Why is the B2B Model so Difficult?

Data Quality

Of course it depends on the organization, but the data quality issues in B2B companies tend to far overshadow the B2C challenges. Whereas you may have duplicate individuals across disparate systems in a B2C environment, B2B is saddled with duplicate individuals and duplicate organizations. Further complicating the issue is that B2C businesses have a typical hierarchy - consumers and households. However, B2B organizations have a nonstructured and nonstandard hierarchy, even across similar verticals. Endless arrays of departments, divisions, subsidiaries and corporations make it hard to perform apples-to-apples comparisons and analyses across business issue customers.

Perhaps the most frustrating issue is the ambiguity concerning which individuals belong to which organization. Many systems typically accept an order that contains an attention, a business and an address. As long as the product makes it to its destination, the order has been successfully fulfilled. However, this structure makes it very difficult to link a specific person to his or her company. As a result, complicated, expensive matching algorithms are needed to link the two. Often, it is even unclear if the name in a customer field is a person or an entity. Considering how many businesses are named after people (law firms, schools, etc.), it is easy to see how errors can happen.

Loyalty Conundrum

Strategically, B2B companies have a difficult decision to make when it comes to retention, cross selling and migration marketing. They need to ask themselves if they should market to the business advantages of their value proposition or to the personal advantages of the individual buyer.

For example, many employees may look at certain discounts or volume incentives and ask, “What’s in it for them?” Though some employees might see cutting costs as a way to gain management attention and approval, others may look at it as other people’s money. The point here is that if you stress too many business benefits in your loyalty program, you may get a lukewarm reception.

However, presenting too many personal benefits in a loyalty program (such as actual merchandise like TVs and iPods) could bring up ethical issues. Procurement departments and buyers may get cold feet if they think that reward programs could be viewed as skewing their objectivity. Likewise, if you gained the loyalty of an individual and that individual leaves the company, are you left with any type of relationship with the business? You may have to rebuild the entire program with the company if the business itself never saw any benefit from your program.

Analytical Misdirection

In some ways, B2B models are easier to evaluate customers. Due to volume, I have seen many organizations make much more progress with customer value when the customer is the business. The level of aggregation makes it easier to specifically differentiate value from different organizations as well as allocate costs across the different businesses.

However, evaluating the impact of marketing programs can be incredibly difficult. In a B2C world, we have issues with people giving their friends and relatives their catalogs or mailings. Consequently, we don’t know exactly how that customer received the communication. In a B2B model, it is not uncommon to market to one individual in the organization and have the actual order placed by a subordinate, administration or colleague. Attributing responses to marketing stimuli becomes incredibly difficult in the B2B world.

The Customer is Complex

In many ways, the fight over which business model is more complicated, B2B or B2C, is moot. Both models are incredibly complex. Though B2C models may have simpler information requirements, figuring out never-ending interests and tastes of consumers is incredibly difficult. Though B2B models have complicated, closed-loop marketing requirements, they have low volumes and consistent interests.

The interesting trend is that so many companies are turning into hybrid organizations. Many B2B companies are now selling more direct (e.g., consumer packaged goods companies) and several B2C companies are now receiving money from the business sector (e.g., Apple). Enabling the customer intelligence data architectures - once rooted in one business model or the other - to support both models is not an easy task.