How data brokers hurt your bottom line (part 2)

As a business owner, you’re probably tired of salespeople coming into your store, calling you, sending direct mail, or e-mailing you about products you don’t need. Have you ever wondered why you get these messages?

In part 1 of this series, we explained how expensive and inaccurate data raises the price of small business products. This time around, we’ll explore how the B2B selling process creates barriers for small businesses, owing to structural factors like account size and third-party selling.^‍

^{Account size}

Many B2B providers use resource-intensive sales strategies to target their customers. For example, in account-based sales, providers target their customers individually: instead of one salesperson going after multiple clients, the entire business comes together and targets a single organization. Selling to an organization requires a lot of time and money - sales must be large enough to offset the costs.

As such, providers often ignore small businesses because of their limited spending power (read: small businesses do not have large corporate budgets). That means you may never hear about certain products, let alone get offers for them.

On the other hand, providers that do target small businesses spread their sales and marketing budgets across a wider pool of potential customers. That is, B2SMB providers are less likely to concentrate their resources on a single SMB customer, which means they are less likely to understand your unique pain points or know the right time to approach you. For you as a business owner, that means fewer offers that fit your particular needs and more unproductive conversations with salespeople.

^{Third-party sellers}

Sometimes, you may be confused about the identity or incentives of the person selling to you. That makes sense. Rather than sell directly to businesses, B2B providers often rely on outside sales networks (third-party sellers) to sell on their behalf. As in previous cases, providers offset additional costs (in this case, the overhead from hiring third-party sellers) by raising the prices of products you want. 

Since third-party sellers are paid on a commission basis, they try to facilitate as many transactions as possible. That puts pressure on salespeople to move on from each customer quickly, which can lower the quality of their service. Many of your questions may go unanswered, and you may not have time to negotiate either. With third-party selling, relationships between salespeople and small businesses are not set up for the long run, which means salespeople can’t improve their offers over time as you provide them with feedback. 

Worse still, some salespeople work for several providers and sell many different things simultaneously, so they don’t always have time to learn about each product they handle. Given this lack of specialization on the part of salespeople, small businesses are less likely to get offers that fit their needs and more likely to abandon a provider in the long run. Providers deal with this higher churn risk from small businesses by charging remaining customers a premium for their services.

^{Higher costs translate to higher prices}

The pattern is always the same: rising costs for B2B providers lead to higher prices for you as a small business. At Hansa, we are helping members receive better offers - for products they actually need - by getting their data to the right people. The best part? You don’t pay anything.

If you want us to help, reach out to info@withhansa.com and tell us about your business. Schedule a free consultation at your earliest convenience!

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