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B2B and B2C CRM: An overview of the differences

I'm interested in the subtle difference between a contact and a customer. The real world is full of people (i.e., contacts) who buy products either as individuals -- business-to-consumer (B2C) or as representatives of an organization in the business-to-business (B2B) world. I would view CRM more as a "contact" relationship management. So, that would entail the workflow process being:
  1. Identify and enter contact -- including demographics and categorizations for marketing strategies.
  2. Determine opportunities for that contact.
  3. Contact buys product.
  4. Contact is now a customer, either an individual for consumer or an account for an organization.
Do you see flaws in this logic? A customer is always a contact but a contact is not always a customer (at least right now). In this approach, a "lead" is just an embryonic stage of an opportunity.

Are there organizations or best practices structured around this approach?

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The answer is yes, the logic is great. There is in fact a whole discipline of business-to-business (B2B) customer relationship management that is somewhat different from traditional consumer relationship management -- business-to-consumer (B2C) CRM. The truth is, B2B CRM is probably older and more established than consumer or B2C CRM, primarily because even before computers made it possible, sales reps would keep records of individual contacts, because it was worth it to do so. Martha Rogers and I actually wrote a book about this whole distinction: One to One B2B: Customer Development Strategies for the Business to Business World.

We suggest there are seven basic differences between CRM in the B2C world and CRM in the B2B world. First, in the B2B world, you have relationships within relationships, and that is what you are alluding to, when the contact is the actual person. Keep in mind that corporations have no brains and make no decisions by themselves. They are only legal fictions. They are collections of other people. It's the people that have the brains. We have a four-step methodology for building and managing relationships: identify customers; differentiate customers; interact with customers; and customize for customers -- we call this the "I.D.I.C." method. In the B2B space, the "identify" task concerns itself a great deal with identifying the actual people within the business that have responsibilities for the decision. Those people might be decision makers themselves or they could be reviewers or approvers or specifiers or influencers.

The difference between relationship management within the B2C space and within in B2B space is that in B2B you have just a few large customers, big organizations. And that means the statistical tools that are useful in B2C CRM are largely not relevant in B2B CRM.

The third difference is account development selling. What I mean by that is, organizations are complex, and it's much more beneficial for you to think of a B2B company becoming a customer gradually. So I agree 100% with your logic. A lead is just an embryonic stage of an opportunity. Martha Rogers and I would say that an identified prospect is just a customer with whom you have 0% share of customer right now. And constantly you have to think about how to develop that account, how to make more contacts within the business-to-business organization

The fourth difference is channel complexity. In the B2B world, the channel distribution process can be extremely complex. You can have value added resellers in the IT business, for example, or you can have installers, enablers -- lots of people at different gates between the marketer and the customer.

Another difference is what we call knowledge-based selling. Because the products and services sold in a B2B context are often highly complex, it's advantageous to base the sales process on educating and training the customers, much more so in B2B than in B2C CRM.

Yet another difference is infrequent purchases. In the B2B CRM world, purchases are likely to be more infrequent and farther between. This characterizes a lot of business to business operations, and in many B2B companies, a large amount of effort is allocated in the CRM space to create a continuous service stream that surrounds the occasional sale of products, so that you have opportunities with customers to maintain your relationships with them.

And the final difference is, in the B2B space, it makes a great deal of sense to help clients manage themselves. If you're selling to a business, one of the principal issues that any business is always wrestling with is, "How do I better manage my business?" And to the extent you can fashion your customer relationship initiatives in such a way that will help a business manage itself, that's a very high-value offering.


Hear more in Creating Customer Value, a SearchCRM.com monthly podcast series with Peppers and Rogers.

This was first published in August 2007

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