Opening business to new customers

Written on May 2, 2010 – 10:40 pm | by Michael Harris

As businesses are adapting to our changing market place, owners are being forced to morph into new creatures that look, act and respond differently to the marketplace.

Determining whether or not you’ll be able to adapt may determine whether or not you’ll be able to survive.

I was recently sent an email that asked this question:
Dear Matt,

I have been operating a local specialty retail shop for the past several years. Sales are okay, but as I’m sure most retailers would say, I’d like to increase my revenues. Do you have any thoughts about how?

My answer was:

When it comes to most retail businesses, I see the trap that is set for you. It is easy to get focused on serving your client, which is generally the end consumer of what you sell. I like to expand the horizons of retailers and ask them if they’ve ever thought about selling their products to other businesses. This may take some adaptation of what you currently offer in a business to consumer (B2C) marketplace, and it will certainly require a shift in thought process, but these modifications can prove very valuable in a business to business (B2B) marketplace.

Let me encourage you to take a close, hard look at what you’re selling and suggest that you have a product that businesses will buy. Even if you sell nothing but wrapping paper, which seems inherently B2C oriented, there is a business out there that is looking for a creative way to present their product to their customer, and wrapping it in your wrapping paper may be the answer to their solution. For example, think of all of the online retailers made possible by eBay, Amazon and Etsy. You can add value to their product by getting them to gift wrap their products before shipping them, charge more for the wrapping and therefore make more profits.

Obviously that was a quick stab at how to take a B2C product and introduce it to a B2B market. Before jumping into the B2B market however, there are three things you should be aware of.

1. B2B clients are not just for-profit businesses. The B2B market is made up of three distinct groups. These groups, Businesses, Institutions (health care, education and non-profit) and Government (federal, state and local) each operate differently enough that big businesses actually have divisions that market only toward one and other divisions to the other two.

In the same way you have to understand what motivates your Consumer market to buy from you, you have to learn what motivates each of the sections of the business market to buy.

2. The length of the relationship you will develop will be much longer than a B2C market. Think of B2C sales as a night at the clubs. After a few drinks you’re hoping someone, anyone will buy what you’re selling and take you home with them that night. In a B2B market it’s more long walks on a beach talking about how many children you want to have someday.

B2B sales are comprised of a series of encounters, where the purpose of each encounter is not necessarily to close the deal, but rather to advance the relationship on to the next stage. According to the Journal of Marketing, these stages include identifying and categorizing customer segments; determining a customer’s current and potential needs; visiting customers to learn about the uses and applications of individual products; developing and executing the individual components of sales, advertising, and promotion; assessing price sensitivities; and determining customer response to rivals’ current and potential offerings.

All in a day’s work right? Well, maybe a few days, but expanding your market isn’t going to be easy, regardless of how you try to slice it.

3. You have to find your value proposition. If I’m hungry, the first fast food place I drive by has a value proposition. If I’m bored, the first movie theater has a value proposition. In B2C markets, value propositions can be relatively simple if you understand the basic psychology of which need your product meets. Things like physiological, safety, social acceptance and self worth are primal urges the consumer bases many purchasing decisions on.

Look deeper into the basic marketing mix of product, price, place and promotion you’ve established your B2C market on. Price may be tough to compete on, especially if you are not the wholesaler or even the manufacturer of the product, so look to adding value to other areas like place or promotion. Can you supplement their current promotional efforts by cross promoting what they sell?

Before I became a refugee of Iowa and took up permanent residence in Colorado, we used to stop at King Super to buy our lift tickets on the way up to the mountains. While we stopped, we also got all of our groceries we needed for the week as well, all because of the cross promotion between two consumer oriented markets.

The B2B market is vast ,and full of etiquette that the B2C market doesn’t practice, but if you spend time learning and working on it, it can prove to be a valuable expansion.

Perfect Business!