Business buyers are people just the same as you and me but behave very differently when buying for their employers than when choosing products for their family.
Business people are considered purchasers and highly risk averse – the opposite of impulse buyers. They value long-term relationships with a small number of suppliers. They have long buying cycles policed by their procurement teams.
Essentially, if you’re doing a decent job as a supplier, you stand a good chance of keeping your customers long-term and the longer you keep them, the more profitable they become.
The converse is that getting new customers is hard. In fact, most large enterprises have procurement teams dedicated to reducing the number of suppliers and “encouraging” the business to look first to existing suppliers for anything new.
In my experience, innovation plays a critical role in both winning and retaining customers. There’s no doubt that the best way into a new account is to have a product that nobody else can supply. Even so, business buyers typically mistrust new suppliers and will first ask their existing ones if they can match the new product or service within a reasonable delay. Thus the existing supplier gets a strong incentive to innovate – the need to keep an account – but also a less risky business case as the first order is in the bag.
The key to successful B2B innovation is to stick close to your customers, to understand what their needs really are – at a business level, not just a technical one – and to ensure you give them a say in your product development.
One good way of doing this it to maintain a small consulting team. At BT Expedite, our CRM consultants got wider and deeper into accounts than anyone else and brought back both ideas and customers willing to pay for them. Clienteling (assisted service in luxury retail) is a great example.
Another is to formalise customer involvement in innovation through Customer Councils or other user groups. Used wisely, these not only help prioritise scarce development resources so that they can be targeted on new features that bring the most benefit, but they can also assist in avoiding one of the most common pitfalls – mistaking client demand for a market one.
I helped set up BT Auto-ID Services. We built a business around using RFID tags to help retailers manage their supply chain. Marks & Spencer were a world leader in adopting the technology and we were delighted to beat IBM to win their business. The project went well and delivered real benefit to M&S. We were in the papers. We made a really cool video and waited for the phone to ring. Surely all the retailers would want this?
Well, no they didn’t. It turned out that our solution solved a business problem unique to M&S and we’d not stopped to check whether other fashion brands would buy our services. I pitched our proposition to Simon Wolffson, CEO of Next. He was very polite but you could see he thought M&S were crazy to invest in our technology.
Innovation doesn’t have to be at the cutting edge of technology, of course. Business buyers respond equally well to a good service proposition. I’ve just launched WorldPay Total, the first time businesses can buy a complete payment service from a single supplier, serviced 24/7 from the UK with a dedicated account manager. The component parts were each available before but never packaged together. We’ve already sold our first big deal.
This post was first published as a guest blog at Incite.