Business-to-business marketers are using every marketing tool at their disposal to attract and retain customers. They are embracing systems selling and adding valuable services to their product offerings and employing customer reference programs and a wide variety of online and offline communication and branding activities.
1. COMMUNICATION AND BRANDING ACTIVITIES
Business marketers are increasingly recognizing the importance of their brand. Swiss-based ABB is a global leader in power and automation technologies with 145,000 employees in about 100 countries. The company spends $1 billion in R&D annually to fuel a long tradition of groundbreaking and nation-building projects. An extensive and carefully planned rebranding project in 2011 evaluated five alternative positioning platforms, concluding that ABB should stand for “Power and Productivity for a Better World.” Magazines, posters, brochures, and digital communication were all revamped to give the brand a new look.46 NetApp is another good example of the increased importance placed on branding in business-to-business marketing.47
NETAPP NetApp is a Fortune 1000 company providing data management and storage solutions to medium- and large-sized clients. Despite some marketplace success, the company found its branding efforts in disarray by 2007. Several variations of its name were in use, leading to a formal name change to NetApp in 2008. Branding consultants Landor also created a new identity, architecture, nomenclature, tone of voice, and tagline (“Go further, faster.”). Messages emphasized NetApp’s superior technology, innovation, and customer-centric “get things done” culture. Some marketing efforts still left a few things to be desired, however. Called “Frankensites” because they had been modified by so many developers over a 12-year period, the company’s Web sites were streamlined to organize the company’s presentation and make updates easier. The new Web sites were estimated to increase sales leads from inquiries fourfold. Investing heavily in marketing communications despite the recession, NetApp also ran print and online ads and tapped into a number of social media outlets—communities and forums, bloggers, Facebook, Twitter, and YouTube. Social media initiatives helped it in Asia where it did not have an advertising presence.
In business-to-business marketing, the corporate brand is often critical because it is associated with so many of the company’s products. At one time, Emerson Electric, a global provider of power tools, compressors, electrical equipment, and engineering solutions, was a conglomerate of 60 autonomous—and sometimes anonymous—companies. A new CMO, Kathy Button Bell, aligned the brands under a new global brand architecture and identity, allowing Emerson to achieve a broader presence so it could sell locally while leveraging its global brand name. She also took on the challenge of strengthening the corporate brand online. A global consolidation cut the number of company Web sites in half; Web sites and marketing campaigns were translated into local languages around the globe; and social media platforms were built out. Record sales and stock price highs have followed.48 SAS is another firm that recognized the importance of its corporate brand.49
SAS With sales of more than $2.3 billion and a huge “fan club” of IT customers, SAS, the business analytics software and services firm, seemed to be in an enviable position in 1999. Yet its image was what one industry observer called “a geek brand.” To extend the company’s reach beyond IT managers with PhDs in math or statistical analysis, the company needed to connect with C-level executives in the largest companies—people who either didn’t have a clue what SAS’s software was or didn’t think business analytics was a strategic issue. Working with its first outside ad agency ever, SAS emerged with a new logo, a new slogan, “The Power to Know®,” and a series of TV spots and print ads in business publications such as BusinessWeek, Forbes, and the Wall Street Journal. One TV spot that exemplifies SAS’s rebranding effort ran like this:
The problem is not harvesting the new crop of e-business information. It’s making sense of it. With e-intelligence from SAS, you can harness the information. And put the knowledge you need within reach. SAS. The Power to Know.
Later research showed that SAS had made the transition to a mainstream business decision-making support brand and was seen as both user-friendly and necessary. Highly profitable and now one of the world’s largest privately owned software companies, more than doubling its revenue stream since the brand change, SAS has met with just as much success inside the company. For more than 15 years, Fortune magazine has ranked it one of the best U.S. companies to work for.
Here are some examples of the way top firms are redesigning Web sites, improving search results, engaging in social media, and launching Webinars and podcasts to improve their business performance through their B-to-B marketing.
Chapman Kelly provides audit and other cost-containment products to help firms reduce their health care and insurance costs. The company originally tried to acquire new customers through traditional cold calling and outbound selling techniques. After it redesigned its Web site and optimized the site’s search engine so the company’s name moved close to the top of relevant online searches, revenue nearly doubled.50
- Emerson Process Management makes automation systems for chemical plants, oil refineries, and other types of factories. Readers like to hear and swap factory war stories on the company’s blog about factory automation, which attracts 35,000 to 40,000 regular visitors each month and generates five to seven leads a week. Given that its systems sell for millions of dollars, ROI on the blog investment is immense.51
- Machinery manufacturer Makino builds relationships with end-user customers by hosting an ongoing series of industry-specific Webinars, averaging three a month. The company uses highly specialized content, such as how to get the most out of machine tools and how metal-cutting processes work, to appeal to different industries and different styles of manufacturing. Its database of Webinar participants has allowed the firm to cut marketing costs and improve its effectiveness and efficiency.52
- Canadian supply-chain management company Kinaxis uses a fully integrated approach to communications including blogs, white papers, and a video channel that hinges on specific keywords to drive traffic to its Web site and generate qualified leads. With research suggesting that 93 percent of all B-to-B purchases start with search, Kinaxis puts much emphasis on search engine optimization (SEO), reusing and repurposing content as much as possible to make it relevant and “Google-friendly.”53
Some business-to-business marketers are adopting marketing practices from business-to-consumer markets to build their brand. Xerox ran a fully integrated communication campaign to cleverly reinforce the fact that 50 percent of its revenue comes from business services and not copiers. Here is how its Marriott ad unfolded:54
Two Marriott bellmen are sitting in an office. “Did you finish last month’s invoices?” one asks the other.
“No, but I did pick up your dry cleaning and have your shoes shined,” the second replies. “Well, I made you a reservation at the sushi place around the corner!” the first bellman says. This voiceover follows: “Marriott knows it’s better for Xerox to automate their global invoice processes so they can focus on serving their customers.”
Sometimes a more personal touch can make all the difference. Customers considering dropping six or seven figures on one transaction for big-ticket goods and services want all the information they can get, especially from a trusted, independent source. “Marketing Memo: Spreading the Word with Customer Reference Programs” describes the role of that increasingly important marketing tool.
2. SYSTEMS BUYING AND SELLING
Many business buyers prefer to buy a total problem solution from one seller. Called systems buying, this practice originated with government purchases of major weapons and communications systems. The government solicited bids from prime contractors that, if awarded the contract, became responsible for bidding out and assembling the system’s subcomponents from second-tier contractors. The prime contractor thus provided a turnkey solution, so-called because the buyer simply had to turn one key to get the job done.
Sellers have increasingly recognized that buyers like to purchase in this way, and many have adopted systems selling as a marketing tool. Cisco Systems began to take share from telcommunications rival Avaya by offering customers a one-stop solution for communications technology.55 Technology giants such as Hewlett-Packard, IBM, Oracle, Dell, and EMC are all transitioning from specialists to competing one-stop shops that can provide the core technology necessary as businesses shift to the cloud.56
One variant of systems selling is systems contracting, in which a single supplier provides the buyer with its entire requirement of MRO supplies. During the contract period, the supplier also manages the customer’s inventory. Shell Oil manages the oil inventories of many of its business customers and knows when they require replenishment. The customer benefits from reduced procurement and management costs and from price protection over the term of the contract. The seller achieves lower operating costs thanks to steady demand and reduced paperwork.
Systems selling is a key industrial marketing strategy in bidding to build large-scale industrial projects such as dams, steel factories, irrigation systems, sanitation systems, pipelines, utilities, and even new towns. Project engineering firms must compete on price, quality, reliability, and other attributes to win contracts. Suppliers, however, are not just at the mercy of customer demands. Ideally, they’re active early in the process to influence the actual development of the specifications. Or they can go beyond the specifications to offer additional value in various ways, as the following example shows.
SELLING TO THE INDONESIAN GOVERNMENT ment requested bids to build a cement factory near Jakarta. A U.S. firm made a proposal that included choosing the site, designing the factory, hiring the construction crews, assembling the materials and equipment, and turning over the finished factory to the Indonesian government. A Japanese firm, in its proposal, included all these services, plus hiring and training the workers to run the factory, exporting the cement through its trading companies, and using the cement to build roads and new office buildings in Jakarta. Although the Japanese plan would cost more money, it won the contract. Clearly, the Japanese viewed the problem not just as building a cement factory (the narrow view of systems selling) but as contributing to Indonesia’s economic development. They took the broadest view of the customer’s needs, which is true systems selling.
3. MARKETING MEMO Spreading the Word with Customer Reference Programs
In a networked economy, buyers increasingly rely on the input of others to help them make purchase decisions. One way to entice or reassure potential new buyers is to create a customer reference program in which satisfied existing customers act in concert with the company’s sales and marketing department by agreeing to serve as references. Technology companies such as HP, Lucent, and Unisys have all employed such programs.
Buyers can interact with a company and its customers in a variety of ways—via social media; conferences, events, and trade shows; and their own personal and professional networks. Companies need to recognize the importance of peer-to-peer interaction and know how they can assist a potential buyer. One expert offers the following advice:
- Establish a formal, organized customer reference program to build an army of advocates.
- Put references at the center of your growth strategy.
- Give your customer reference program a seat at the table by using an experienced executive as its leader.
- Don’t strive for “100 percent referenceability”—put focus on a smaller group of truly committed, impactful company advocates.
- Revolutionize your customer value proposition; find customers who want to be advocates because of their passion for the company and not as the result of any financial inducement.
Research has shown that another potential benefit of a customer reference program is that it can increase the loyalty even of the customer advocates themselves.
Sources: V. Kumar, J. Andrew Petersen, and Robert P. Leone, “Defining, Measuring, and Managing Business Reference Value,” Journal of Marketing 77 (January 2013), pp. 68-86; David Godes, “The Strategic Impact of References in Business Markets,” Marketing Science 31 (March—April 2012), pp. 257-76; Bill Lee, “Customer Reference Programs at the Tipping Point,” HBR Blog Network, June 7, 2012.
4. ROLE OF SERVICES
Services play an increasing strategic and financial role for many business-to-business firms selling primarily products. Adding high-quality services to their product offerings allows them to provide greater value and establish closer ties with customers.
A classic example is Rolls-Royce, which has invested heavily in developing giant jet engine models for the new jumbo planes being introduced by Boeing and Airbus. An important source of profits for Rolls-Royce, beyond selling engines and replacement parts, is the add-on “power by the hour” long-term repair and maintenance contracts it sells. Margins are higher because customers are willing to pay a premium for the peace of mind and predictability the contracts offer.57
Technology firms are also bundling services to improve customer satisfaction and increase profits. Like many software firms, Adobe Systems is making the transition to a digital-marketing business with cloud-based monthly subscriptions. Revenue is increasing because the company is able to sell support services, Web site hosting, and server management to its cloud customers.58
All kinds of firms are finding ways to bundle value-added services to their products. Italian firm Mondo makes state-of-the-art running tracks for stadiums all over the world. Despite competition, it has continued to win new clients, such as the London Olympics, in part because of the installation and maintenance services it offers.
Source: Kotler Philip T., Keller Kevin Lane (2015), Marketing Management, Pearson; 15th Edition.