Many online B2C operations came under fire and then went under, period, for extravagant spending on marketing. But while B2C spending was overblown and flawed, a study by Accenture found that B2B concerns aren’t marketing at all.
Accenture’s study found that in their effort to grab a piece of the B2B pie, companies rushed to gain first-mover advantage without truly understanding what drives value in online B2B brands suggesting a blind spot by executives to the importance strategic marketing plays in achieving corporate objectives.
The key finding in the report underscores that a familiar, reputable brand is the single most important buyer preference by a wide margin followed by service, price and variety. Moreover, for 80 percent of the buyers in B2B, price is even less important in online buying decisions.
“The findings in our study were counterintuitive to what we would believe to be the case in B2B, which is that price matters first,” said Stephen Dull, partner in Accenture’s Convergence Marketing practice. “You can’t compete in B2B if your only differentiator is price or any of the four Ps of marketing (price, product, promotion and place of distribution), for they are mere commodities. Focusing your attention on the customer is where companies will rise above the noise.”
The study also discovered that, while the B2C market has had many high-profile customer service issues, the level of customer satisfaction online is lower in B2B than it is in B2C. The report refers to this as symptomatic of a failure to identify and respond to the real demands of the market. Less than half of B2B customers said they were very satisfied with their online purchasing experience compared to 52 percent of B2C buyers.
“It appears that some of the lessons learned in B2C do have relevance in B2B, like adhering to the fundamental principles of Marketing 101, which is to deliver a superior online experience that is relevant and targeted. However, as our study reveals this has not been the case. Albeit not apples to apples, certain truths in B2C do apply to B2B and to ignore the common ground is myopic,” Dull said.
Accenture’s study also debunked certain myths about the B2B space:
Myth #1: B2B is big, but don’t jump on the bandwagon yet, because like in B2C, it has been dramatically overhyped.
Reality: The backlash in B2C has caused the pendulum for B2B to swing too much the other way. Not only will B2B continue growing, it will be very big. Currently, more than half of all businesses are not purchasing goods online. Of those, 45 percent of them buy less than 5 percent over the Internet. Part of this is experience: of those businesses that do buy online, 69 percent have been purchasing through this channel for less than two years. Purchases tend to grow (and rapidly) as buyers become familiar with the medium and the seller’s offering, suggesting the B2B market is trending to be very big.
“B2B is still in its infancy. Imagine if industrial marketers spent half as much effort as their B2C counterparts in creating a rewarding online experience for their customers, the adoption rate of e-commerce in B2B would skyrocket,” said Mark Wolfe, partner in Accenture’s Customer Relationship Management practice. “The numbers speak for themselves as to the role marketing plays and more importantly the price this blind spot is costing companies in untapped opportunities not to mention efficiencies.”
Myth #2: The Internet has made B2B in the New Economy easier than in the Old Economy. Also, because the Internet is borderless, global commerce is a mouse click away.
Reality: New Economy B2B is much more complex than B2C because there are more variables to manage. This finding suggests that it’s more important to take the time to do it right than to be the first one out of the gate. Additionally, whereas a benefit of B2B is to facilitate global commerce, the reality is that doing business globally is also very complex. As the study reports, 19 percent of global companies (operating in more than five countries) do 25 percent or more of their purchases online versus 34 percent of international companies (operating in less than five countries) do 25 percent or more of their purchases online.
Myth #3: In terms of presenting easy open access for companies large and small to come together to buy and sell, the Internet levels the playing field.
Reality: In terms of execution, it’s widening the gap. Supporting e-branding research suggests that large companies conduct more of their purchasing online than do small and midsize companies. Of the roughly half of companies purchasing online, 23 percent of large companies conduct over a quarter of their purchases online compared to 18 percent of small and midsize companies. Only 34 percent of small to midsize companies are very satisfied with their providers, whereas 52 percent of large companies are very satisfied. It may simply be because few B2B providers are satisfying small companies adequately.
“Our study revealed that whereas in B2C there was too much marketing, we found that B2B did very little marketing if at all. The fact is that neither approach is correct with a lack of marketing being the worse of the two because of the sheer size of the space,” said Brian Johnson, partner at Accenture’s Customer Relationship Management practice.
Accenture’s study polled close to 1,000 purchase decision makers, specifically screening for those who purchase or transact online. The online purchasing respondents represent companies or business units across eight industries, totaling $700 billion in revenue.