B2B Brand Reputation

Part
01
of four
Part
01

Insights Surrounding Brand Reputation

A strong brand reputation would make B2B customers more disposed to buying from a supplier.

LONG-TERM RELATIONSHIPS

  • B2B buying is usually a lengthy process involving multiple decision-makers. As such, B2B companies need to think long-term when marketing their brands. Businesses are shifting from being seen as vendors/suppliers to play the more involved role of being strategic partners in long-term, mutually beneficial relationships.
  • A long-term approach would require building relationships across several channels to establish trust. Brand reputation is crucial to this approach, as the buyers need to be able to place their faith in the company's ability to deliver.
  • According to research, about 32% of people say brand reputation is vital when choosing a supplier. It also stated that brand-building should take up at least 46% of B2B marketing spend.

PURCHASES

  • Compared to B2C companies, business purchases involving B2B companies focus more on brand reputation (39%) rather than price (27%) and features (34%).
  • B2B customers often face higher switching costs when moving from one vendor to another. Except with pure commodities, they might need to train their employees on how to operate a supplier's equipment. As such, they hardly make one-off purchases.
  • B2B customers thus consider the longevity and vitality of brands before making purchases.
  • Similarly, due to future relationship implications and the scrutiny that goes into choosing a B2B supplier, a strong brand reputation would make B2B customers more disposed to buying from a supplier.

RISK REDUCTION

  • B2B decision-makers would pay a premium to get into business with reputable companies, as it reduces their risk.
  • Doing business with a reputable B2B company not only reduces risk, but it may also serve to boost the buyer's corporate reputation as a result of their association.
  • According to a McKinsey study, B2B brands with a strong reputation outperformed others by 20%, increasing by 7% from the previous year.

NETWORKING

  • A strong brand reputation aids networking and access to more customers for B2B companies.
  • With the uprise of internet adoption and social media use, customers can now research new brands, customer experience, and reviews before selecting a product.
  • According to Top Floor, millennials comprise 50% of all B2B buyers, 84% of which are utilizing social media to research brands and products during the decision-making process.
  • However, peer-to-peer reviews also contribute significantly to the brand. In 2016, 62% of B2B customers relied more on peer-to-peer reviews than their research when choosing B2B brands.

LOYALTY

  • A strong brand reputation is crucial for driving customer loyalty, as 71% of B2B customers are actively thinking about taking their businesses elsewhere.
  • However, about 55% of B2B customers in the US would recommend a brand having obtained a pleasant experience.
  • Also, 42% of customers express loyalty to brands that have a solid reputation in the eyes of their family and friends.
Part
02
of four
Part
02

Positive Case Studies

Two case studies detailing a brand's reputation in the B2B market having a positive effect on its bottom line include Salesforce and HubSpot. Both companies have enjoyed exceptional reputations that have led them acquiring considerable market shares within their respective markets.

Salesforce

  • Salesforce operates as an integrated CRM, or customer relationship management, solution that functions to bring both businesses and their clients/customers together. The solution provides businesses with a comprehensive view of each their clients. It provides services to multiple industries, including banking, communications, consumer goods, government, healthcare, insurance, manufacturing, retail, wealth management, and travel and hospitality, among others.
  • Business.com ranks Salesforce as "The Best CRM Software of 2020." Salesforce has received praise for its helpful features, which include a comprehensive ecosystem, simple import process, popular integrations, and practical productivity functions.
  • Additionally, it has a rating of 4.36 out of 5 stars on Software Advice from 13,698 reviews, while Capterra gives it a rating of 4.4 out of 5 stars from 13,686 reviews, indicating excellent word of mouth and an exceptional reputation. Some recognitions that the company has received include being named "Fortune World's Most Admired Companies" in 2019 and being listed as one of the "Most Innovative Companies in the World" in 2011-2016.
  • The brand's positive reputation is evident with its annual Dreamforce Conference, which draws over 170,000 attendees every year. Visitors to its site can search through over 250 various client success stories by company type, industry, company size, or product.
  • Currently, more than 150,000 different organizations utilize Salesforce to expand their business, including T-Mobile, TransAmerica, Unilever, etc. Its reputation resulted in it becoming the quickest enterprise software business within its market to reach an annual revenue of $10 billion. As of 2019, the company is valued at approximately $130 billion.
  • In the CRM market, Salesforce maintains a market share of about 20%, as of 2019.

HubSpot

  • HubSpot is an internet marketing company and also serves as a CRM solution provider, helping more than 57% of its clients to witness sales growth in 2018. Its platform consolidates community, software, and education to assist businesses in growing. HubSpot's growth platform enables the various departments (e.g., customer service, marketing, sales) within businesses to collaborate effectively.
  • On its official website, the company has a section dedicated to showcasing successful case studies involving its services.
  • It currently has around 68,800 clients globally in more than 100 nations, including VM Ware, G2 Crowd, Door Dash, Subaru., among many others. Some of the industries it provides its services to include ecommerce, healthcare, financial services, real estate, software, manufacturing, education, professional services, etc. Furthermore, the company was able to attract 26,000 attendees, including business owners and professionals, to its Inbound 2019 session.
  • HubSpot has received stellar reviews from businesses and users. On Capterra, HubSpot has a rating of 4.5 out of 5 stars from 2,430 reviews, while it has been giving a rating of 4.3 out of 5 stars on G2 from 5,757 reviews.
  • Additionally, PC Magazine recognized HubSpot as having the "Best Marketing Automation Software & Best Email Software," while Gartner Peer Insights named it the "Best CRM Lead Management Software." Also, G2 Crowd acknowledged HubSpot as a "Leader in Marketing Automation, Web Content Management, CRM, and More."
  • The insights provided above are indicative of a company that maintains a positive brand reputation within the B2B market, assisting HubSpot in securing a 21.36% share of the marketing automation market, according to Datanyze. Additionally, the company has also been able to attract over 200,000 inbound professionals to be trained and certified through the HubSpot Academy, which provides them with the skills needed to expand their business.
Part
03
of four
Part
03

Negative Case Studies

Equifax and Boeing are two B2B companies with a bottom line negatively impacted by the brand's reputation. Equifax's reputation suffered from a data breach in 2017 affecting 147 million of its customers. Boeing's reputation for safety suffered when two jets in its most modern and technologically advanced airline models crashed. This case study includes a company overview, a short explanation of the incident leading to the negative reputation, and the financial impact the incident had on the company.

Equifax

  • Equifax is a data, analytics, and technology company providing consumer credit reporting services to other businesses, governments, and individuals. The company is traded on the New York Stock Exchange (NYSE), employs over 11,000 persons at its operations and investments in 24 countries, and has headquarters in Atlanta.
  • On 29 July 2017, Equifax discovered a data breach impacting the private data of 147 million customers personal and financial information. The breach, which began on May 13, 2017, exposed a website application vulnerability named Apache Struts CVE-2017-5638, in an open source software used by Equifax.
  • During the investigation into the breach, Equifax admitted that it was told in March 2017 of the vulnerability in the software and of patch to fix it. Equifax failed to apply the patch in a timely manner.
  • On 22 July 2019, Equifax announced that it had arrived at a settlement amounting to $671 million that resolved class action litigation from multiple districts, and investigations from the New York Department of Financial Services (NYDFS), the Attorney General of 48 states, Puerto Rico and the District of Columbia, the Consumer Financial Protection Bureau (CFPB), and the Federal Trade Commission (FTC). Estimates of the cost to address fallout from the breach stand at $1.4 billion.
  • The settlement comprise payments of $425 million to a consumer restitution fund and $290.5 million to pay attorney's fees and cost related to the multi-district litigation, and to various state and federal agencies. Under the settlement, persons affected by the breach have four years to access free credit monitoring from Experian and TransUnion, and ten years from Equifax.
  • Shares fell 2.5% on the announcement of a Federal Trade Commission (FTC) probe, and in September 2017, just two months after the breach, the share price was down 33%. On 5 September 2017, Equifax's shares were worth $141.39. By 19 September 2017, the share price fell $45.39 to $96.00. In the intervening years, the share price has recovered to $154.72 as at 9 February 2020.
  • In the company's annual report for 2018, revenue increased by 1% over the comparative period in 2017, but net income decreased to $300 million when compared to 2017 figures. Equifax attributed the decrease to a $307 million investment in data security. Overall revenue for its US operations decreased by 1%, however, international operations increased by 7%. The WorkForce Solutions subsidiary increased its revenue by 8%.

Boeing

  • Boeing is an aerospace company operating with three business units: defense, space and security, commercial airplanes, and global services. With corporate headquarters in Chicago, Boeing employs over 153,000 persons in over 65 countries.
  • On 29 October 2018, a Boeing 737 airline with 189 persons onboard, operated by Lion Air, crashed into the sea off the coast of Jakarta, Indonesia. On 10 March 2019, another Boeing 737, this time operated by Ethiopian Airlines, crashed with 157 persons on board.
  • Despite the Boeing 737 being the company's newest and most advanced jetliner, the Federal Aviation Authority grounded the entire fleet on 13 March 2019, after several other countries had already done so. A Joint Authorities Technical Review Committee (JATR), comprises 28 representatives from nine civil aviation authorities across the globe, and from the FAA and the National Aeronautics and Space Administration (NASA).
  • The JATR released its final report in October 2019, where culpability for the crash was attributed to Boeing and to the FAA. On Boeing's part, developments of the MCAS flight control system changed it from a "benign to an aggressive" system, and the company's failure to communicate the impact of these changes to the FAA, were the cause of the failure. The FAA was reprimanded for failing to update the aircraft certification process.
  • Boeing fired David Muilenburg as CEO in December 2019 and replaced him with David Calhoun. US Treasury Secretary Steve Mnuchin is quoted as saying the Boeing Max 737 crisis has the potential to slow US gross domestic product growth by 0.5% in 2020.
  • The grounding of the Max 737 impacted orders for the airline, the share price of the company, and annual financial returns. Orders fell by 53% over the comparative period in 2018. Overall orders ended up at a net minus 87.
  • On 26 February 2019, Boeing's share price was $435.44 and by 26 March 2019 the share price had fallen $61.23 to $374.21. On 21 January 2020, the share price was $309.00. By 9 February 2020, the share price had rebounded to $344.67.
  • In 2019, company revenue fell 24% over 2018 figures. Annual revenue for 2019 was $76 billion, down from $101 billion in 2018. The commercial airlines business unit revenue fell 44% to $32 billion from $57 billion.
  • The company had no new orders for jetliners in January 2020. It was also reported that Boeing was seeking over $10 billion in loans to offset expenses emanating from the Max 737 crisis.

Research Strategy

To create the two case studies where brand reputation impacted negatively on a B2B company's bottom line, the research team began with a search for B2B companies with negative brand reputations. This search led to an article from bankinfosecurity.com on the total cost to Equifax of the data breach which occurred in 2017. It also led to an article from CNBC on the change in CEO for Boeing. Next, the team completed background research on the specific incidents causing the negative brand reputation. This yielded valuable information on the incidents from the New York Times and from USA Today for both companies. The team then searched for information on the impact of the incidents on company bottom line, beginning with an examination of share prices prior to, and after the incidents. A targeted search for press releases on financial data from the website of both companies were sought, and found. The brief for both companies was completed with a general review of business publications articles in CNBC, CNET, CNN and marketwatch.com.
Part
04
of four
Part
04

Change in Importance

Commoditization, increasing variety, and the growth of e-commerce are three insights surrounding the growing importance of brand reputation to B2B companies compared to the last 5-10 years and beyond.

Commoditization

  • Greater commoditization has made it difficult for B2B companies to "differentiate their offerings along concrete dimensions, such as performance features."
  • With the world getting smaller, differentiation has become a vital requirement for B2B companies.
  • For instance, searching the internet for a verve manufacturer about 10 to 15 years ago would return about 2 options. The expectations of price and service would differ because there are only two experienced options. Therefore, switching options would be less frequent compared to recent times when different suppliers are readily available with a simple search.
  • Commoditization in the B2B space is driven by the internet, the ability of B2B customers to review B2B companies, and the lack of control B2B companies currently have over their brand.
  • As such, B2B companies are continuing to innovate and reinvest to maintain their brand relevance.
  • Aside from being unique, B2B companies need to build a brand reputation that demonstrates the added value their products or services can offer to the market.

Increasing variety

  • An increase in variety could be traced to the greater commoditization of the B2B market and the entrance of low-cost competitors into the B2B market. It's becoming more difficult for customers to grasp all the benefits of a B2B company’s offerings and effectively compare them.
  • New competitors are using lower prices to enter the market while still meeting customer’s requirements.
  • Globalization has made it easier for new competitors to enter the B2B market as a result of the ability to replicate and commoditize becoming inexpensive. As a result, B2B customers now have more choices.
  • For instance, about 15 years ago, working with a "printer, or a distributor, a car shop, or even a healthcare provider, the switching costs were great for consumers and business-to-business customers alike."
  • This was because finding a trusted alternative was more difficult at the time than it is now because a "vision on pricing or quality was lacking."
  • Previously, choosing a B2B company was based on trust which has been built through long years of buying cycles. However, in recent times, B2B companies do not have that luxury anymore.
  • As such, it has become important for B2B companies to continue to improve their brand reputation to remain relevant.

Growth of eCommerce

  • The current state of e-commerce makes it possible for "customers to choose how to discover offerings, evaluate their options, and even transact online, bypassing traditional sales channels that in the past have been important in communicating the value and benefits of a suppliers’ offering."
  • Take for instance "millennials shop these days, they want to do it on their timetable and devices."
  • Their decision-making no longer depends on the usual one-on-one relationship.
  • The growth of e-commerce has also increased the target market for B2B companies. Therefore, B2B companies need to leverage this expanded target market by building a strong brand reputation.
Sources
Sources

From Part 03