The landscape of business-to-business (B2B) purchasing has changed considerably with shifts in sales channel strategy, the availability of eCommerce technology and associated services, and the demands of the new generation of our workforce today.
In a short span of five years, there have been notable shifts in sales strategies. Take for instance brands selling direct-to-consumer, like major PC companies selling to SMBs. Or, B2C retailers servicing business customers, such as grocery stores competing with food companies, and traditionally B2C eMarketplaces standing up dedicated sites to target SMBs, like eMarketplace giants. These have resulted in not only a rebalancing of power amongst suppliers, distributors, and end-consumers but also new ownership of customer relationship and loyalty.
Aside from the inevitable cannibalization amongst sales channels, the long-term benefits for all parties outweigh the short-term pain.
Catching up to the B2C world, B2B procurement has been moving online from traditional offline at an accelerated rate, thanks to the emergence of ready-to-use eCommerce platforms and developers, like Magento. Moving sales online is not necessarily to replace offline channels, but to complement and enhance the purchasing experience. As our workforce moves to a digitally native demographic, B2B buyers will likely, if not already, make purchases in multiple ways and expect an immediate, transparent and streamlined purchasing experience. In fact, 98% of B2B buyers believe it’s important to have the same purchasing experience across all channels (in-store, sales, online).
So, what does this mean for B2B payments? With 63.9% of B2B buyers expect to pay online and 55.6% require multiple payment options, what will B2B companies do in 2020? Reflecting on what we have learned, heard and seen in the past three years, 3 trends stood out and expect to be executed in 2020.
1. Multiple payment methods: Move the traditional offline payment experience online
Given the history of eCommerce, which was designed for B2C, it is not surprising that credit cards are the widely adopted payment method for B2B online purchases too. However, B2B purchases are fundamentally different than B2C. B2B orders are repeatable, sizable and often have a lower profit margin than B2C. From an economic standpoint, credit cards do not work for long term B2B accounts.
In 2020, we expect to see companies offering multiple payment methods both online and offline. Whether it is online direct debit, net terms (in-house credit or white-labeled credit management), cards (open loop or closed loop), or other payment schemes, such as PayPal, B2B customers expect to have a synchronized purchase experience online and offline.
2. Account-based payment strategy
The success of an account-based marketing strategy is due to the emphasis on personalized experience and engagement. In 2020, we expect to see an account-based payment offering, which demonstrates the same concept. If executed successfully, companies will see a lower cart abandonment rate, an increase in speed and ease of completing each transaction, and an additional profit margin.
Every payment option has its benefits and drawbacks. Depending on the needs of the customer segmentation, sales strategy and, risk profile, companies should offer the appropriate payment methods.
3. System Integrations: Internally and externally
We all heard the success story of how Enterprise won over insurance companies through system integrations. Companies that can streamline the procure-to-pay (P2P) process will win. Many P2P tools in the market lack the payment option, especially for eCommerce. In 2020, we expect companies to figure out how to create a “center-of-truth” between their offline and online commerce. and integrate with their key customers to make procurement as simple as possible.
The heads of eCommerce have worked tirelessly in the past five years to roll out, optimize, and maximize their eCommerce presence. Unlike SEO optimization, payment strategy is difficult to create and execute as it requires intercompany collaboration among eCommerce, finance, sales and risk departments. If executed correctly, a sound payment strategy will differentiate your business from your competitors. We expect to see departments breaking the silo, so no one drops the baton in helping B2B buyers complete each purchase.