Seminars, publications, market research, and customer care centers are important tools in every B2B firm’s toolbox for understanding, attracting, serving and keeping customers loyal. But they're not enough today. (First of a series.)
Seminars, publications, market research and call centers are among the most important tools in every business-to-business firm's toolbox. They help them understand, attract, serve and keep customers loyal. But in a world of fierce global price competition, increasing transparency of business practices, and ever-rising complexity, these activities are no longer enough for many B2B companies.
Today, software companies such as SAP and Taleo, business information providers such as LexisNexis, and consulting firms such as Palladium Group have moved much of these interactions to online communities they have built for their customers. While they are still in the early stages, these online communities are providing these companies with a competitive advantage: the ability to get much closer and become more valuable to customers every day, around the clock.
In the first of a multipart series, we review the traditional ways that B2B companies have interacted with customers and their limitations in a world in which change has dramatically accelerated. We then discuss why a number of companies have launched online customer communities in the last few years, defining the core hallmarks of successful communities.
By Vanessa DiMauro and Robert Buday
Ever since 1895, when Deere & Co. mailed to farmers the first-ever custom publication, businesses that sell to other businesses have embraced a variety of techniques for getting close to their customers. Trade shows, user group meetings, seminars and webinars, syndicated research studies and publications that can’t be found on a newsstand have become commonplace in B2B – much more so than in B2C.
It isn’t surprising. The average B2B sale is typically much larger than it is for B2C firms. And for B2B firms, a small number of customers can account for the majority of their revenue. Thus, it pays for B2B companies to go to extra lengths to pay attention to their customers. In fact, many devote substantial resources on programs to dissect customer needs, educate prospects on products and services, create personal relationships, and promote their offerings.
But the B2B world has changed markedly in just the last decade. Executives get more information through search engines today than from any other source, including meetings, print publications, and sales calls. Word of mouth increasingly travels more through online social networks such as Twitter and LinkedIn than it does through business get-togethers. And many publications are out of date by the time they thump on a manager’s desk.
The result: By relying on traditional ways of interacting with customers, many B2B firms are struggling to keep up with growing customer demands and more-nimble competitors anxious to capitalize on those nascent needs. Waiting for the annual conference to announce key new-product introductions can now penalize a firm with being very late to market. Holding webinars or publishing journals quarterly or even monthly can risk giving customers information long after others have filled the void. Conducting online research panels every six months may make a new product or advertising campaign dead on arrival because customer needs and interests have changed that quickly.
A small but growing number of B2B companies have realized this. While they haven’t pulled the plug on the customer interaction programs of the past, they have adopted a new way of getting inside the minds of buyers, and on a daily basis: creating private online communities. Such websites, gated off from unwanted intrusion by most Web viewers, allow business people to view articles and studies for their eyes only, form private discussion groups to air out sensitive issues, weigh in on the products and services of the community organizer, and seek out others with experience that can save them from making a bad decision.
Online customer communities have become of intense interest in such industries as information technology. Nearly two-thirds (65%) of 207 organizations surveyed in 2010 by the research firm ITSMA said they are engaged in private online communities hosted by the companies that sell them computer hardware, software and the services. [1] And 49% of all B2B companies manage an online community dedicated to customers or prospects, according to Business.com Business Social Media Benchmarking Study (2009), and a third planned to create a customer community in the near future.[2]A 2011 study by B2B Magazine found that 22% of B2B firms had online communities.
There are great lessons to be learned from B2B firms such as software giant SAP, legal information provider LexisNexis, and consulting and education firm Palladium Group, which have fostered successful online customer communities. Their communities have accelerated new product and service development, helped customers generate much more value from their offerings, reduced the high cost of post-sale service, and boosted customer loyalty. The results, in some cases, are stunning.
Take LexisNexis’ Martindale-Hubbell business unit, a 140-year-old publisher of legal directories. The firm’s business model was founded on helping attorneys find one another, especially to help in-house corporate counsel locate the right law firms. Martindale-Hubbell has a deeply trusted brand. But three years ago, the firm realized it needed to change. At the end of the 20th century, lawyers and law firms were finding search engines and online sites such as LinkedIn as tools to find legal expertise. Such websites threatened Martindale-Hubbell’s dominant market position as a print directory publisher. So the firm built a private, gated online community, Martindale-Hubbell Connected, only for legal professionals around the globe.
With Martindale-Hubbell Connected, those firms have a far better way to get themselves in front of their clients, share their expertise with other attorneys, and provide a deeper profile of themselves and their firms. The online community has more than 60,000 members – 10 times the number of a year ago – from more than 120 countries. Prior to the community, there were no dominant online ways for a legal services buyer to find and access specialized legal professionals.[3] In an industry where law firm web sites are commonly underdeveloped, finding legal experts was time-consuming and inefficient. Martindale-Hubbell Connected has streamlined the process of finding the right legal specialist and now sends 20 times more qualified prospects to law firm websites than Google search results.
Palladium Group is a consulting and education firm known for the Balanced Scorecard approach to measuring a company’s operational and financial health. It launched an online community for clients in April 2010 and currently has more than 4,600+ senior practitioners; 1,170 are from clients' organizations and 60% have the title of director and above. Palladium reviews applications and sets access rights. In the first six months, the community was generating revenue. Additionally, the community helps Palladium differentiate its value proposition and deepen client relationships.
Since 2003, enterprise software powerhouse SAP has launched several online communities. The benefits have been numerous: faster uptake of new products and enhancements, higher customer satisfaction and loyalty, and better products and customer experiences due to continuous external feedback. In fact, SAP attributes part of its strong Net Promoter Score (a popular measure of customer loyalty) to its online communities.
In this installment, we will set the context for online customer communities. We will explain how B2B companies have traditionally interacted with customers: to educate them about how to use their products or services, discern their needs, form personal relationships, provide support and promote their products and services. We then describe the changes in customer needs, competition and technology that are forcing many B2B companies to rapidly improve the ways they interact with customers.
B2B companies collectively spend billions of dollars to attract and become more familiar with their customers. Companies like IBM, General Electric, SAP, and McKinsey have established well-developed mechanisms for getting themselves in front of customers and intimately understanding their needs. (See sidebar on “A Brief History of B2B Customer Interaction Tools.”)
The customer interaction initiatives of B2B companies can be seen as fitting into five broad categories:
B2B companies that have mastered one or more of the techniques for educating, meeting with, understanding, promoting products and services, and supporting customers have gained important competitive advantages. However, these customer interaction channels are no longer sufficient. Why? Put succinctly, in a world in which the Internet and global competition have dramatically accelerated the pace of business, these channels alone don’t enable B2B companies to march in lock step with customers.
Specifically, they don’t help companies deal with three fundamental realities:
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The Limitations of Today’s Customer Interactions Programs |
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Forces of Change |
Limitations of Customer Relationship Techniques |
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Understanding |
Customer needs change more frequently and increasing numbers of new competitors crop up to meet them |
Traditional B2B market research is too episodic and lacks depth Syndicated studies designed for numerous companies don’t answer one firm’s unique information needs |
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Educating |
Rising complexity for customers |
Publications that share customer experiences are published too infrequently and don’t extensively tap customers’ experiences (because the publishing model precludes customers from conversing directly with other customers) |
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Meeting |
Customer needs changing more frequently |
Trade shows, seminars, and user group meetings happen too infrequently, resulting in no ongoing dialogue between customers and marketing, product development, etc., except in the sales and customer service functions |
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Promoting |
Customer needs are more complex |
Corporate websites have become more informative, but they’re still a one-way communication channel. They aren’t set up to promote dialogue on the site between a company and its potential customers, much less to allow present and potential customers to interact with one another.
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Supporting |
Customers need to tap more than the expertise of their B2B suppliers; they need to access the experience of other customers that have adopted their suppliers’ solutions |
Traditional call center and self-service websites provide few (if any) ways for customers to learn from the experiences of other customers. Conversations are two-ways: between the supplier and the customer. |
The three powerful forces of increasing price competition, growing customer complexity, and rising transparency of business practices are rendering the traditional ways of interacting with B2B customers to be less effective. For a growing number of B2B firms, the approaches to understanding, educating, meeting, promoting and supporting customers are falling far short.
Realizing the limitations of traditional customer interaction approaches, companies such as SAP, LexisNexis, Taleo, Palladium Group, and LexisNexis are going beyond them. They have built online communities to take their customers’ digital pulse daily. They are bringing customers “inside” their organizations, sharing information and enabling them to collaborate with other customers, around the clock.
What do we mean by “online customer community”? It is a private website that enables customers to access, create and collaborate via discussions, content and information about topics of mutual interest. The key words in this definition are “customers,” “collaborate,” and “issues of mutual interest”:
We realize this is a much narrower definition of online community than many are talking about. Depending on your age, industry and profession, the term “online community” can evoke multiple and conflicting perceptions. To further our distinctions, here’s what we don’t mean: customer service websites; e-commerce sites where goods and services are bought and sold; online customer panels that focus on customer research; online publications that let readers comment on articles; and blogs, twitter and general use of social media broadcast tools. These are still very important, but they are not what an online customer community must be about if you want to attract members and hope to keep them.
The online customer communities we've discussed here are not new to the B2B world entirely. But they have primarily been used by high tech, education and science organizations with the best access to online community technologies and the skills to use them. Only now, with the ubiquity of more accessible social tools, have B2B online customer communities started to be adopted in mainstream industries. But a number of B2B companies already have them: Bank of America, American Express, Caterpillar, Cisco, EMC and Dell.
To varying degrees, these companies use their communities for six core purposes:
In our next installment, we will discuss how a number of B2B companies are using their online customer communities in these ways, and the advantages that they and their customers are gaining from them.
Sidebar:
B2B companies have used a range of techniques to become familiar with their customers and generate repeat business for more than 100 years. To understand the value of these techniques and how they have evolved, we discuss them in five categories: educating, meeting, understanding, promoting and supporting.

Exhibit 1: A Timeline of Customer Interaction Techniques
Understanding: Divining Customers’ Needs and Wants
While some business historians point to the early 20th century and companies like General Electric, DuPont and Bell Labs as when research and development became an organized business function, market research didn’t emerge as a formal B2B discipline until about a half century later. By the 1960s, several companies started to appear, dedicated to conducting research on B2B customer needs. In 1964, the UK’s first B2B market research firm, the Industrial Market Research Association (IMRA), was formed. By the 1990s, IMRA renamed itself Business Intelligence Group as B2B market research went beyond the sector of heavy and light manufacturing.[14]
In the U.S., B2B market research firms started sprouting up in fast-growing, highly competitive sectors such as information technology (e.g., International Data Corp. in 1964 and Gartner Group in 1979). Since then B2B firms have seen an explosion of syndicated research firms. Today, research firms catering to the IT and many other sectors provide B2B companies with a wide range of research on customers.
Over the last decade, B2B companies have also conduct a substantial amount of their own customer research (which, of course, they don’t share with other firms as they do when they subscribe to syndicated studies). In addition, many use syndicated research firms to conduct customized studies whose results benefit only the firm that funds the research.
Educating: Helping Customers Get More Value From Their Purchases
In 1895, some 48 years after its founder invented the world’s first self-polishing cast steel plow, agricultural equipment manufacturer Deere & Co. created a publication called The Furrow for its customers -- farmers across the U.S. The magazine, regarded in some circles as the first customer publication in North America, focused on all things important to farmers, especially advancements in farming methods. Deere didn’t design the publication to directly sell farming equipment. (That was the role of its independent dealers.) Rather the publication’s role was educating farmers about advances in agricultural technology (especially Deere’s).[15] The $26 billion company still publishes The Furrow, which has a worldwide circulation today of 1.5 million. “The Furrow has become an institution in U.S. agriculture,” a past editor told a researcher in 2003. “It’s been read by generation of farmers. As the market shrunk over the years, we have found it even more important to capture the attention of those readers.”[16]
Today many companies have customer magazines. Numbering 116,000 in North America alone, these firms collectively spend $30 billion annually on producing and mailing them, according to an industry trade group, the Custom Content Council.[17] Ranging from software giant Oracle to Toyota (which publishes a magazine for its Lexis customers), they largely follow The Furrow’s 116-year-old editorial formula: provide useful advice about how to use their products. Whether they are written for farmers or a customer’s computer department, these publications have become a critical customer relationship tool over the last century. According to a UK trade association for the custom publishing industry, the average customer spends 25 minutes a month reading magazines published by its suppliers, and claims such publications increase loyalty by 32%.[18]
In fact, the emergence of a new type of marketing – alternatively referred to as “thought leadership,” “content” or “solutions” marketing – reflects the desire of B2B companies to get better at educating their customers and prospects. By elevating their marketing beyond a feature-and-function basis to more of a consultative sell, B2B companies hope to become a more valued and trusted source, moving into buyers’ consciousness at the very beginning of their purchasing process.
Meeting: Getting Together With Customers to Cement Relationships
The activity of merchants getting together with other merchants has been happening for a long time, even before the birth of Christ. Fast forwarding to the mid-1800s, England’s Prince Albert convened the first international trade fair in London in 1851, attracting more than 13,000 exhibitors and 6 million visitors, both businesses and consumers. Similar shows cropped up in the rest of Europe, as well as the U.S. (Philadelphia and New York) over the next 30 years.[19]
The rise of industry trade associations in the late 1800s fueled the rise of B2B conferences as an efficient way for buyers and sellers to get together and form or renew relationships. By the early 1900s, the exhibition business took root in the U.S., becoming a key marketing tool.[20] The rapid rise of trade and professional associations, which itself has become a $30 billion industry in the U.S., has provided B2B companies with extensive opportunities to meet annually with many customers and prospects in one location.
Trade shows, seminars and conferences – today collectively referred to as “event marketing” – have become staples of the B2B marketing mix. U.S. companies spent $17 billion on it in 2003, about 20% of their total marketing budget.[21] The annual industry conference has become a way for B2B companies to create personal relationships with customers and prospects at scale.
In industries underpinned by rapid technological change, trade shows have become a critical tool for showcasing new products and services, forming alliances with distributors and other resellers, and establishing and renewing customer relationships. In the 1980s, the computer industry’s annual Comdex show became a Mecca for hardware and software firms and their corporate customers, drawing 200,000 attendees at its peak in 2000. (Due to sharply declining attendance, the last Comdex show was held in 2003.)
Despite Comdex’s demise, other, more focused trade shows targeting narrower segments of the $1.5 trillion global IT industry continue to attract B2B companies and their customers.[22] In fact, in every industry, trade shows are strongly attended because they enable companies to efficiently meet face to face with customers and prospects and discuss issues that uniquely matter to them.
Promoting: The B2B Corporate Website Takes Center Stage
B2B companies have embraced a number of techniques to get their marketing messages to customers. Spending less on media advertising than their B2C counterparts, over the last few decades many of turned to direct marketing: the mail, email, and their own websites. In fact, the corporate website has become the hub of many B2B companies’ promotional tools. Yet according to the Marketing Sherpa B2B Marketing Benchmark Report 2011, only 50% of B2B firms consider their web sites to be effective marketing tools.
Marketing tactics have changed considerably in the last 10 years, largely because of the way most B2B executives find information: over the Internet. Search engines have become many buyers’ preferred way of learning about B2B firms. A 2009 study by Forbes magazine and Google of 354 executives at $1 billion-plus companies found that search engines had become their most valuable tool for finding business information.[23]
With this in mind, it’s no surprise that companies have spent significant sums in search engine optimization – ensuring their websites have the content and terms to increase their chances of ranking high in customers’ search results. Many firms are now redoing their sites to make them better lead generators – tools that can get viewers to willingly give up contact details and insert them into marketing automation systems. The thinking is that by understanding which website pages attract viewers and by doing background checks on those viewers and their firms, a B2B company can better identify which viewers and firms could be serious leads.
But this is all changing. More and more B2B firms are looking to determine how social media can get themselves in front of customers. The idea that an organization will gather information about a company’s services primarily via the web site is not a realistic approach; customers and prospects are increasingly relying on external online influencers to make buying decisions. Peer opinions remain executives’ most important input to making complex decisions. Online communities and other social networks enable these managers to find and reach peers and experts far more easily than in the past.
Supporting: Call Centers and the Web Have Become Instrumental After the Sale
Treating customers well after the sale has been crucial to B2B companies forever. A mere 5% reduction in customer defections increases company profits by 25 percent to 85 percent.[24] Post-sale customer support has become a key competitive differentiator in many B2B sectors, and a major source of investment. Over the last 100 years, the form of that support has evolved from field repair to call centers to the Web, although all three are alive and well.
For more than a century, many B2B companies have had extensive field support networks. In fact, some B2B companies’ “customer care” operations grew so extensive that they spun them off to serve other companies’ customers. Convergys (which used to be part of the old Cincinnati Bell) and Genpact are two examples.[25]
But many B2B companies have realized they can’t locate their field support in every corner of the world in which they sell their products and services. So they have centralized or regionalized support through sophisticated call centers in the last 45 years[26] and elaborate Web support in the last 15. Computing device maker Dell has thousands of people working in call centers to support B2B customers.
[1] ITSMA 2010 report, “How Customers Choose Solutions Providers, 2010: The New Buyer Paradox,” by Julie Schwartz, Katie Espinola and Olivier Nguyen Van Tan.
[2] Ibid.
[3] (no longer available)
[4] According to “Global Market Research 2010” a study published in 2010 by ESOMAR, a Dutch research firm. http://www.esomar.org/uploads/industry/reports/global-market-research-2010/ESOMAR_GMR2010_Cover-Contents-FirstChapter.pdf
[5] This data is from two sources. The 1995 data is from Kennedy Information, as quoted in the 2010 book, “The Lords of Strategy,” by Walter Kiechel III. The 2010 data is from Forbes Magazine’s 2010 list of the largest U.S. private companies.
[6] Pepper, Don and Rogers, Martha. The One to One B2B: Customer Relationship Management Strategies for the Real Economy. ( Doubleday Business, 2001)
[7] Webber, Alan E. “B2B Customer Experience Priorities In An Economic Downturn: Key Customer Usability Initiatives In A Soft Economy,” Forrester Research, February 19, 2008
[8] Business Marketing Association. Growth Team Membership ™ Americas 2010 Marketing Priorities Survey. Study was conducted by the research firm Frost & Sullivan.
[9] Minnesota Nurses Facebook Account: http://www.facebook.com/MinnesotaNurses
[10] Solis,Brian and Breakenridge, Deirdre. Putting the Public Back in Public Relations: How Social Media Is Reinventing the Aging Business of PR (FT Press:1999)
[11] http://www.facebook.com/press/info.php?statistics
[12] Qualman, E. Statistics Show Social Media Is Bigger Than You Think. Retrieved Oct 1, 2011 from http://www.socialnomics.net/2009/08/11/statistics-show-social-media-is-bigger-than-you-think/
[13] According to a 2010 study DiMauro, V, and Bulmer, D. “The New Symbiosis of Professional Networks.” (SNCR Press, 2010). The study found that “gaining access to thought leadership” was the top reason professionals used online communities and networks.
[14] McNeil, Ruth “Business to Business Market Research: Understanding and Measuring Business Markets,” (Kogan Page Ltd., 2005).
[15] The history of Deere’s publication The Furrow can be found in a white paper of The Publishing & Media Group.
[16] Ibid
[17] Custom Content Council. Pearl Awards Recognize Excellence In Custom Publishing. Retrieved on September 29, 2011 from http://www.custompublishingcouncil.com/news-members-article.asp?ID=88
[18] www.apa.co.uk
[19] Lancaster, John. “Trade Exhibitions – 1851 to 1933: An Australian Perspective,” published in September 2008 Retrieved from http://www.philatelicdatabase.com/stamp-exhibitions/trade-exhibitions-1851-to-1933-an-australian-perspective/
[20] The Inside Track. “History of Trade Shows” retrieved on October 1, 2011 from http://www.theinsidetrackinc.com/History-of-Trade-Shows.aspx
[21] Business Marketing Association 2003 study, mentioned on a Wikipedia page about business marketing: http://en.wikipedia.org/wiki/Business_marketing
[22] According to IDC’s Worldwide Black Book, the global IT market grew by 8% year over year to more than US$1.5 trillion. Including telecom services, the overall information and communications technology (ICT) market grew by 6% to almost $3 trillion in 2010.
[23] Forbes/Google study, “The Rise of the Digital C-Suite: How Executives Locate and Filter Business Information.” More information on the study can be found here.
[24] Reichheld, Frederick, and Sasser, W. Earl, “Zero Defections: Quality Comes to Services”, Harvard Business Review, September-October 1990, p. 105.
[25] Auguste, B., Harmon, E., and Pandit, V. “The right service strategies for product companies” The McKinsey Quarterly (2006) makes this point, using Convergys as an example. We also know of Genpact, an IT services firm spun off by General Electric in 1997, which has grown into a $1.2 billion public company.
[26] Call Centre Helper Magazine. The History Of The Call Centre. Retrieved on September 22, 2011 from http://www.callcentrehelper.com/the-history-of-the-call-centre-15085.htm
Vanessa DiMauro
Vanessa DiMauro is the CEO of Leader Networks, a research and strategy consulting company that helps large organizations succeed in social business and B2B online community building. DiMauro is a popular speaker, researcher and author. With over 15 years experience in social media leadership positions, she has founded and run leading online communities for CXO Systems, Cambridge Technology Partners and IDG, and has developed winning social strategies for influential companies such as Cisco, Cognizant, EMC, Palladium Group and SAP.
She is an Executive-In-Residence at Babson College's Olin School of Management, and holds both a B.A. and M.A. from Boston College. She blogs at http://blog.leadernetworks.com. She can be reached at vdimauro@leadernetworks.com
Robert Buday
Robert Buday co-founded Bloom Group LLC in 1998. Since then, he has worked with numerous professional services firms on thought leadership content development, marketing strategy and marketing programs. He is the lead author of the 2008 book Thoughts on Thought Leadership and the co-author of two Harvard Business Review articles, "A Consultant's Comeuppance" (2003) and "Marketing Breakthrough Products" (1999). He blogs at http://www.bloomgroup.com/blogs/bob.
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