A primary goal of B2B commerce is to drive greater efficiency that in turn reduces the cost of sales and improves your bottom line. What many manufacturers and distributors don’t understand is that the same strategies can not only drive efficiency but increase revenue at the same time.
When focused on a particular product or product use case, there are enormous opportunities to increase revenues per product that also help accelerate the efficiency of the customer experience as well. A strong B2B eCommerce solution can support key areas that achieve this goal including:
- Custom Catalogs
- Cross Sell
Much has been written in the past couple years about “outside-in” strategies for commerce and the supply chain, meaning one that’s not only customer-focused, but is agile enough to meet changing customer expectations. When real-time data is available throughout the entire buying cycle, and the system is flexible enough to match a customer’s desired experience, an outside-in strategy can be achieved.
Categorizing products in unique ways can be a big part of an outside-in sales strategy. Basically, it involves introducing product categories in such a way that increases revenue. This might include kitting and bundling to create value added categories out of previously commoditized products. For example, a distributor might create a brand new part number that represents a bundle of cables introduced as a new bundle product . Creating new categories and product sets based on past ordering experience can not only improve customer efficiency, it can make it difficult for competitors to sell against products that are unique to your brand. Now you’re not only selling more of that part in volume, you’re making more money on it because you’re combining it into a unique configuration.
Categories can be helpful for catalog purposes as well by adding in site-specific groupings or even creating dynamic categories within the catalog itself.
Sophisticated B2B commerce solutions are able to create custom catalogs of products only available to that specific customer. Traditional catalogs can become unwieldy and managing multiple identifiers such as customer part number, SKU, UPC, or cross reference data is time consuming and even frustrating. Face it, if they can’t find it easily, they can’t buy it easily. Creating custom catalogs that include several go-to-market brands that meet the specifications of that particular customer can make reordering much easier, not to mention completing complex product configurations. Catalogs should also provide sophisticated search indexes and filters within the catalog, making the product purchase fast, smooth and integrated with any required back end systems that may populate catalog data.
Increasing the efficiency of the customer experience can coincide with more sales when selling is done in a way that adds more value to the customer. This does not mean increasing price – as we’ve seen it also might mean increasing price in certain product categories. This is where cross selling and its cousin, upselling, come into play. Basically we’re talking about increasing profit on a particular product by selling it differently.
Cross selling in a nutshell involves delivering product in a way that makes it easy to do business with you, and sells more of every product in a category at a better average margin. There are many ways to cross sell customers, and a thousand examples we could provide that happen every day. One example might involve a typical spec sheet a contractor might use for a bathroom renovation. Consider the many products, from simple washers to an entire vanity, that might be included in this particular sheet. Consider turning that spec sheet into an actual kit that could be one order, giving the contractor everything they need. While pricing the kit reasonably, you can still ensure reasonable margins on average throughout the entire package. Plus, it’s much more efficient for that particular contractor.
A strong B2B commerce solution can provide suggestions for upselling in a transaction, in other words encouraging customers to purchase a comparable product that offers a higher margin for your business than the one they’re considering. Past customer buying histories, custom catalogs and other data can offer the system opportunities where it might be valuable to suggest a higher quality product.
An effective approach to boost more revenue per product can work with existing customers, but also help find new markets as well. Creating unique configurations of common kits and bundles can be a stand out offer in a cluttered market. Working with your distributors to design creative new ways to bundle products can also help introduce your brand to a new market or customer. Marketing campaigns and promotions created around new kits can be designed to enter the market swiftly and with impact.
Whether you’re trying to sell more to existing customers, or thinking about entering a new marketing, boosting revenue per product is an effective strategy. But the approach cannot be singularly focused. Combining the three C’s – categorization, custom catalogs and cross selling – in a way that’s focused on improving the customer experience and achieving greater efficiency, is the right way to achieve this particular revenue goal.