Welcome to my new monthly column, in which I’ll be covering many of the issues that will dominate B2B marketing in the future. I’ll be investigating how the ideas of key/major account and mass marketing are influencing each other. These have been partly driven by the new capabilities of the Internet and contact centres, and supported by the ideas of CRM and the experiences of companies that have tried successfully or unsuccessfully to implement them. I’ll be considering how the increasingly advanced information systems and database capabilities have changed what is possible in B2B marketing.
I’ll be digging into some more complex areas, such as how some companies are moving from marketing products and services to solutions and outsourcing. I’ll also be examining how developments in pricing made possible by new technology such as online yield management have affected how companies can manage customers more profitably while maintaining standards of service and customer satisfaction.
I’ll be touching on controversial issues, such as the sometimes negative influence of consultants and other suppliers who claim to be able to transform their clients’ marketing, and how to get rid of bad customers.
However, I’m starting this column with a retrospective on my own experiences of B2B marketing in the last 30 years, summarising what I’ve learnt and what I think the implications of these are. I started in B2B marketing in the late 1970s, when I worked for an engineering supplies company and then for Xerox. At that time the ideas of quality and customer service were making a big impact.
In my first role, I learnt about the close relationship between quality, price and level of service; in this case sales service, rather than after-sales service. The product was integral to customers’ manufacturing processes and being out of stock meant that customers’ production lines halted. Why did such companies learn so late about the relationship between these three variables? The answer is simple. The marketing function was at a primitive stage and focused on marketing communications and distribution channel strategy. Pricing was carried out by straightforward cost-plus methods. Level of service from stock was determined by the factory. In other words, marketing was fragmented.
I analysed the competitive situation and then proposed to the marketing director that prices should be increased, the level of service from stock of the products with the highest demand should be greatly improved and that the weakest products should be deleted from the product range to free-up manufacturing and inventory capacity.
The marketing director refused and I had to go over his head to the MD. I made my case, supported by my colleagues, and the MD agreed with it. The result was a big increase in profits and sales. I learnt that obvious things to a new boy are less clear to those involved for some time. The idea of satisfying customers profitably got lost in complex business rules, so the best/ most profitable customers got the worst service.
At Xerox I was taught another basic truth if your product is unreliable no matter how good your field service then customers will eventually leave, although excellent service can put off the evil day. Xerox understood this and worked hard on product reliability. Here I discovered many of the technical marketing disciplines that have served me well since. I learnt how to build what is now called a data warehouse from sales, service and market research records, to understand the difference between customers’ perceptions of service levels and the levels the company thinks it is delivering.
Throughout the 1980s, I worked on projects later blessed (or cursed) with the name ‘CRM’. These ranged from key account management projects in the IT industry to mass-market B2B projects in telecoms. This was before the Internet. Mobile phones were making their first appearance. Information and coms technology had just started its acceleration. PCs sprouted on desks all over the country. Telecoms liberalisation led to an explosion in the range of services available to companies that wanted to manage customers more efficiently.
It was then that the replacement of field sales people started for all but the most critical tasks of opening and advancing relationships and handling difficult problems. This meant marketing got much more involved in sales process definition and implementation, and in specifying the systems needed to deliver new business and more business from existing customers. The term ‘sales force automation’ dates from this period, and it fell naturally to marketing to drive it forward; few sales directors liked the idea of the shrinking sales force and campaigns run out of the direct marketing department.
Yet, this period laid the foundations for today’s B2B marketing in which the web, email, telemarketing, DM, distributors and yes, still, the sales-force are integrated into a powerful competitive combination marketing proposition. This is composed of product, price, pre and post-sales service and where customers ‘serve themselves’ this marketing, as much as suppliers target customers for receiving it. It’s this new B2B marketing that I’ll be exploring in this column, but as you can see, its roots are deep in the commercial and technological history of the last three decades.
