Can a B2B Ecommerce Site Really Attract New Customers?
Everyone is selling improved business processes to wholesalers, but it’s often better to sell an ecommerce storefront to your boss with more revenue than reduced expenses. Our survey respondents’ agree: B2B professionals were more than twice as likely to say that acquiring new customers to grow revenue would be more effective positioning than reducing reliance on manual processes to reduce operating costs. Not to mention, those that were already selling online were more than three times as likely to say that acquiring new customers was a more effective way to position an ecommerce site to decision-makers. Still, while selling growth may be a more effective way to position an investment, should you play it safe?
If you find yourself in the quarter of people who think efficiency is the way to go, I’ve got two good reasons why you may want to focus on gains.
First, the theory of loss aversion tells us that people prefer avoiding losses to making gains. Researchers have put forward that a loss is twice as psychologically powerful as an equivalent gain. In other words, people are twice as likely to avoid a $5 loss versus a $5 gain to revenue or reduced expense. So either way, to persuade your team to make an investment, a reduced expense or added revenue has to double potential losses. Since you can never cut more than 100% of costs, but can gain an infinite amount of revenue, new gains might be the only way to double the risk.
For example, an enterprise B2B site might cost $500k. How much time would it take for an ecommerce site to save you a million dollars in operational expenses? Now how long would it take to earn a million dollars from new customers? If you do $50m online, you need a 2% increase to revenue to earn a million dollars. If your operating expenses are $10m, you’ll need to reduce costs by 10%. How many jobs is that? Without the promise of new customers, it’s hard to imagine a scenario where such a large capital investment can be justified.
Second, the process of selling efficiency is riskier than selling new revenue. You can sell a large investment well if you can describe all the negative implications of the problem in excruciating detail and get the other person to ask for a solution. Sales reps are good at this, but you will probably be the one who has to sell your boss. If you describe the problems and the negative implications well enough, but can’t get them to buy into the solution, all you’ve done is paint an ugly picture of your current sales model. With that, good luck in your next annual review.
Now for those of you focused on gains, consider the risks of your approach as well. Say your new site launches. In six month’s time (maybe less), you’ll be asked to review your results. If you sold your boss or peers on new revenue but instead cut overhead, it isn’t the end of the world. Slashing operating costs is going to give you an improved margin and something to stand on, even if top-line revenue didn’t move very much. However, a good boss is going to hold you accountable to your promises. If you didn’t genuinely believe in the possibility of new revenue when you made those claims, then you’ve compromised your integrity (not to mention your credibility). There are some questions you might want to ask, which will provide you with the confidence that a B2B ecommerce site really can attract new customers.
- Is there a customer group out there who isn’t buying from you at all because they want to buy online? How do you know? Have you done the market research? Can you afford to improve brand awareness and market the new site to that new customer base? Do you have the expertise and the time to create marketing campaigns and online content to educate prospective customers on your products?
- Do you have the budget to build an ecommerce solution and customer experience that satisfies the expectations of such a market and retains that new business? Can you afford platforms and tools that enable you to meet their technology demands? Do you know what this will cost you after launch? Will you be able to get approval for ongoing feature development? Does your management team prefer to feel pull before acting or are they proactive?
- When you think about an ecommerce site, is it solving your problems or the problems of your customers? Which customers will be helped the most?
- What’s your customer acquisition rate? How many customers do you lose in a year? Have you reached out to former customers to see why they left? How many are left for competitors who simplified transactions or provided value through ecommerce? How much is that lost loyalty worth to you? Do you have have a process to improve customer engagement with existing customers?
- How many hours will this free up for sales reps? Given all that liberated time, is your sales team trained to find and close new business or just to retain and fulfill orders? If not trained, do you have the budget to hire sales reps who are trained to find new business or spend money training your current staff? Will you leverage those salespeople in new ways or will you make cuts?
Those should be enough to create many more relevant questions, the answers to which will help you make your decision.
Have you downloaded Blue Acorn iCi’s B2B Digital Transformation Workbook? Click here for key insights and an interactive worksheet to master digital transformation.
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