How to sell in B2B markets

Written by Faizan Abdul Khaliq, and Razi Uddin

Any business needs to have clientele in multiple segments. Focusing on a single segment can result in lost opportunities. The B2B segment is a very important area when it comes to selling your products. Business customers are usually high volume clients that provide you with sales revenue, and growth. Many businesses prefer to deal in the B2B segment primarily because focusing on a selected number of clients can provide you with significant sales volume as compared to working on each customer just to get one single unit sale in the B2C market. Several types of sellers are operating in the B2B markets, there are official distributors of imported products, and there are wholesalers, retailers that also sell to businesses, local companies that manufacture, and sell their products directly, and indenters.

When you are starting your operations in the B2B segment you must have complete knowledge about your competition that is operating in the same field and providing a similar if not the same product. You will have to counter the value proposition of your competitor otherwise you will not have many customers.

Challenges

Although the B2B sector appears to be lucrative it is much harder to tap for new businesses. The competition is tough; it is hard to gain customers, and much harder to meet all their terms, and conditions especially for a new business. Businesses are conservative when it comes to purchasing, they want to avoid risks while getting the best prices, and quality. They will prefer to deal with someone familiar unless the other party is not providing them with a value proposition that forces them to leave their old suppliers.

B2B selling requires complete documentation of sales tax, and other documentary proofs as required by the regulations for imported, and local products. Businesses will require that their supplier is a legally registered, tax-paying entity, and the product that they are procuring is genuine, and in case of imports, it is backed by tax documents stating that this product has been imported legally with all relevant taxes, and duties paid.

Almost all B2B sales are done on a credit basis therefore you must have enough reserves to support the backlog of payments while maintaining liquidity for your business. Most payments are processed 30 or 60 days post-delivery.

B2B transactions are done through banking channels, and a company account is usually used for these transactions.

It is important to have lines of credit with your suppliers so that large orders can be met without incurring the huge financial burden of making advance cash payments. This will also help you leverage your finances, and fulfill larger orders, and pay your suppliers when you get paid.

From the perspective of a new business, it must be meeting the legal, and business requirements before transitioning to the B2B segment to sustain, and succeed.

Making the sale

Although the selling in B2B is to be done to companies, and organizations instead of people there is always a human at the other end of the table in those businesses who are going to decide to buy or not buy your product. B2B selling requires reaching out and winning over the decision-maker with your value proposition. A B2B customer can be of multiple types it can be a retailer who will sell your product to customers from their stores, it can be a wholesaler who will sell your product to other retailers, it can be a hyper or supermarket, it can be an organization that requires the product for its consumption the nature of the customer will change how you will approach the decision-maker, and extract a favorable outcome from them.

Retailers, wholesalers, and markets will normally require favorable credit terms, besides, they might want discounts or supplies on short notices all of these demands must be met to close the deal. Supermarkets usually will look for flexible payment terms, and discounts on products to support their promotional sales. The organizational customer that requires product for consumption will focus more on price as compared to other aspects. You have to find and meet the needs of the customer.

Businesses will not offer the same percentage of profit that retail customers do on each sale, and B2B sellers are mindful of this fact. Since businesses purchase in bulk they expect, and demand discounts over the market price based on the volumes of their purchase, and these demands have to be catered in the B2B segment to generate large-volume of sales.

If you are a wholesaler your customers will probably be retailers who will sell your products in their stores, other than that there will be hypermarkets and superstores that will require bulk stocks. If you are a retailer that is venturing out to B2B you will be selling to other retailers or organizational customers.

B2B market dynamics

It is important to have good terms with your competition. If you are selling a product that is also sold by others a good market relationship can result in you leveraging their supplies for your orders if required. For example, you get an order to supply a large quantity of a product, and you can only fulfill a percentage of the requirement from your inventory you can fulfill the remaining quantity from the inventory of other wholesalers or retailers that are normally your customers, and or competitors this will help you keep the business, and provide sales volume to all parties involved in the sale. It will also help you to keep a modest inventory instead which is supported by your financial reserves.

How you can get an edge!

You will get an edge if you are the official distributor of a specific product that you are selling. This status provides a level of credibility, and customers know that the person selling them the product is trusted by the manufacturer to represent their product in the assigned territory. It also provides some level of satisfaction to customers that the product they will receive will be genuine.

Having large organizational customers will enable you to leverage their trust in you to gain new clients. When people see that other large buyers are trusting you enough to do business with you this makes it easier for them to consider you as their choice.

If you are dealing in products that require warranty, then the provision or facilitation of warranty claims can help you gain an edge over others this might even require you to go beyond the policy and pay out of pocket for repairs but all of this is necessary to gain, and retain the competitive edge in a marketplace where same or similar products are available for an almost similar price. For example, an official distributor will be in a better position to manage and facilitate warranty claims for the B2B customer as compared to a retailer, and retailers will have to overcome this to prevent customers from switching to the official distributor.

B2B or B2C or both

Most businesses prefer to operate on a single model which enables them to focus their energies on that particular segment. Although this strategy is successful for most businesses today businesses are transitioning to a hybrid model where they are offering services to B2B clients and diversifying operations to B2C models through subsidiaries. This helps them gain sales as well as potential tax benefits of the fixed tax regime which is expected for small, and medium-scale retailers from FBR.

Dealing with the customer

B2B customers require more personal attention, time, and focus as compared to retail customers. The interactions have to be frequent and must focus on business retention, and growth.

Wholesale or retail customers will usually be contacted through visits by the salesperson or calls. Organizations have dedicated buyers that are the point of contact for the particular category besides they can be emailed regarding offerings and sales updates. In-person, meetings are important for getting orders as well as sustaining them.

Personnel requirements B2B, and B2C B2C usually requires salespeople at storefronts, B2B requires a POS person at hypermarkets, salesperson, and order bookers for retail, and wholesale customers, and client managers for the large clients that require more attention, and frequent interactions. For businesses that are starting operations in B2C client, management is usually done by the owner until the business reaches a stage where all operations cannot be managed by one person but initially, a single resource can be used to do sales and order booking and grow the work force with sales growth.