B2B can learn from B2C, say Zilliant and UnleashWD
Zilliant and UnleashWD recently partnered to provide insights on how B2B can tear a page from the B2C playbook:
1. Cross-sell based on previous purchases. Most consumer e-commerce websites, specifically Amazon.com, use statistical modeling techniques and algorithms to predict what customers should buy based on their past purchase histories. Such websites explicitly provide customer suggestions on what other products they might be interested in purchasing. B2B companies, particularly suppliers and distributors, also have customers with similar buying patterns and can use the same approach to make product suggestions to repeat customers. This has proven to be a successful approach whether B2B companies are selling through the web or more traditional means. Ultimately, the underlying method for predicting what a customer is likely to purchase based on previous purchases is very similar.
2. Retain existing customers. It’s significantly more costly to acquire new customers than it is to retain current customers. When B2B companies can identify the early signs of customer defection, they have an opportunity to reverse that trend. However, that’s easier said than done for suppliers and distributors that have thousands of customers and tens of thousands of products. To keep up with top customers, distributors must become the “unofficial employees” for their customers. But with so many customers, that’s only feasible for the top 10 to 20 percent of accounts.
In the B2C world where customers spend in recurring amounts or have ongoing subscriptions, such as gym memberships, companies often rely on technology to provide an early warning system when customers begin to decrease their usage of a product, as in not going to the gym. That often triggers a special offer and an effort to retain those customers, but B2B companies aren’t presented with such opportunities. By leveraging data-driven, predictive analytics, B2B companies can automatically identify customer defection while notifying the appropriate sales rep without a manual process or intervention.
3. Don’t compete on price alone. Many suppliers and distributors must compete with commodities and consider price as the only factor to win the deal. In reality, there are few, if any, true commodities in this world.
In fact, there are a variety of factors that can determine what a customer is really willing to pay. Some of these factors may be product-related, but many factors have to do with the customer’s situation, a sales rep’s unique relationship and services, and the circumstances surrounding the specific deal at-hand.
B2C companies have long figured out how to differentiate supposed commodity products. Starbucks is a great example. The coffee market was largely commoditized, yet Starbucks found a way to differentiate its offering through a unique customer experience, and in doing so, can charge a premium for its products. Suppliers and distributors can also find ways to differentiate the customer experience by understanding the factors beyond price that affect customer buying behavior, such as the sense of urgency, distribution channel and special circumstances required. By understanding how these factors affect willingness-to-pay, B2B companies can differentiate their prices from so-called commodity prices.
Ultimately, by mirroring B2C best practices, B2B companies can begin to overcome the massive complexity in their business and build stronger relationships with their customers. B2B companies can enable data-driven pricing and sales decisions at the front line to predict what customers are likely to purchase, identify when customers are defecting and understand the factors that affect customer buying behaviour.
Javier Aldrete, senior director of product management at Zilliant, has more than 16 years of experience applying advanced business intelligence and predictive analytics to solve business problems in multiple industries.
Dirk Beveridge, founder of UnleashWD, is an expert in how wholesale distributors and manufacturers increase market share through examining and improving their relationship with customers.