How to avoid this silent sales killer
Could business customer apathy be killing your sales? | Behalf
It’s not just the threat of a big box retailer or the cost of demand that could come between you and this season’s highest sales. There’s another potential bump in the road to increasing growth: the success of your business customers.
Your business customers are your most valuable asset and their prosperity is integral to your success. Logically, you can’t scale sales if your core base of customers doesn’t have the capacity to scale purchasing. Don’t think your business customers’ working capital is your problem? Gallup reports that small business customers who feel that their vendor is invested in their business spend larger amounts of money. Yet a stunning 60% of B2B customers feel total indifference toward their suppliers.
What’s the cause of business customer apathy?
You know your business customers are running price comparisons and choosing which suppliers to work with based on perceived value. But, finding quality goods at reasonable rates isn’t the only factor that contributes to your business customers’ purchasing decisions. The small business segment, more than any other, is stifled by working capital constraints. Just as important as finding the right product is finding a supplier who offers flexible payment options. If the payment terms you offer do not match your business customer’s cash flow cycle, you are unwittingly driving them out the door.
Do payment options really pay?
According to research gathered by Intuit, 83% of small businesses report an increase in sales as a result of accepting credit cards. Accepting Credit Cards is an effective, mainstream option to provide business customers with flexibility. However, many businesses – particularly in the B2B space – have decided that the ~3% processing costs are too much for their businesses to bear.
Offering your own, in-house terms program can come at an unexpected price. An international survey of B2B payments in 2014 found that 22.5% of U.S. businesses find collecting on outstanding invoices a concern, with 3.2% of receivables ultimately written off as uncollectible. Practically, this means that if you gross $100 million a year you’re losing over $3 million on defaulters.
Trying to balance business customer advocacy with the need for collections can put your company between a rock and a hard place. To alleviate the cash flow strain of outstanding receivables, while distancing themselves from the customer-facing collections process, some consider Invoice Factoring. This method of selling receivables for immediate capital can add up to the highest cost option on the market.
A win/win for your business customers and your sales
New alternative payment options are emerging, which can both eliminate collections and help you close more sales. Behalf, an alternative provider, can approve business customers for a range of credit options at the point of sale. When a business customer chooses Behalf at checkout, the supplier gets paid immediately while the customer enjoys the freedom to customize his own payment terms.
For B-Stock, a company that operates B2B liquidation marketplaces for returned and overstock merchandise, Behalf was the perfect fit. B-Stock’s business customers purchase bulk lots of inventory for resale and like many small businesses, they struggle with inventory management: when the need for more product is imminent there might not be cash on hand to make necessary purchases or meet inventory demands.
Because credit card acceptance was prohibitive, B-Stock knew its customers’ purchasing was constrained by the lack of payment options offered.
“We started our program with Behalf in 2014 in order to extend our customer’s purchasing power on our B-Stock Supply B2B marketplace. Through Behalf, our small business buyers are able to apply and get funds in less than five minutes. With this new purchasing power they are now able to competitively bid on more auction lots, across a variety of sizes including truckloads, LTL (less than truckloads), and pallets,” said Sean Cleland, B-Stock’s Director of Business Development.
Empathizing with the core needs of your small business customers – growth, working capital, and saving time – is the best way to build loyalty. Thinking broader than your product/pricing strategy and looking for ways to improve the way you do business together should become part of your service delivery model. Investing in your small business customers’ success helps them grow their own business.