Avoiding B2B One-Night Stands

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We’ve all probably done this: a business that sells to business customers offers a special deal or promotion to attract new business or to liquidate inventory, and then is unable to convert those bargain hunters into loyal, repeat customers. For example, a restaurant supplies store offers a great bargain on coveted cookware, hoping to lure new customers and/or to sell additional products, but only the bargain hunters show up. Or an event organizer provides free or highly discounted booth space at an undersold trade show in order to make the trade show more appealing to business customers, and the organizer only succeeds in alienating his current exhibitors; not attracting new ones for the next event. Or a software firm offers unlimited use free software with a premium upgrade, but nobody opts for the upgrade.

Luring New Business Customers with Evaluation Kits. One of my favorite examples of offering “free samples” or “at cost samples” to B2B prospects was National Semiconductor’s evaluation kits and boards. When Phil Gibson was running Web marketing for National Semiconductor, he developed a very sophisticated software toolset, known as WEBENCH®, which design engineers could use to design one-off evaluation units.TI's WEBENCH® Designer (National Semiconductor was acquired by Texas Instruments—in part because of the value of these tools and this marketing approach.) National would then ship either a kit for the engineer to build the prototype board, or the company would assemble the one-off custom board and ship it out the next day—at close to cost.

Phil’s team also provided sophisticated free software simulation tools that enabled customers to create lots of designs and test the designs for thermal efficiency, power consumption, costs, and so on. This was a great service for prospective customers, and it resulted in attractive prospective customers whose eventual orders (placed through National Semiconductor’s distributors) would be in the tens of thousands of units. You can read more about the evolution of WEBENCH® tools here and here. Throughout his long tenure at National Semiconductor, Phil had to fight many battles to keep these design and evaluation tools free. There were certainly customers (and competitors) who took advantage, used these tools, and never purchased from National Semiconductor. These included university students from all over the world, who would use the design and simulation tools for their senior projects, resulting in big spikes in usage every spring. On the positive side, acquiring engineering students as fans and devotees is a great marketing move!

Free Trials. We’ve all taken advantage of free trials—particularly software packages that we try for a limited time, or with limited functionality, and then decide whether or not to upgrade. This has proven to be an excellent way to attract prospects, weed out the serious buyers, and get a steady stream of low-cost conversions. These free trials can be quite sophisticated. A great example is elasticserver.com, which was an early offering from CohesiveFT. Essentially, it’s a free “software factory,” that lets developers configure and manage a specific software stack configuration in the cloud. From its earliest days, CohesiveFT understood that providing developers with free self-service tools to do their jobs and then charge them for production deployments was both the easiest way to find early adopters and to convert them to become customers or partners. Lead generation becomes really easy when customers design and configure their stuff using your tools.

You can also offer free trials through your partner channels. Here’s another great example from CohesiveFT. VNS3 is a virtual cloud computing security perimeter that corporate IT architects can use to extend their data centers securely to one or more clouds. The best way to see how easy it is to set up this firewall/router/VPN appliance is to DO it. So CohesiveFT offers a 30-day free trial through Amazon’s AWS Marketplace. CohesiveFT VNS3 Build Your Own Cloud NetworkThat gives IT evaluators ample time to deploy and test the security across one or more cloud computing suppliers. On its own website, CohesiveFT promotes its VNS3 Free Edition with a 7-day Free Implementation support. The support these evaluators receive is really top notch. If they have a question or run into a problem, they are able to talk/email/chat directly with the senior developers/architects at CohesiveFT. Not providing top-notch support for technical evaluators would be suicide for this marketing strategy. So the 7-day time window is a great way to bound the investment and focus the attention of both parties.

Excess Inventory/Yield Management. Many businesses find themselves in the situation of needing to shed excess inventory and/or to fill capacity. In general, what I’ve learned is that this is NOT the way to attract prospects. These one-off bargains should be offered in one (or both) of two ways:

  1. Offer excess inventory, bargains and discounts to your existing customers, not prospects. They are the ones who already value your products. They will enjoy and take advantage of special deals.
  2. If you need to get rid of excess inventory at a steep discount, do it through anonymous third-party channels and aggregators, such as eBay or Hotwire or Techsoup—aggregators through which you can move excess inventory at a discount without cannibalizing your own brand value.

Bottom Line: Lure B2B Prospects with Tools that Help Them Do Their Jobs!

Avoid using discounts and special deals to lure prospective B2B customers. But do invest in offering sophisticated evaluations that will enable prospective customers to get hooked on your offerings. Always make these valuable tools free. Your goal is for customers to begin doing their jobs or managing their stuff using your free tools. Then you can convert them to long-term, paying, and loyal customers.

Are Your Daily Deal Customers Just One-Night Stands?
How Might You Convert Them to Loyal, Repeat Customers?
By Ronni T. Marshak, EVP and Senior Consultant, Patricia Seybold Group, July 31, 2014

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