Marketing Strategies - The Advantages of Business to Business Vs. Business to People
Sunday, November 24, 2013
When deciding your target audience, you not only have to evaluate whether you want to sell to a specific group of individual consumers, but also whether you might be better off selling to companies instead. Understanding some of the basic differences between a business-to-business model and selling to consumers will help you determine which is best for your business.
Easier to Target Customers
One of the key benefits of using a business-to-business approach is that it’s easier to know exactly who your customers are and how to reach them. When using a business-to-consumer model, you select demographics such as age, sex or race, but people within those groups have different needs. You might also have trouble reaching them with marketing communications based on the many different lifestyles they lead. When you sell to businesses, you can limit your marketing efforts to companies in a specific industry, tweaking your product to serve their exact needs. For example, a company that sells accounting software might create programs for the health care industry. You’ll have an easier time marketing to businesses, using targeted sales calls, mailings to their offices, booths at trade shows and ads in industry business magazines.
Larger Orders
Businesses often buy in bulk or place large orders. Depending on what you sell, you’ll obtain economies of sales that decrease your costs and increase your profit margins using a business-to-business model. Not only will you get large orders, but you also might have less warehousing and shipping to deal with, reduced customer service needs and less accounting work. While limiting your business to serving only a few customers is risky, the fewer customers you have generating the same sales volume, the bigger your margins.
Better Customer Service
The fewer customers you have, the better you can serve them. With a business-to-business model, you won’t need to rely on thousands of customers to make your sales goals and won’t have to service that many customers. Many business-to-business models rely on sales representatives who develop long-term relationships with customers. This allows clients to have one main point of contact with your company who has a vested interest in their success. Many business-to-business companies develop a consultative selling approach, working with clients to better understand how the customer uses the seller’s products. This helps foster long-term relationships.
More Level Cash Flow
When you rely on businesses for your sales and revenues, you often have an easier time projecting and managing cash flow, or the timing of the money you receive. Unlike companies that rely on sales from the general public, business-to-business companies can manage order fulfillment better. For example, your business can work out delivery and payment schedules with customers who order on a regular basis to help avoid busy periods that stress your resources and downtimes that keep your facilities and workers idle. You can set up payment plans with business customers that allow them to pay smaller amounts each month, rather than large lump sums two or three times during the year. This can help you keep an even flow of money coming into your business.
Tags:
Marketing, Marketing Strategies
Easier to Target Customers
One of the key benefits of using a business-to-business approach is that it’s easier to know exactly who your customers are and how to reach them. When using a business-to-consumer model, you select demographics such as age, sex or race, but people within those groups have different needs. You might also have trouble reaching them with marketing communications based on the many different lifestyles they lead. When you sell to businesses, you can limit your marketing efforts to companies in a specific industry, tweaking your product to serve their exact needs. For example, a company that sells accounting software might create programs for the health care industry. You’ll have an easier time marketing to businesses, using targeted sales calls, mailings to their offices, booths at trade shows and ads in industry business magazines.
Larger Orders
Businesses often buy in bulk or place large orders. Depending on what you sell, you’ll obtain economies of sales that decrease your costs and increase your profit margins using a business-to-business model. Not only will you get large orders, but you also might have less warehousing and shipping to deal with, reduced customer service needs and less accounting work. While limiting your business to serving only a few customers is risky, the fewer customers you have generating the same sales volume, the bigger your margins.
Better Customer Service
The fewer customers you have, the better you can serve them. With a business-to-business model, you won’t need to rely on thousands of customers to make your sales goals and won’t have to service that many customers. Many business-to-business models rely on sales representatives who develop long-term relationships with customers. This allows clients to have one main point of contact with your company who has a vested interest in their success. Many business-to-business companies develop a consultative selling approach, working with clients to better understand how the customer uses the seller’s products. This helps foster long-term relationships.
More Level Cash Flow
When you rely on businesses for your sales and revenues, you often have an easier time projecting and managing cash flow, or the timing of the money you receive. Unlike companies that rely on sales from the general public, business-to-business companies can manage order fulfillment better. For example, your business can work out delivery and payment schedules with customers who order on a regular basis to help avoid busy periods that stress your resources and downtimes that keep your facilities and workers idle. You can set up payment plans with business customers that allow them to pay smaller amounts each month, rather than large lump sums two or three times during the year. This can help you keep an even flow of money coming into your business.
