B2B vs. B2C CRM: What's the Diff?
All CRM systems are not created equal, and that's good news for companies that sell more to consumers than to businesses. However, it's crucial to understand the differences between B2B and B2C CRM in light of each company's individual requirements. Three consistent themes appear and can be used as a baseline for selecting tools to help B2C marketers: speed, process and persistence.
02/22/10 5:00 AM PT
CRM solutions have a long history of helping B2B marketers achieve greater ROI from their leads. Yet for companies that sell their products and services direct to consumers, CRM solutions frequently miss the mark. A quick Google search for CRM helps prove this: The search returns plenty of B2B products, but sifting through the results to find solutions designed specifically for the B2C sale is like finding a needle in a haystack.
Why is this? To answer that question, it's first necessary to understand the unique differences between B2B and B2C sales. Of course, there are many formulas for sales and marketing success, but seven aspects that are common to both B2C and B2B sales effectively illustrate the differences between them:
1. Speed of Sales Process -- A B2C sale is typically fast, usually weeks or months; a B2B sale is much slower, usually months or years.
2. Number of Decision Makers -- There are usually one or two decision makers in a B2C sale; there may be a dozen or more involved in a B2B sale.
3. Simplicity of Buying Process -- A B2C sale is relatively simple; a B2B sale is usually more complex.
4. Quantity of Leads -- A B2C sale starts with more leads; a B2B sale will have fewer leads to manage.
5. Role of Emotion -- B2C sales frequently involve emotion on the consumers' side; a B2B sale is typically driven by a business decision rather than by emotion.
6. Value of Sale -- The total value of a B2C sale is relatively small -- hundreds or thousands of dollars; a B2B sale could be thousands or even millions of dollars.
7. Uniformity of Offer -- B2C sales are typically a uniform product offering; B2B tend to be a more customized product offering.
It is clear that there is a distinct difference between B2C and B2B sales. So doesn't it make sense that sales and marketing professionals should leverage tools that are designed to address the unique aspects of each sale? To make matters worse, there is much confusion about the definition of CRM that frequently leads B2C marketers to implement solutions that either don't work or are overkill.
What 'CRM' Means
CRM is typically defined as a solution used to aid a company in the management of customers and sales prospects. That means that CRM can be a useful tool for a variety of business functions, from lead generation to customer service.
For companies that are specifically looking for ways to track and convert more leads, a CRM solution may be overkill. Moreover, CRM systems fundamentally are designed with a hierarchical structure that is not required for B2C companies. Consider this example:
Company A is a B2B business selling copiers to other businesses. Company A uses CRM to track its prospects and clients at a variety of stages of the client lifecycle. First, Company A is already selling copiers to a certain division of one client. It is also trying to win a contract from an entirely different division of the same company. Having a CRM system is quite useful here because the client is stored as a "company" record, and each person in the company is tied to that record as a "contact." A "company" can have many "contacts," creating a hierarchical structure.
Company B is a B2C insurance company that sells auto insurance policies to individuals or families. Company B uses the same CRM software as Company A, but is burdened by the significant overhead required to manage the hierarchical structure. Company B simply has a single record for each customer looking to get an insurance policy. Having the added capabilities of a CRM system is not useful and creates unnecessary steps in managing its leads.
Referencing the seven sales and marketing rules above as they relate to the B2C sale, three consistent themes appear and can be used as a baseline for selecting tools to help B2C marketers:
1. Speed -- At every stage, speed is essential when dealing with a B2C sale. Leads must be received in real-time and distributed to sales people quickly; initial contact must be made in minutes.
2. Process -- Having a consistent and repeatable process is critical to scale a B2C sales operation; that means everyone works leads the same way, so sales managers and marketing executives can track results.
3. Persistence -- Selling to consumers is very competitive. To be successful, B2C companies will need to have persistent long term follow-up strategies in place.
The first key driver is speed. There has been much research about the importance of speed in the sales process and, in particular, speed-to-contact. A recent MIT study found that leads contacted in five minutes convert 22x more often than after 30 minutes. When evaluating tools to support B2C sales, look for solutions that offer
- real-time lead source integrations;
- automatic rules-based lead distribution;
- lead management and pipeline reports;
- email and screen pop notifications; and
- key performance metrics tracking.
Process for ConversionThe second key driver is process. Although many marketers believe lead quality is the silver bullet for success, sales process also plays an important factor in converting leads. Long-term consistent follow-up can have a dramatic impact on overall conversion rates. B2C companies should look for solutions that offer the following capabilities to optimize the sales process:
- easily configurable sales workflow;
- custom lead form and call dispositions;
- automatic lead nurturing;
- milestones tracking; and
- scheduled reports and email delivery.
Practice PersistenceThe third key driver for B2C sales and marketing effectiveness is persistence. Multiple call attempts greatly increase the likelihood that leads will be contacted; the optimal number to maximize contact rates is as many as six calls. That means it is very important to be persistent. With persistence being a key driver for success, it's easy to see how important it is for B2C companies to have tools that support this behavior to maximize return on their marketing spend. The most successful B2C organizations leverage tools that incorporate these features:
- lead scoring and ranking;
- automatic call prioritization;
- follow-up drip emails and reminders;
- lead recycling and routing; and
- follow-up reminders and emails.
There is clearly some overlap between what is useful for B2C and B2B marketers. For companies that borderline the characteristics of one or the other, traditional CRM may be a good fit. However, for B2C organizations that closely align with the attributes described here, there is more than enough evidence to support the need for specialized B2C tools.
The good news is they do exist. In particular, specialized B2C solutions are available in some verticals like mortgage, insurance and education. Furthermore, as more B2C companies begin to demand solutions that are specifically designed to support their unique business processes, better products will become available.
For now, start by doing research; understand what type of company you are and then look for tools that support your business processes. Ask the right questions to find tools that work for you.
Jeff Solomon is founder and senior vice president of product and marketing of Leads360.