Guest Post by Jacky Tai, principal consultant of StrategiCom, a leading B2B brand strategy consulting company with offices across the globe.
I remembered one presentation made by my colleague to a B2B company some years back. Five minutes into the presentation, he was asked this question, “Excuse me, we are not selling Coca-Cola, you know? Why are you talking to us about branding?” My colleagues and I have been asked this question by CEOs of B2B companies many times in the past. They were simply not convinced that a B2B company needed to undertake a branding project. Their contention was that since B2B companies are very different in nature to B2C companies, branding was not important to B2B companies and would not make any difference. Today, the situation has changed. More and more B2B companies are realising that branding is actually more important to them than to a B2C company because B2B purchases carry higher risk. Because of the risks involved, buyers tend to buy from the strongest brand within their price range.
But there are still B2B companies that don’t believe in branding, have a very warped idea of what branding is or, even worse, think that they are unique and therefore don’t have any competitors. The last part is just wishful thinking. Try telling your customers that they should buy from you because you don’t have any competitors and they will name you a list of competitors that you have. To you, these may not be classified as competitors but as long as your customers see them as alternatives, then they are competitors. That is the way of the business world.
For every action, there is an equal and opposite reaction, according to Newton. And every coin has a flip side. Likewise for B2B branding. Some think it is important. We obviously do or we wouldn’t have dedicated StrategiCom to the art and science of B2B branding strategy.
But we also realise that what we say will be perceived as biased because we have a vested interest. Therefore, we will let you make up your own mind. We will present you with the arguments against B2B branding and let you decide. These are the arguments that have been put forth by many CEOs of B2B companies. We have spent many hours in boardrooms listening to objection after objection from CEOs who simply cannot believe that branding has any value for a B2B company.
B2B Buyers Are Rational Creatures Who Are Not Affected By Intangibles Like Brands
Some CEOs of B2B companies – as well as many of the executives who work in such companies – have told us that a B2B purchase is a very rational one that is driven by cold, hard objectivity that is devoid of emotions, unlike a B2C purchase. Basically, they are saying that the heart takes a back seat and the head rules.
These CEOs have argued that what matters in a B2B purchase are things such as whether the supplier is able to meet their technical specifications, whether the quality of the products is excellent, whether the performance is top-notch and so on and so forth. To them, the whole decision making process is as clinical as a German factory.
Unfortunately, the decision makers are not a bunch of robots or a computer program. They are human beings like you. They have emotions. They have prejudices. They have preferences. They can be influenced by brands. For example, if you are a construction company, wouldn’t you want the world to see that you are using a top construction equipment brand like Caterpillar? If you are a tunnelling company, wouldn’t you want the world to see you using a top tunnelling machine brand like Herrenknecht? If you are a hydropower company, wouldn’t you want the world to see you using a top electric turbine brand like General Electric? Whether you can afford these brands is another thing but you would if you could, wouldn’t you?
If your customers are not influenced by brands, then how come every time you compete with a top brand for a customer, you seem to lose more often than you win even though objectively speaking, you are better and cheaper? Food for thought?
B2B Purchases Are All About Relationships
This is another objection that B2B companies have against branding. They claim that a B2B purchase is all about the relationship between the individual sales representative and the buyer. What these companies are saying is that if the B2B brand means anything, it is the meaning that is created by the sales representative.
I just met a company that is providing testing services for petrochemical companies in the South East Asian region. The CEO told him that branding doesn’t matter. All that matters is his relationship with the buyers. If the relationship is strong, then there is a deal. If the relationship is weak, there is no deal.
While we do not deny that a strong relationship with your customers is always a good thing, the brand also has something to do with the purchase decision. If you are of the opinion that branding plays no role in a B2B company and relationships are all that matters, have you stopped to consider why this is so? Maybe these companies have resorted to relationships to sell because they have never bothered to build a strong brand.
Let’s reverse the picture. Let’s take you as an example. You have to implement a new ERP system for your company. You have a very good relationship with a local IT company that tells you it can do a customised ERP system for you from scratch. This IT company is not known for ERP. Microsoft Dynamics NAV is a strong brand in low-cost ERP systems for the SME sector. Are you willing to bet your company’s operations on an unknown IT company no matter how good your relationship is when there is a reasonably priced but strong ERP brand available?
Price Is The Only Thing That Matters In A B2B Purchase
As the B2B Branding Study For Globalisation showed in 2007, price is not a consideration during the shortlisting process. It is a consideration when it comes to awarding the contract to the shortlisted vendors but if you don’t have a strong brand, you wouldn’t be shortlisted in the first place. Again, perhaps you can look at how you buy for your own company. Does price matter? Of course, it does. You don’t have a bottomless pit of money but you can always find a handful of suppliers who are equally matched – on paper at least – in terms of price, performance, quality, etc. So, how do you choose from these suppliers? The one with the strongest brand, perhaps? Price matters in a B2B purchase but it is not the only thing that matters. If you have participated in tenders, you will know that the lowest price doesn’t always win. Very often, you will find that the tender was finally awarded to a competitor that is between 15 per cent and 25 per cent more expensive than you although what you offer is more or less the same. Ever wondered why? Perhaps the other guy has a brand that inspires more confidence in the customers?
B2B Products Or Services Are Largely Invisible So Branding Won’t Help
Many CEOs have argued with us over this in the past. Some companies still do. They all claim that since a B2B product or service is never seen by the end customer, the brand doesn’t matter at all. Branding won’t help an invisible product or service. Ever heard of Intel? Unless you have been living in a cave for the past three decades, you will have heard of Intel for sure. The next question might make you pause. Do you know what a computer chip looks like? Many of us have no idea. So, why do we still check to see if there is an Intel chip in the computer before we buy it?
Our Customers Know A Superior Product When They See One
Many B2B companies work under the assumption that their customers have perfect knowledge. Well, just because you are very knowledgeable and objective in your field doesn’t mean that your customers are too. Many B2B companies seem to forget that their customers are very often – not always but very often – not as knowledgeable as they are.
If you work under the assumption of perfect knowledge on your customers’ part, it is a very dangerous thing to do because your customers don’t know everything. Very often, the person who is making the purchase decisions is not even trained in your field. That makes it difficult to sell because you have to spend a lot of time and effort educating and persuading your customers. But the upside is that these customers – because of their lack of perfect knowledge – will gravitate towards stronger brands just to be on the safe side.
B2B Products Are Not Aspirational
Many B2C products are aspirational. They are symbolic in nature. A Rolex watch says you are wealthy. A Hugo Boss suit says that you have impeccable taste. A BMW says that you are a driven and successful executive. An iPhone says you are cool and young. A Birkin handbag says that you are one of the elite few who know what a Birkin is and important enough to be able to get one. A Harley-Davidson says that you are carefree and someone who beats his own path.
B2B products do not promise to make you cool or sexy or anything like that. They are not aspirational in nature. They are utilitarian. B2B products are not status symbols. No company will aspire to own a B2B product. Yes, B2B products or services are utilitarian in nature. They perform a function but the best ones can be status symbols as well. If you are a building owner, wouldn’t the installation of Otis elevators and escalators be something to aspire to because they tell the world that you use the world’s top brand of elevators and escalators? If you are a logistics company and you use Crown electric forklifts and reach trucks in your warehouses, wouldn’t that make you proud to show off your warehouses to potential customers? If you are a systems integration company, wouldn’t it confer more status – and credibility – on your brand if you buy Cisco networking products?
The answers to the above questions could be yes, no, or maybe. But that doesn’t mean that a B2B product or service cannot be aspirational.
B2B Companies Don’t Sell To Millions So Branding Is Not Needed
It is true that the pool of customers that a B2B company has is definitely less than the potential customers that a B2C company has because there are definitely more people in the world than there are companies. A B2C brand like Coca-Cola can sell to billions of people around the world whereas a B2B brand typically has customers numbering in the thousands. Most of our B2B clients have fewer than one thousand potential customers worldwide. One of our clients is so specialised that they told us there are fewer than 50 companies in the world that can use their service.
So, many B2B companies in the past have argued that since they don’t sell to millions of customers, branding is not important. But the thing is, you don’t have to sell to millions of customers to need branding. Even if you only have 50 companies that could potentially be customers, you will still need a strong brand because you will always have competitors. These competitors can and eventually will copy everything that you can offer. If they can match everything that you do and you cannot counter that with a stronger brand, then life is going to be hard. Everything being equal – and over time, it tends to be – the stronger brand wins.
B2B Products Or Services Are Too Complex To Be Branded
We absolutely love this one which is why we have left it till last. We don’t know why there are people who think that complex products or services cannot be branded. They absolutely can. In fact, the more complex your products or services, the more you need to brand because a strong brand simplifies the decision-making process.
Accenture delivers extremely complex IT solutions to its clients. Accenture is a highly branded IT company. You may not understand fully what Accenture does but you would trust your IT needs with Accenture.
Accuray makes a highly complex machine called a stereotactic radiosurgery device, which it has branded as CyberKnife. This is basically a giant gamma ray gun that is guided by a sophisticated computer that allows surgeons to zap cancer cells with sub-millimetre accuracy. CyberKnife is a great brand and that is why so many surgeons and tens of thousands of patients have used it.
The brand is simply an idea that exists in the minds of your customers. The brand simplifies a complex product or service, distilling it into a simple, powerful and easy-to-understand idea. The more complex and difficult to understand a product or service is, the more you need to brand it so that the brand helps to simplify the decision-making process. That may sound like a contradiction but imagine this. If you are selling a complex product or service and you have key competitors selling something that is equally complex, how will you sell it? If you can associate this complex product or service with a simple idea, you will make it easy for customers to understand you better and that will give you the upper hand.
One of the biggest headaches that you have is that you are not operating in a vacuum. You have a big pain in the neck known as The Competition. Whether you like it or not, they are always there and always ready to steal your clients. If you don’t take care of your own brand, you allow The Competition to take care of your brand for you and they will. They will just help you to manage your brand out of the market place. Whether you are a B2B or B2C company, you still need to take care of how your brand is differentiated and communicated or you leave these important functions to The Competition and that is not a smart thing to do.
Jacky Tai is a Principal Consultant of StrategiCom (www.strategicom.com), a B2B branding specialist headquartered in Singapore with offices in 12 cities. As Principal Consultant of StrategiCom, Jacky works with a crack team of talented consultants and researchers to help B2B companies across various industries gain an unfair advantage over competitors by effectively differentiating, dramatising and communicating the brand. Jacky is the author of 5 highly-acclaimed branding books – the latest one being B2B – 10 Rules To Transform Your Business Into A Brand.