It’s impossible to read the news today without learning about changing trends in the world of eCommerce. Amazon is constantly making headlines with its increasing market share and new product offerings, Shopify is gaining the attention of businesses from around the world as it starts to expand on an international scale and Adobe recently added to its conglomerates with the acquisition of Magento. However, it is within the less discussed world of B2B eCommerce and not B2C where the real opportunity lies with worldwide B2B eCommerce sales outpacing B2C by more than threefold in 2017. Add to this the fact that most B2B eCommerce orders have a higher than average dollar value, include fewer “one-item” orders which simplify the picking, packing and shipping process, have lower B2B shopping cart abandonment and higher conversion rates, and you have the perfect recipe for market expansion.
A B2B strategy has historically been quite different from that of B2C – and rightfully so. There are many differences between B2B and B2C customer expectations, product offerings, sales experiences and general interactions. B2B purchases are frequently made using objective criteria such as price, warranties and service levels, and the expectation is that B2B vendors automatically design products to meet specifications, comply with regulations, follow ethical practices and compete on pricing. In a recent study by Harvard Business Review, however, research shows that more and more business decisions are based on subjective criteria and that there is actually little difference between B2B and B2C decision making. The study, which outlines the B2B elements of value, and how to measure and deliver what business customers want1, makes the case that traditionally most business decisions were based on rational and quantifiable criteria, but meeting these criteria today is just the cost of entry. Instead, B2B offerings are starting to become more and more commoditized and as a result, customers are making decisions based on subjective and sometimes quite personal feelings – typically more common among B2C purchases. Common examples of subjective criteria include the ability for a product to enhance the buyer’s reputation and reduce anxiety. Understanding the full range of rational and emotional factors that make up the B2B customer experience and the roles these factors have on decision making is imperative to succeed in the market. Businesses need to tailor their value proposition to meet this new way of thinking in order to build customer loyalty and increase sales.
Elements of B2B Value
The study on B2B elements of value aims to help businesses better understand this changing B2B customer landscape. Through the study, HBR categorized elements of value that influence business buying decisions, starting with the more traditional objective elements and then moving on to the more subjective elements. The categories outline how people in corporate roles make purchasing decisions and what motivates them to purchase and use business products and services. These categories are as follows:
- Table Stakes: Table stakes are the bare essentials when it comes to meeting purchasing criteria. These values can be summarized as the ability for a product or service to meet business specifications at an acceptable price, while in compliance with regulations and ethical standards.
- Functional Value: Functional value elements are where most B2B vendors and buyers focus attention. These include features that address a buyer’s product performance needs such as cost reduction and scalability.
- Ease of Doing Business: Elements that increase the ease of doing business include the ability for a product or service to save a company money, reduce the effort of employees, simplify processes and increase organization. These elements are also more traditional in nature and have typically been included in the value proposition of many businesses. However, it is at this point that we start to see some subjective criteria – such as the perceived responsiveness and expertise of the B2B vendor.
Objective values tend to be easier to measure and are more straightforward to compete on, but these no longer have the biggest influence on customer decision making. As technology continues to improve product design, businesses now need to focus attention on more subjective customer considerations and meeting personal customer expectations. The more subjective categories include:
- Individual Value: For employees involved in making purchasing decisions, it is imperative that the supplier provides value to the buyer in terms of their personal priorities or career-related priorities. Buyers who spend large amounts of money and make decisions that affect the company and its employees and revenues, need to feel confident in their decision making without fear of failure. In this regard, the HBR study identified that buyers are looking for a vendor who can increase their marketability or network expansion, provide reputational assurance and offer products that are appealing in design and aesthetics. These elements of value are extremely important as they address highly emotional concerns and most decisions are emotional, not logical.
- Inspirational Value: Inspirational values include the ability for a product/service to help a firm anticipate changes in the market, provide hope for the future of the company and its employees or enhance a company’s social responsibility.
B2B Adoption of B2C Features and Differences
Understanding each value element and determining which ones are most important to your customers will help with the design and implementation of a successful B2B eCommerce strategy. Smart B2B companies are already taking advantage of traditional B2C eCommerce features in order to address more subjective purchasing habits such as:
- Using high-quality images and videos
- Robust onsite search functionality
- Adding social proof in the form of reviews, ratings and testimonials
- Offering personalized product recommendations
- Providing dynamic pricing based on customer information, available promotions, and volume discounts
- Flexible shipping options including in-store pickup, real-time product and stock availability
- Mobile optimization and
- Easy access to a knowledgeable customer service team
Some of these B2C features are actually even more important for B2B customers – for example, site search – as B2B customers need the ability to search by very specific product specifications such as part numbers, manufacturer, product type or item details.
Another option is for B2B companies to take a hybrid approach, where the eCommerce homepage is designed following B2C best practises and then site visitors can log in to a gated B2B back-end site. This makes it easier to capture new leads and rank for SEO, while still providing customers with a personalized, secure experience once logged in. Even with all the similarities between the B2B and B2C shopping experience, there are still significant differences. B2B customers need to be able to easily set up an account to purchase product, which typically involves interaction with a customer service rep to negotiate pricing and terms. Therefore, B2B websites need to make it easy for new customers to sign up for an account. B2B customers also have different pricing. A dynamic website needs to include customer specific pricing as well as functionality for managing volume discounts, promotions and specials in real-time.
B2B eCommerce empowers the customer to take ownership of the purchasing process. Buyers want the option to self-educate as opposed to listening to a salesperson. Product recommendations, similar items, inventory specifications and demonstrations all help make the sales process as efficient as possible. Done properly, B2B eCommerce also has many benefits to the supplier as well, and not just the customer. These benefits include:
- The customer is less likely to complain and make mistakes when they are responsible for ordering product themselves, which in turn, helps to reduce the number of RMAs.
- Your business is able to operate 24/7 without the need to hire additional staff.
- It is often easier to communicate a product’s benefits online with the help of visual aids, specifications and demo videos, as opposed to trying to provide information over the phone.
To succeed in B2B eCommerce, companies need to shift their mindset to follow the best practices of B2C companies and start to learn about which personalized, subjective buying criteria matter most to their customers.
1 Information in this article is based off research from the Harvard Business Review Feature: The B2B Elements of Value. Almquist, Eric, et al. “The B2B Elements of Value”. Harvard Business Review, Harvard Business School Publishing Corporation, 1 Mar. 2018, hbr.org/2018/03/the-b2b-elements-of-value.