In B2B, whether you provide a product or a service, you must first think about how to meet the needs of other companies. And the needs of a company, whether it is a product or a service, are basically the needs of the businessman behind it.
1. Multiple decisions and multiple account settings
The first challenge is the most important in the B2B sector.
The biggest difference between B2B and B2C is that in B2B, multiple people are involved in decision-making.
Even in the smallest B2B area, the family store, several people are still involved in decision-making and teamwork. Because of the multi-person decision-making within the company, the first thing B2B companies should consider is to build a multi-account system.
Setting up a transaction account is relatively easy. Usually, you set up a main account and a sub-account. h. There is an account for operators and an account for management.
Why? Because these two account types meet the unique needs of users. In addition to sub-accounts, you need parallel accounts. Such accounts are from the Procurement department linked to the Accounting department, and these individual departments have their own requirements.
2. The Four Key Players in B2B Direct Marketing
Whether B2B is a product provider or a service provider, on-site marketing is necessary. This is determined by the attributes of multi-person decision-making. B2C often identifies target markets based on demographic data, but this is difficult for B2B. Therefore, on-site marketing is a must. On-site marketing is key to the success of your B2B business, but it doesn’t mean you should blindly invest in on-site marketing.
How do you evaluate your direct marketing campaigns? It’s easy. Just look at four different metrics at different stages: coverage rate, conversion rate, purchase rate, and penetration rate.
Does your product or service have a strong unique selling point that is difficult to substitute? The key is penetration rate. The higher the penetration rate, the less likely customers are to replace your product or service.
3. B2B transactions are unique and price transparency is difficult
The special characteristics of B2B transactions make price transparency difficult. In fact, there should be no price transparency at all.
First, different purchase quantities result in different prices. Second, different payment terms result in different prices.
The delivery location also affects the price. Moreover, prices and costs are confidential and cannot be disclosed to the public or third parties. These are all characteristics of B2B business and cannot be changed even in the age of the Internet. Many B2B companies tell their customers that their prices are transparent because they cut out the middleman, but this is not only impossible but illogical.
Small businesses need to compete on the basis of value and not just price. Pursuing the cheapest provider usually prevents companies from reinvesting profits in product development and improving service levels.
4. The B2B experience is key – “More, faster, better quality, less cost”
Both B2B and B2C customers have the same user experience that revolves around four words: “More quantity, faster delivery, quality products, less cost.” However, it is impossible to achieve all four in either B2C or B2B, so you need to prioritize.
Companies such as China’s Xiaomi focus on “quantity” and “savings”, while Apple focuses on “speed” and “quality”. The pursuit of “quantity, speed, quality, and savings” has not changed at all since the days of merchants. You still need to choose one or the other.
Even two companies in the same industry often have different needs because the needs of the businessmen behind them are different. There’s no need to talk about how “fast” you can serve small businesses, because they typically have a lot of time, but not as much access to capital or small business working capital financing, and even fewer business opportunities.
However, small businesses tend to pay you based on performance. Does your product or service make a difference? Does it create more business opportunities for your customers?
5. Breakdown of information flow, logistics, and capital flow
In traditional B2B, all costs, such as information costs, logistics costs, and capital costs, are often combined and reflected in the final price. For example, the price of frozen chicken air-shipped from Brazil to Singapore will also cover all the above expenses.
In the Internet era, B2B transactions need to find a way to clearly calculate these three costs. Information flow refers to the profits gained from information distribution and arbitrage, and capital flow refers to the profits from financial activities, and there are also logistics costs.
If capital injection brings a positive ROI, a temporary bridge loan or other loan made to raise business capital may not necessarily be a bad option. You need to calculate all three and analyze each separately. Your goal is not to be profitable on all three, but to be profitable on one or two of them.
Managing your business processes helps you correlate costs and prices, allowing you to offer some services for free where others require a fee.
6. The financial core of B2B supply chain consists of “chain” and “credit”
Doing business in B2B, you also need to think about financing options. In fact, unless your business is 100% cash on delivery, you probably need financing. How? There are two types of business loans suitable for B2B supply chain financing in Singapore: One of them is “supply chain finance.” What do you mean by “chain”? There must be two parts that are linked together. Supply chain finance must include at least two transactions, two trades.
Take a small sugar manufacturer for example. Whenever the manufacturer has to harvest the sugarcane, he is short of capital, but financiers can’t just give him a small business loan. What if the manufacturer used that money for real estate or stocks? Instead of using sugarcane? So the financier grants the loan on the condition that they have ownership of the sugarcane. The loan amount must correspond exactly to the price of the sugarcane, i.e. the financier actually buys the sugarcane for the manufacturer.
There is also “trade finance”. Trade finance is a form of import finance where the bank funds the borrower’s inventory purchases. The borrower can then get loan terms from the bank, usually a 90-day payment term. There are many other creative ways to structure fundraising for your B2B business, so think outside the box.
7. B2B needs to be managed across different categories and levels.
The 80/20 principle states that 80% of your revenue comes from 20% of your customers. If you take a closer look at your sales breakdown, you might see the 80/20 principle. If your business model is based mainly on customer acquisition, with a good diversification of customers contributing almost equally to your revenue, then focus on your product mix or sales team.
Here we see the 80/20 principle at work, where 20% of your product-service mix contributes to 80% of your revenue. Or the top 20% of your sales team generates 80% of your total sales.
Therefore, it is important to segment your customers and/or products/services and manage them in different categories. Of course, it is important to put more resources into the 20% of your product mix that generates the majority of your sales. You should also eliminate 80% of product lines that are not increasing overall sales.
Segment your best and largest customers and focus your customer service team on them. There are different levels of buyers and sellers. You need to provide the most value to your best customers in every transaction with your company. B2B sales are structured more complex than personal sales. You need labels. Different customer levels and different privileges. The more a particular customer contributes to your revenue and the faster they pay, the more privileges, value and better pricing they should get.
