Spawn New Business
How to Build a B-to-B Program From Your Computer Catalog
By Steve Trollinger
Every day catalogers are looking for ways to grow the business and maximize the bottom line. Consumer catalogers, in particular, with tightly defined markets or highly specialized product offerings are constantly in pursuit of the next idea. Well, here's one to consider: Build a business-to-business (B-to-B) program from your consumer catalog platform.
Business buyers have a different behavior dynamic than consumers. They may make several purchases over the course of the year at $500 or $1,000 on average, compared to consumer buyers who may make three or four purchases for $50 or so. As a result, business purchases tend to have much higher average order values and better overall margins.
The sales effect of having business buyers on the file is obvious. What may be less obvious is that each business buyer, as well as every person it ships or distributes your product to, becomes a new prospect for a consumer offering. But how do you know if a B-to-B program is right for your consumer catalog?
Evaluate Core Competencies
To determine if a business offering is a fit for your consumer catalog, you'll need to look at the core competencies of your catalog business—merchandising, creative, marketing and operations. So, what do you look for?
The first issue to address is whether or not your catalog's core product offering is sufficiently suited to a business audience. Steaks, fruit, muffins, popcorn—they all make great gifts for Grandma, right? Why not client gifts, employee rewards and office party favors? Gift and food mailers probably have among the greatest opportunities of building business programs from consumer merchandise assortments.
Apparel catalogers also can build strong business programs provided they can differentiate their brands from the proliferation of business specialty companies. Lands' End is a great example of a company leveraging its appeal in the consumer marketplace to build a successful business offering.
Hard goods mailers may not have the obvious opportunities that others might, but the potential is still there for building a business program.
The key is to be able to address a few fundamental issues:
>Is your core product suited to a business audience? Can you position what you sell as a corporate use item? Unless you have strong relationships in place with key suppliers, it's often difficult to establish a completely new product line to reach a business audience.
>Can you bring in ancillary products or services to address the needs of business customers? Do you have relationships in place that would allow you to bring in a mug and coffee, for example, to go with the muffins you sell to make a reasonably priced corporate gift? Can you put a logo on a product?
>Can you source products exclusively for a business audience? Exclusive business products says your catalog is "in the business" of selling to businesses.
>Are your margins strong enough? If you are a reseller of consumer electronics it may be difficult to squeeze the margins necessary from vendors or manufacturers to offer major price incentives to business buyers and still keep the bottom line acceptable. In this case, the challenge becomes cultivating those key customer service functions to build better customer experiences that allow buyers to see past price to how good you make them look to their bosses or peers.
Once you know for certain you can and do sell products that businesses buy, the foundation is set to build a program. From here you must address the creative platform, the marketing effort and the operations implications.
Looking the Part
The creative platform for a consumer business book doesn't have to be a complete re-creation or brand new design. It does, however, need to be directed at the business buyer. You still have to convey the message that your catalog is not only great for personal use, but it also meets their business needs.
Consider using outer wraps, cover versioning, special inserts or special design treatments to make the offer stand out. Also use a copy tone and benefit statements that apply to the business buyer. Customer service, price points, delivery, partnership—these all take on a new meaning with the business buyer, so exploit the key benefits with your creative.
Building the Business
Take a hard look at the business buyers already on your housefile to understand who they are and what makes them special. Can you identify some unique characteristic about them that will allow you to better target them?
Next, talk with your list broker about your goals—which should drive your acquisition efforts. Are you looking for numerous low-ticket customers, or fewer high-end buyers?
Build an acquisition strategy that allows you to get new buyers at an acceptable loss level. Understand what you can afford to lose on new customers and build a plan to get them at or above that level. Establish offer strategies that attract good business customers. You may have a proven consumer offer set at a $50 purchase threshold, but the same offer to businesses may cut you short because it could have been promoted at a $150 price point with no ill effect.
Becoming a Partner
More than consumers, businesses expect relentless customer service. They want guaranteed ship dates, preferential pricing and specialized products. They want a partner. So if you haven't dedicated a portion of your customer service function to the 'business' business, make certain your customer service team can handle the responsibility. If not, you'll hurt your chances for long-term survival.
B-to-B offerings aren't for every consumer cataloger, but those that have the merchandise and service opportunity stand to build a lucrative profit center for their mail-order businesses.
Steve Trollinger is senior vice president of client marketing for J. Schmid & Assoc. He can be reached at (913) 236-8988, or firstname.lastname@example.org.