop 14-4-4 |
| City | Anytown | Sometown | Sometown |
| State | MO | IL | IL |
| Zipcode | 64444 | 60603 | 60603 |
Business-oriented Data Fields |
A
Business Address should look like this |
...so
that we know... |
|---|---|---|
| Contact | Fran Jones | (We know who she is) |
| Title | Director of Marketing | (We know what she does) |
| Company | The Acme Company | (We know where she works) |
| Address 1 | Mailstop 14-4-4 | (We know the mail will reach her desk) |
| Address 2 | 2000 Willis Avenue, Suite 200 | (We know the mail will reach her building) |
| City | Sometown | |
| State | IL | |
| Zipcode | 60603 |
METHOD AND TIMING OF CONTACT
It often makes sense to have outbound telesales and/or salesperson contact with business customers to support the relationship. For accounts spending hundreds or thousands of dollars on a regular basis, the additional sales from such personalized contact can more than pay for the added selling cost. It is not uncommon to have a completely different selling approach for businesses than for consumers.
Business also make decisions further in advance than consumers. They need more time to allocate budgets, make selections and get approval. As a result, seasonal offers need to be made much earlier to businesses than to consumers. By the time consumers are ready to respond, businesses have long since made their decisions.
WHOM TO CONTACT
Consumers are generally treated as a household and the most recent contact person is the one who will receive the next contact. The most recent contact person is considered the decision-maker.
When a data capture system geared toward consumers is used with business customers, the best contact(s) may not be in the database at all. The contact may be in accounts payable or the contact address may be a shipping address.
In B2C marketing, when a household has made a recent purchase, they are considered an active buyer. A business customer, on the other hand, could make several purchases and not be considered a buyer at all. For example Jane Smith, head of marketing, may buy corporate gifts each year for clients. If the data show only "accounts payable" as the client, Jane is not considered a customer. She could be dropped from future contacts.
For many business clients, the only way to know who the contacts are is to periodically call and/or visit them. If each account's purchasing volume is high enough, this is well worth the extra expense. This is particular true when business clients have more than one worthwhile contact. It is important to reach the one who specifies the purchase, the one who approves the purchase and the one who actually makes the purchase.
DIFFERENCES IN MESSAGE
The reason to buy and the tone of the selling message may be quite different for businesses and consumers. The motivations are different from one business contact to another. As a result, smart marketers send different messages to different types of contacts. For example, the business end user of a product, such as a computer or a printer, is primarily concerned with features, benefits and functionality. The department head may be more concerned with whether the product is compatibility with other products already in the office and whether or not it will fit in the budget. The purchasing agent may be more interested in finding the best place to buy the product. Each business contact has a very different perspective from an an-home consumer.
FINDING NEW BUSINESS CUSTOMERS
Renting response lists works well to help find new individual consumers. They do not work nearly so well to reach new businesses. There are far fewer business response lists to choose from. However, there are several other ways to reach businesses that are not available or not particularly effective for reaching consumers. For example, compiled lists using SIC, sales volume, region and credit variables may be effective in finding new business customers. Magazine lists, usually from vertical industry publications may also have excellent contact lists for specialized products.
Before deciding which type of businesses to pursue, remember the 80/20 rule. That is, 80% of sales come from 20% of the customers. Look not only at how many of each type of business are in the database, but also at how much each type spends. Usually, certain kinds of businesses spend significantly more than others. So, first go after the ones that spend the most!
Be careful when reviewing the business customers already in the database. Many marketers assume that bigger is better. They assume that if they target larger companies, each sale will be larger. However, it is not uncommon to find 70% to 80% of a company's business client revenue comes from companies with 15 or fewer employees. Small business can be the best customers because they are often much easier to deal with and often allow higher profit margins. Do not be surprised if small businesses are your best customers, too.
HOW MANY BUSINESS CUSTOMERS ARE THERE?
If businesses have been treated like consumers, it may be difficult to tell if a customer is a business or a consumer. This is especially true when there is no specific place to store a company name in the database or when notes about a customer are occasionally put where a company name should be.
To get an idea of how many customers are businesses, start by having
a database specialist look through the name and address fields for things
like "Inc.", "LLC", "The", "Suite" and "Corp".
(See example below.) A next step is to overlay the database data with business
demographics data purchased from a list compiler. Those that match are
businesses. A little more work should make the distinction between consumer
and business addresses fairly accurate.
| Example
#2: Telling a Business from a Consumer |
||
|---|---|---|
Data
Field |
Address |
Clue |
| Name | Bill Edwards | |
| Address 1 | 500 Main Street | |
| Address 2 | Apartment 16 | Apartment suggests
a consumer |
| Name | Frank Gates | |
| Address 1 | 900 Washington Avenue | |
| Address 2 | Suite 200 | Suite suggests
a business |
| Name | Patti Sharp | |
| Address 1 | 700 Main Street | |
| Address 2 | #150 | Apartment?
Suite ? Can't tell! |
MAKING USE OF THE KNOWLEDGE
Once you establish how many sales come from businesses versus consumers, you can determine how profitable different customer types are. If this type of analysis has not been done recently, it will probably inspire a shift in both prospecting and repeat customer marketing. In most situations, businesses are targeted more as prospects and reached differently as customers. How this is accomplished varies greatly from company to company.
Look into your database and see if you can tell how profitability of consumers and businesses compare. You may be surprised!
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