Why B2B Companies Can't Ignore the 5th P of Marketing — Payments
Here's why the fifth P (payments) has proven to be an essential part of the marketing mix in 2022.
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For decades, marketers have relied on the four Ps — price, product, promotion and place — as staples of strategic planning. In 1960, E. Jerome McCarthy proposed the four Ps in his book, Basic Marketing: A Managerial Approach, and they are still relevant today. But there have been big changes in the cultural landscape since 1960, culminating with the digital explosion during the pandemic. And that's why the fifth P — payments — has proven to be an essential part of the marketing mix in 2022. Customer journey improvements now extend all the way through the payment journey, too, because buyers want to seamlessly transact on their terms, with their preferred payment methods.
Today, there are more ways to interact with brands, especially online, and thanks to their experiences with B2C companies, B2B buyers have leveled up their buying expectations. In fact, 51% of business buyers are attracted to B2B sites with an excellent B2C-like user experience. That's why now is the time for B2B businesses to modernize their payments. After all, B2B buyers are traditional consumers at their core and have increased expectations when it comes to transacting with the brands they prefer and trust. The risk of ignoring the fifth P as a core part of the B2B customer journey is huge.
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What B2C payments can teach B2B companies
B2C companies have already invested significant effort to determine what shoppers prefer, and the answer is simple: fast, convenient ways to pay their way during a seamless, omnichannel experience. As such, B2C merchants have a more established fifth P-based customer journey in place already.
Starbucks is a well-known example: They offer plenty of B2C payment methods, including cash, Apple Pay, credit cards, debit cards, Google Pay, Samsung Pay, PayPal, Starbucks cards — plus their own popular app. In fact, Starbucks' mobile payment app, launched in 2009, has synched with their customers' payment journey. The app has had the most mobile payment users in the U.S. until just recently. Today, Starbucks boasts an impressive 31.2 million loyal app customers who love the omnichannel payment method, second only to Apple, which has 43.9 million mobile payments users.
Starbucks has innovated payments to grow customer loyalty, effectively impacting marketing results without changing the product, price, place or promotion mix. Now, consider the fact that business buyers are coffee consumers, too. It's easy to see how they've been influenced by Starbucks and other B2C innovators and carried this expectation for seamless payments into the business world.
Related: How Fintech and Payments Innovations Will Disrupt Global Ecommerce
Credit cards aren't favored in B2B
Thanks to many sellers' existing merchant services, credit cards are the typical default payment method in digital B2B transactions. But credit cards aren't often the best payment method for B2B purchases. Although more than half of B2B buyers use credit cards to make online purchases, data from the Why More Payment Options Mean More Purchases report suggests they don't want to — 50% actually prefer to pay with methods other than credit cards when given the option. That's why business sellers that only accept credit card purchases stand to lose to competitors that offer more desirable payment alternatives.
Today, 90% of B2B buyers research payment options before purchasing from a new supplier. They're much savvier about how they expect to pay, thanks to their experiences as consumers. Now is the time for B2B businesses to modernize their payment options and go beyond credit cards. Building out a payments strategy for the complexities of B2B purchases can require a significant investment. It requires a sleek, sophisticated trade credit offering, along with net terms invoicing across all channels. The investment can pay off, though, because 15% of B2B buyers spend more when offered trade credit, as noted in the same TreviPay research. Even more importantly, 82% would choose one vendor over others if that vendor offered invoicing at checkout with 30-, 60- or 90-day terms.
Related: Will 2022 Spell the End of Traditional Credit Card Payments?
B2B payments need more than a simple B2C-like payment method
The behind-the-scenes plumbing is complicated for B2B payments, with invoicing options, payment terms, and all the required data so that Procure-to-Pay and Enterprise Resource Planning platforms can easily ingest the invoices. This complexity is complicated further by urgency: Today's B2B buyers want their preferred terms, and they want them to be offered on the spot.
According to Forrester Tech Tide 2022, B2B payment augmentation is increasingly critical to companies' ability to win, serve and retain business customers. Offering trade credit and net terms invoicing, automatic onboarding, instant decisioning and digitizing A/R are all needed to make the B2B experience feel as easy as a B2C ecommerce transaction for the B2B buyer. Fast decisioning qualifies and secures more buyers with the right payment terms and the right trade credit lines, ultimately growing a loyal buyer network.
B2B organizations considering a fifth-P strategy must contemplate: B2C-like payment acceptance methods; digital and mobile purchasing options; payments, invoicing and billing in one centralized location; invoicing, account reconciliation and overdue reminders; risk management and sophisticated fraud detection; more working capital for buyers; and integrations with a myriad of technology vendors.
The fifth P offers customer-centric benefits the entire organization should champion
A new payments solution touches almost every department in one way or another. If the emphasis is placed solely on the finance team's benefits, progress can drop off when dependencies include multiple business units. Instead, leadership must focus on customer-centric benefits that everyone can appreciate. These benefits include offering buyers consistent, quality service and support throughout their entire customer journey, creating a virtuous cycle of repeat purchases.
Many businesses invest a significant amount of time and energy in improving their buyer journey but come to a screeching halt at payments. The truly customer-centric road continues all the way through the fifth P, and previously siloed teams must collaborate to bring digital payments and invoicing transformation to life or risk losing out to competitors.