What’s the future hold for business-to-business marketers?
It’s enough to make them go out of business. They face more complex channel options, heightened price competition, declining response rates and the encroachment of consumer firms into the B-to-B space. And some areas are getting worse more quickly than others.
Take the channel problem.
“Direct marketing was easier 20 years ago,” said Terence Jukes, CEO of B2B DMI Inc., speaking at the Direct Marketing Association’s B-to-B conference in mid-March. “The phone rang, you took the order and the stuff went out.”
But the recent channel explosion has made it difficult for companies with revenue of under $25 million to track, fulfill and analyze all their communication options, he added.
And the firms that are tracking aren’t necessarily doing a good job.
They may not, for example, understand how their revenue mix has changed and how they should adjust their media expenditures.
Companies should also have a handle on how their new customers are reaching them. If new buyers are generated through search engine optimization or viral marketing, for example, these options should weigh more heavily in the future media mix than they do right now.
Another problem is that customers are consolidating the number of suppliers they buy from. They do this to save money and to cut down on the number of firms submitting invoices to their accounts payable departments, according to Doug Hershey, executive vice president of New Pig, an industrial-spill management firm.
How do you make sure you remain on the list?
New Pig sends all its customers a “repork” card that details the orders it has fulfilled on time, the service opportunities the client chose, the new products the firm has introduced and the money saved.
“It’s a reminder that we do take care of our customers,” Hershey said.
Hershey noted that the vendor consolidation trend goes hand-in-hand with competitive pricing pressure. The Web has brought about a boom in comparison shopping, and reverse auctions (in which a company puts out a list of needs and allows a few vendors to make live bids that undercut each other) have taken root.
“Those things are killers,” Hershey said, adding that New Pig no longer participates in them. “It’s not the way we do business. To sit there watching our price drop is painful.”
Instead, New Pig touts the quality of its industrial supplies, and if a client presses for cost savings will steer it toward less expensive merchandise.
Is there any good news?
Yes: For one thing, women are increasingly represented among B-to-B supply purchasers.
There are now 10.1 million female-owned businesses in the United States, according to Keith Grabow, vice president of marketing at NEBS. Moreover, their revenue increased by 40% between 1997 and 2002, compared with 7% for businesses in general.
The trick is knowing how to approach them. Grabow offered the following:
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Men want facts and figures to be the primary drivers of their purchase decisions, while women ask many people for input.
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Men go into a transaction knowing what they want, while women seek more information, investigate more options and take longer to make the transaction.
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Men are interested in closing a transaction, whereas women want to establish a relationship.
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Men look for a good solution to their needs, while women seek the “perfect answer.”
NEBS, which traditionally has been very male-oriented, is trying to make itself more user-friendly for women.
For example, it has repositioned its catalog from a reference tool to a sales-oriented tool. And it has incorporated copy with more of a marketing pitch, labeling products “good,” “better” and “best” for comparative purposes.
NEBS also has begun incorporating customer testimonials, and is exploring how it can capitalize on word-of-mouth advertising, which Grabow feels is a powerful motivator for both the small business and female audiences.
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