When a company vows that the customer is king, it is generally referring to the final user of the product. For the bulk of businesses who do sell to end consumers, this makes sense. But for business-to-business marketing (B2B), committing to a customer focus is often deemed unnecessary and irrelevant.
However, as McKinsey reports, adopting a customer-first mindset is integral to the success of every business, especially those in the B2B market. Based on its insights, B2B organisations that have espoused their commitment to satisfying customers perform better and make higher margins than those who have not – even if they are not charging the lowest prices. In fact, while B2B has traditionally competed on price, this is rapidly changing too, as business customers follow trends in rising expectations more familiar to end customers.
Shift away from price and towards value
Four-fifths of B2B buyers do not prioritise price, found B2B International. But what other ways are there to compete?
According to experienced Australian creativity and entrepreneurship coach and academic, Marcus Powe, there are three basic ways to compete: the easy, not so easy, and the hard way.
- The easy way – compete on customer service.
- The not so easy way – compete on product quality.
- The hard way – compete on price.
Leave price for the big corporations to battle over, and instead compete on customer service.
This simple rule of thumb emphasises the benefits of taking a customer-centric approach and placing your clients in the centre of your business strategy. It is not just easier to compete, but you will be more able to attract and retain customers as well.
As a warning to the problems your business is bound to face when competing on price alone, Mr Powe recommends to leave price for the big corporations to battle over. Instead, create your competitive advantage out of something that they cannot do better, such as extraordinary customer service.
Interestingly, customer experience ratings are typically far worse for B2B organisations than for B2C. McKinsey reported that while the latter often score between 65 and 85 per cent, B2B companies generally average below 50.
How you can adopt a customer focus in a B2B setting
Research from B2B International found that only 14 per cent of businesses operating in B2B settings described their customer-centricity as "embedded" within the company's framework. Marketing between businesses is predominantly based within email. In fact, email will still be the single fastest growing channel in B2B marketing communication, with around 50 per cent of businesses looking to invest more into email marketing in the near future, and 33 per cent increasing their spend in marketing lists and direct mail.
But even within these channels, a customer focus can be adopted. Thankfully, McKinsey offers several suggestions for making the transition.
Firstly, understand who your customers are and how they are interrelated. This is tightly related to knowing what happens throughout your supply chain. You need to know more than just what your buyer's needs are. If you know what their customers are looking for, too, you can anticipate the desires of your customers and consequently be better equipped to satisfy them.
Email will still be the single fastest growing channel in B2B marketing communication.
Second, you need to understand the customer journey that your buyers take, again, considering how each phase within the transaction is perceived by them. Does it add value? If not, then something needs to be changed.
Third, ensure that internal procedures and policies are not restricting your ability to process customers in a timely manner. You want to reduce the chance for delays and potential dissatisfaction by thinking ahead and putting yourself in your clients mindset.
Finally you must appreciate how the customer journey is digitising. This is not exclusive to end consumers. Business customers are going online now more than ever before – if you want to keep them, you need to keep up.
For more advice or ideas about B2B marketing, get in touch with the Prospect Shop today.