B-to-B CRM Needs More Than RFM

AT FIRST BLUSH, customer relationship management in the business-to-business arena is similar to consumer CRM. Both focus on efforts to maximize the long-term value of customers.

But the differences between building a relationship with a corporate entity and a consumer run deeper than how an envelope is addressed. The data necessary to increase a target firm’s value to a marketer is at least as critical — and significantly more elusive, according to Robert Burgess, group manager for CRM at Verizon Information Services.

A fair amount of consumer targeting can be done with recency, frequency and monetary data. Add in channel preference, and a marketer can aim effective mass-scale trigger campaigns at individuals, heads of households, or even entire households. It’s not the most sophisticated approach to marketing, but it can suffice.

In the business world, the sales process is more complicated. In addition to purchase authorizers — those individuals who actually sign order slips — a marketer may have to reckon with purchase specifiers, such as plant managers who actually know which size widgets are needed, and recommenders (for example, the boss’s nephew, who happens to like blue catalogs more than red ones). This information is harder to capture.

Don’t think data beyond name and address is important? Try selling computer software priced by the number of licenses without being aware of staff levels, or making a proposal without knowing whether purchases are authorized at the branch or headquarters level.

According to Burgess, a well-rounded business database will contain historical data on the company, financial growth expectations, ranking and market share within the industry, locations of both the headquarters and local branches, key executives’ names and contact information, and chief purchasing personnel names and contacts.

A great business database will contain this information not only for the customer firm, but for all its competitors. By knowing whether a business is lagging in penetration within a specific market, marketers can offer goods or services geared toward strengthening the customer’s position.

Such a file can also assist in operational matters. A B-to-B database should assign a priority to calls coming in to a service center based on the value of the individual customers.

The file can also offer guidance as to how calls should be routed. Depending on the marketer, it may make more sense to batch clients from one specific industry to a particular set of representatives.

Other marketers may find it more useful to dedicate service representatives to a single product or suite of products. The database can suggest which approach makes sense based on overlaying call analyses with client types.

Certain data points can be collected from overlay sources such as Dun & Bradstreet or InfoUSA. Some, such as purchase history, frequency of sales contacts, outcome of sales contacts, the number and frequency of customer-initiated contacts, and the nature of customer-initiated contacts are observed data. And others, such as length of sales cycle, timing of the budgeting process, competitive advantages, preferred methods and time of contact or the seasonality of the business, can be collected by asking the customer — an all-too-frequently overlooked method of data collection, notes Burgess.

Differences in CRM within the B-to-B arena don’t stop with the richness of the database. Marketing strategies to businesses should reflect that business customers tend to be more valuable, Burgess says. For this reason management needs to accept that a higher level of investment — such as comparative data within an entire industry, as opposed to focusing on a single customer — is a worthwhile investment.

That said, a B-to-B database enables long-term customer value functions that are similar to consumer relationship lifetime value programs. As with consumer CRM, a business database allows marketers to determine the prospects with highest potential lifetime value; establish the true cost of obtaining a customer through various sales channels; identify cross-sell and upsell opportunities; and predict accounts likely to fall off and identify those worth saving.

It also can influence the way internal operations are structured. Within a call center, customer service data can influence how incoming service and inquiry calls should be routed. For some marketers, clients might be best served by sending all calls stemming from one product to a dedicated representative.

Other marketers may discover that service calls are resolved more effectively, and marketing efforts are more successful, if clients are served by dedicated representatives who are familiar with their operations and needs.

Even the tone a B-to-B marketer takes with its material needs to differ from consumer relationship marketing. When Verizon representatives deal with small or very small businesses (which may be little more than mom-and-pop operations), they still communicate with the customers as professionals, not consumers. “Don’t take away their dignity, even if their mindset is that of a consumer,” Burgess says.

Burgess spoke recently during a session at the winter National Center for Database Marketing Conference in New Orleans.