What’s different about B2B marketing?

When marketers who are experienced in the fmcg sector change to the world of B2B, many find it unnervingly different and difficult. Laurie Young describes how to get to grips with marketing to other businesses

There is no doubt that, in the past, the public discussion of marketing has been overly biased toward consumer marketing. Advertising and branding debates have focused on the likes of Unilever and P&G, while marketing academics have been obsessed with the consumer goods industries.

Until very recently, the text books of leading academics and the courses of most universities covered, almost exclusively, consumer marketing practices. There was a complete sub-discipline devoted to ‘consumer behaviour’ whereas ‘industrial buying behaviour’ was paid scant regard.

In fact, business-to-business (B2B) marketing was seen as a specialist, unfamiliar and strange backwater that did not understand branding or segmentation and had small budgets reserved for dull activities. This is surprising because business leaders have been investing in remarkable B2B ‘revenue-generating’ activities for at least 300 years; they just haven’t always been recognised as ‘marketing’.

B2b is a huge sector

A vast number of businesses exist to market products and services to other businesses. In fact, professional associations in many Western countries, like Britain’s Chartered Institute of Marketing, say that there are actually more marketers working in business marketing than in the consumer equivalent. For instance, one study found that there were 176,000 marketers directing spend of £9.8 billion on B2B marketing communication in the UK alone.

At a global level, one of the world’s most valuable brands (second to Coke Cola in 2010 according to Interbrand) is a highly respected business marketing group: IBM. It and Accenture spend vast sums on above-the-line advertising and digital campaigns. Their peers spend sums that rival the marketing budgets of consumer goods companies on activities which they consider to be marketing programmes.

These can be missed by some suppliers, though, because the terminology might be unfamiliar to consumer marketers: ‘thought leadership’, ‘customer hospitality’, ‘key account marketing’, ‘solutions’, ‘trusted adviser’, ‘business development’, ‘value proposition development’, ‘collateral’ and many more. Moreover, the best tend to concentrate on the mystique of a few unique, elite media (like the FT, The Wall Street Journal, the annual meeting of the world Economic forum at Davos, the McKinsey Quarterly and the Harvard Business Review).

There are, of course, similarities between consumer and business marketing. Marketing planning, segmentation, NPD/NSD and communications techniques like advertising, social media or other aspects of digital marketing are all, for instance, routinely used.

There are also overlaps between the two. Large organisations consistently forget that a business buyer’s personal experiences create prejudices in their professional life. A telecommunications or computer company that provides awful service to leading individuals can find itself inexplicably shut out of large business opportunities.

As a result, a number of experienced business marketers create specific programmes for VIP domestic users; even if they are subtly and discreetly executed. Sometimes, even the customer does not know they are the subject of such a programme. B2B marketing is as much about people and understanding the desires of human beings as consumer markets, even though organisations are involved.

There are, though, a number of important differences from consumer marketing which need to be understood and tackled.

Key differences

Marketers, particularly agencies wanting to service B2B clients, must start by recognising the differences between business and consumer marketing. Potential suppliers are unlikely to get a hearing unless they demonstrate that they understand these differences and are skilled in them. They include:

• Market size. Business markets are often smaller than consumer markets. In some, for instance, client-side marketers can name nearly all their buyers. Even in worldwide markets the volume of buyers can be quite small. In fact, in some sectors this can lead to ‘conflict issues’. Suppliers (like legal, consulting and accountancy practices) retained by one major organisation are unable to work for others who directly compete against them.

This phenomenon alone forces B2B suppliers to prioritise ‘targets’ and makes meaningless the mindless drive for market share prevalent in other markets. A number will have a strict ‘target list’ and will refuse some opportunities. So, B2B marketing has to be precise and, often, focused on a very small audience.

• The frequency of purchase. In many business markets, it can be several years before business customers will buy a replacement or second product. This means that suppliers have to find ways to remain in contact between purchases. Many create highly targeted relationship programmes and, for some, this is the prime focus of their aftercare or service resources. They often set up elaborate, heavily funded research programmes to track attitudes in anticipation of future sales.
• Intimacy of customers in professional networks. As business markets are small, they tend to comprise numerous inter-related networks of professional relationships. Opportunity can be increased by deepening these relationships; by increasing trust and developing links between two organisations. So, relationships with business executives can be the prime focus of B2B marketers. In fact, many say that ‘it’s all about relationships’.

As a result, business marketing has to encompass highly effective relationship marketing techniques with unique concepts, models and processes. There is evidence that business leaders in this field have been using relationship marketing backed by sophisticated viral techniques for many decades; without actually calling it that or, in some cases, without having any recognisable marketing department

• A more formal buying group. Business buying tends to involve a formal group and clear, detailed assessment processes. In some instances, a formal buying process is even required by law or regulation. It is not unusual for there to be an RFP (request for proposal), followed by a pitch and selection process involving qualified buying specialists.

Yet this buying process is as different as the different organisational structures and cultures of each business; and can be influenced by skilled marketing. Some businesses use large, process-based bid techniques while others in exactly the same sector might turn on the whim of a forceful leader. Sales people need the help of marketing communications activities that allow for this variety and warm up different buyers to the point of sale. Business communications must be tightly integrated into the potential buying process to enable sales teams to function effectively.

• Account management. Business suppliers tend to attract a number of repeat buyers who dominate the operations of the business and demand special attention. As a result, in many business markets the prime interface between a supplier and their customer is an ‘account manager’. This person’s role, qualifications and status varies by industry but it must be the focus of business marketers.

"Agencies might have to invest in research or idea development in order to win campaign commissions that then lead to further work, once trust and confidence has grown"

In fact, as some customers have bigger global revenues than the GDP of some nation states, a number have completely changed their approach to account management since the turn of the century. Many treat their lead accounts as carefully as one of their regional businesses or geographic markets. There may now be a general manger or senior director dedicated to that customer who is supported by a wide range of resources. Some call this ‘account-based marketing” and it is radically altering B2B marketing across the world.

• The involvement and influence of professional buyers. Public sector purchasing is dominated by the buying discipline but its expertise is spreading to other sectors which were previously immune to it. From IT to professional services, purchasing managers are becoming increasingly involved in business buying. They introduce their own values, processes and criteria, demanding rigorous approaches from sales and marketing people trying to sell to their company.

Some have introduced elaborate marketing programmes to side-step this trend and to climb ‘up the value chain’ into consultative sales. But business marketers must get to grips with the role and selection criteria of these hugely influential specialists in each customer organisation. They desperately need mechanisms to understand this community and to engage with them between purchases.

• Sector expertise. There is an assumption among most business buyers that knowledge of their sector is a sign that potential suppliers understand their needs. They will expect their suppliers to understand the language, history, key trends and main competitors in their industry. As a result, most B2B marketers have, or are forced to set up, a sector marketing programme.

B2B companies often lack marketing competence

Large, experienced business marketers (such as IBM), which have been driven by market trauma, have progressively invested in ever more sophisticated marketing capabilities and processes, while others lag behind.

Businesses range from tiny start-ups to medium-sized companies and any marketing units within them are limited by both resource constraints and the understanding of the company’s leaders. They need to construct their marketing with a hard-headed balance between what needs to be done and what can actually be done. They are unlikely to be able to invest in detailed research or elaborate market plans but must identify ‘strategic imperatives’; a tough mixture of sales, revenue, communication, NPD and political demands.

One thing that client-side business marketers must do is to understand the broad range of resources available to them. This will involve: their actual budget, their actual staff, support from other business functions (like logistics, sales support or customer service), their suppliers, their professional association, and their wider professional network.

Suppliers and agencies to B2B companies need to think through and compensate for this lack of organisational competence. They need to drop unnecessary jargon and invest in educating their potential client. They will normally have to swallow some costs in order to win greater account penetration at a later date.

They might, for instance, have to invest in research or idea development in order to win campaign commissions that then lead to further work, once trust and confidence has grown.

They will often have to gain access to the business owners and leaders in order to enter debate about strategic issues. Those that succeed in gaining this business-level access report great success from it. They find that business leaders are less risk-adverse and quicker to take decisions than those in marketing functions; better even than CMOs in some consumer organisations. They are also more willing to pay higher margins for demonstrable benefit.

All B2B marketing activities of any worth (from strategic issues like branding, segmentation and market access to advertising and other communication programmes) flow from this fundamental approach to organisational competence in B2B marketing. Both long-standing, senior client-side marketers and successful agencies report that, once gained, lucrative and exciting rewards follow.

Learning the sector language and culture

Markets create their own language, beliefs and behaviours; and that can be particularly seen in B2B markets. One of the neglected marketing thinkers of the 20th century, Wroe Alderson, pointed out that markets adopt herd behaviour. Marketing directors and business leaders develop ideas, language and beliefs that form a framework for the launch of products and services; and customers collude in those beliefs while they engage in that market.

Most thinking business people would have heard, for instance, the expression: ‘50% of my advertising budget is wasted, but I don’t know which 50%.’ And many would recognise: ‘It costs more to recruit a new customer than retain an existing customer. And, hundreds have heard conference presentations that state: ‘The average dissatisfied customer tells 13 other people if they have a difficulty or experience bad service.’

These beliefs and ideas (which may not necessarily apply to the company concerned) build up in a sector or business market and form a backdrop to strategies and initiatives. So, marketers have to customise B2B marketing with them in mind.

As this industry-specific bias affects all methods of B2B marketing (from pitching and service reviews to PR and digital marketing) it is sensible to develop a clear communications strategy to tackle it. What are the buzz-words used by the intended customer group? Who do they respect, what do they believe (however daft it may seem) and what progressive learning has there been in their little corner of the industrial landscape?

People in financial services, technology, public service and pharmaceuticals have very different views and assumptions, both from each other and fmcg marketers. What are they? There is then a very important decision to be made. Is the campaign going to adopt the technical language of the herd? Agencies who are inexperienced in B2B markets frequently complain that they are asked to use jargon in their work and boast about how they brought ‘common sense and simple English’ to a communication piece.

Yet that may not be the right thing to do. If buyers are wedded to certain words and use them to represent their strategies and assumptions, then they have to be used. In fact, demonstrating that you understand, that you are part of the herd, is an important way of displaying that most important issue of good marketing and income growth: empathy. You simply cannot develop relationships, pitch or advise if you cannot communicate at this level.

An alternative strategy

Sometimes it is possible to shock or gain attention with one piece of communication that misuses industry language. Some organisations deliberately set out to challenge and shake-up markets. In nearly all business markets, respected and outstanding performers exist who are contrarians; standing out from the crowd.

Marketers cannot effectively use marketing communication techniques to publicise their products without a firstrate understanding of this phenomenon; they must know the ‘mind of the market’. This is the essence of B2B communication strategy, and money can be misspent unless marketers get a grip of it.

This is an extract from a ‘best practice guide’ commissioned by Warc. Others in the series include: segmentation, innovation management; brand portfolio management; behavioural marketing; loyalty; corporate marketing; and positioning.

Laurie Young is a writer and consultant.

[email protected]

Featured Image: There is a great deal of crossover between the consumer and business sectors, but marketers need to be careful when changing direction