BTB vs. BTC Database DM: 7 Crucial DifferencesDuring my seminars, everyone asks about the differences between business-to-business and business-to-consumer. This question comes up so frequently that some light should be shed on the subject.
From working many years in BTB, I found that there are some immutable rules and distinctions that highlight the differences.
Marketers trying to move adroitly between these two areas find themselves with perceptions that do not hold true. Frequently there is a gap in direct marketers' understanding of the differences between issues faced in consumer markets and issues in business markets. The following are the most significant differences between the two.
The market size. Consumer markets are measured in the millions, while only a few BTB firms have customer bases in the millions. On the other hand, the dollar value of each customer in business markets is significantly higher than in the consumer market.
The buying process. In the business market the buying process is much longer and at times involves many people, from individuals who specify to purchasing agents. It is not unusual to have a six- to nine-month buying cycle involving five to 10 people as both decision influencers and decision makers.
The selling process. In a corollary to the buying process, the selling process for business markets is also vastly different from that of consumer markets. In addition to highly paid field salespeople in business markets, there are frequently distributors, business partners or independent representatives who are engaged not only in selling, but also in the fulfillment of products or services.
The cost of a sale. As a result of the selling process, the cost of a sale is much higher for business markets. Average sales call costs now average $350 to $400, and in a complex solution there may be a need for eight to 10 calls or more to close a sale. This is in addition to all the advertising and marketing expenses that may have been spent to generate inquiries and qualify leads.
The value of a sale. Balancing out the cost is, of course, the value of the sale. Not only is the initial transaction value measured in hundreds, if not thousands, of dollars, but also the likelihood of ongoing sales is often high. As a result, the lifetime value of each customer can be measured in hundreds of thousands, if not millions, of dollars spanning many years.
Data quality. For database marketers, BTB is full of frustration, since data quality is far below consumer standards. This can be partially understood, as recent research has shown that 72 percent of businesspeople have had one or more changes in their business cards during the past 12 months. There is no national change of address card that tracks changes in businesspeople's addresses. This is just one problem faced in data quality.
Lead generation vs. sale. Most BTB campaigns are devoted to generation of an inquiry that is subsequently qualified to a lead. In the consumer world, only a small fraction of marketing communication is for lead generation, while the majority is to generate a direct sale. This places a greater emphasis on creating offers that are much different from those used in consumer programs.
There is more depth to each difference listed above and more unique factors, but these seven differences must be understood to develop and execute a BTB database/direct marketing campaign. Practitioners wading into BTB need to know that this is an entirely different and, in many ways, far more complex area for database marketing.