Factfile 2
Understanding the difference between B2B and B2C marketing helps give some insight into how to go about finding out about your customers (Turnbull 2000).
B2B purchases are generally of higher value than B2C purchases. The value of individual customers is greater, but at the same time the purchasing decision process will be longer.
Purchases are more infrequent. Higher value purchases are associated with a longer purchasing cycle, in which there are intervals between sales. The challenge is to maintain customer relationships during these intervals.
Customer Relationship Management (CRM) is particularly important in a B2B context. The underlying concept behind CRM is the lifetime value of a customer. In B2B this can be huge. It therefore makes sense for resources to be diverted into developing relationships with existing business customers.
Be externally aware. Know what your competitors are offering. Also, which of your competitors your clients are interested in and why.
In B2B there are multiple decision-makers. Several contacts from on single client company are all likely to influence the purchasing decision-making. The roles these various individuals play must be factored in.
It is important to focus on one-to-one relationship management in B2B.
Focusing solely on sales will not ensure the best results in the long-term. Relationships are not cultivated solely by the marketers, but by the entire company and its products. They can often be as important as the product offered itself, helping to cement long-term bonds.
Social bonding creates added value to some degree by creating a comfortable, trusting atmosphere to do business in. Interactive marketing is thus a critical aspect of relationship building. However, to add real value to the relationship the seller has to provide exceptional service.
There are a number of factors to bear in mind in terms of customer relationships.
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Relationships with relationships. Unlike a consumer, a business is not a single decision-making unit. Therefore take account of relationship dynamics on different levels.
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Focus on just a few, large customers.
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Account development selling. B2B relationships are not just about the number of customers but about the depth of the relationships. There is a difference between market penetration (product-centric and price-dependent) and account development (customer-centric and loyalty-dependent) strategies.
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Channel complexity. Relationships between a company and its dealers and independent retailers can be complex. Identifying preferred channels is essential.
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Encourage two-way communication.
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Consumer satisfaction is the crucial link in establishing longer-term client relationships. Measure levels of satisfaction. Feedback is essential to developing better service.
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Corporate relationships need good corporate memories. Invest in systems to ensure efficient yet flexible processes like database marketing. This is particularly important for multi-product relationships.
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Knowledge-based selling. Customers often need to be trained how to best use products. This provides greater scope for deeper and more inter-dependent relationships.
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Know and prioritise your customers. Don?t just rely on CRM technology to tell you who your most valuable customers are. To quote Tim Ambler: ?CRM is very fashionable? But the technology is not always appropriate.?
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?It is also a fallacy to believe you can infer which are your most profitable customers from a customer database, because it only tells you what they buy from you not what they buy from other people. Traditionally that is the sort of information the sales department gleans if they have a good working relationship with the customer. It does not depend on technology?. (Ody, 2001.)
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Customer linking. Be as involved as you can with your customers and helping them to manage themselves. The strongest relationship is where the seller helps the customers manage their own business. Do not just provide a product; try to get involved in helping your client use it. This creates a deeper relationship.
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In the case of B2B services, most leading consultancies identify key client service personnel to work in integrated client/customer teams. Among capital goods companies, best practice is to install hardware on customer sites and earn a return on its successful operation. The aim is to reduce systems costs and share with the customer the new value created. (Financial Times, August 2001.)
B2B is directly geared to specific customer needs. It is all about providing products to be used to add value to customers? businesses rather than products for final consumption.
Firms operate in multiple end-use markets and sell through multiple distribution channels. Marketing to them as opposed to directly to consumers therefore requires an entirely different marketing mix strategy.
Business marketing success can depend on product design, cost and service innovations. In these cases, business marketing requires a high level of inter-functional cooperation and therefore top management must actively participate in the market planning process.
Despite lesser press coverage, e-commerce has had a far bigger impact in the B2B arena. There are potentially huge money and time savings to be made by carrying out business electronically.
B2B is influenced by the external environment:
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Derived demand.
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Complex buying process.
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Concentrated customer base.
There are also issues within the internal organisation:
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Emphasis on technology.
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High level of customisation.
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Order fulfilment mechanism (Rangan, 1995).