I Used to Sell to Consumers

This content was produced by 21 Hats.

See Full Show Notes By 21 Hats

Podcast Transcript

Full Episode Transcript:

Loren Feldman:
Welcome Paul, Jaci, and Sarah. It’s great to have you here. I want to start today by asking about something all three of you do, which is, you all sell B2B, to other businesses. And we’ve certainly noted that here previously, but we’ve never had a conversation in which we specifically addressed the challenges, the opportunities, the pros and cons of selling to businesses as opposed to consumers.

This was triggered for me by a question I saw on the small business subreddit. The question was headlined, “B2B is difficult.” Let me read it to you:

“Everyone wants to be able to sell to someone, but doesn’t want to be sold to, myself included. We see it here often with the sheer disdain toward marketer’s cold calls, emails, really anything that wasn’t asked for. I realize that selling to us types is harder. So why are we the way that we are? Is it not hypocritical?”

So I want to get your answers to that. But first, before we talk specifically about those questions, and about selling B2B in general, I want to talk about the numbers. Until I saw this question, it had never really occurred to me to check and see what percentage of the regulars on this podcast sell B2B. And somewhat to my surprise, it turns out all of them do, including me. Of course, three have significant consumer businesses as well: Liz, Laura, and Jay. But I was kind of surprised by that. So I asked ChatGPT what percentage of businesses sell B2B. Any of you have a guess? Do you know?

Paul Downs:
Small. I would say 15.

Jaci Russo:
The opposite. I would say the majority.

Loren Feldman:
And you would be right, Jaci. Paul, I was kind of thinking along your lines.

Paul Downs:
Well, what’s the definition of a business?

Sarah Segal:
Wait, I have a question. I’m confused. So you said, “What’s the percentage of businesses—”

Loren Feldman:
The percentage of businesses that sell specifically to other businesses, as opposed to consumers. And according to ChatGPT, the percentage is 75 percent.

Paul Downs:
Yeah, but ChatGPT makes stuff up all the time. So the first thing I would want to know is: What is their definition of a business? Because my understanding is the vast majority of businesses—if you just number them by things that are called business—are quite small, usually single-person. And so that’s a huge number of businesses that probably aren’t selling B2B and would be the denominator in the percentage.

I asked ChatGPT a couple of days ago: When did carrots start to be a popular food item? And ChatGPT told me, to my surprise, that it didn’t happen until the 14th century. And it took about 10 seconds of looking to realize that carrots have been around in European cuisine for at least 10,000 years before that. So just because ChatGPT gave you an answer doesn’t mean anything to me anymore.

Sarah Segal:
Here’s the real question, Paul. Why on Earth were you asking that on ChatGPT? [Laughter]

Paul Downs:
My wife and I were just talking about cooking. And what I was curious about was whether carrots were one of those things, like tomatoes or potatoes, that had been introduced to European cuisine after America was discovered. And so the answer, “the 13th century,” doesn’t make any sense in any context, because it will be prior to Columbus finding the New World, but it will be so much farther after people started cooking in Europe and other places, that it’s just like, “Where did that even come from?”

Now, to be fair, this was Google’s AI. There’s a little summary at the top of the search results, saying, “Here’s what we think it is,” and then all the search results immediately below that directly contradicted this AI-generated answer.

Loren Feldman:
And that’s the same place that said a popular topping for pizza is glue. So yes, you’re correct, AI can be wrong. But Jaci knew. Jaci, how did you know?

Jaci Russo:
Because that’s what we do. We ourselves are B2B, but we primarily work with B2B clients, and so our clients sell to other businesses. And even though I know, I am still regularly amazed by how many businesses are out there that I’ve never heard of in industries that I’ve never heard of making things that I’ve never heard of that are sold in the millions, and sometimes billions. The layers of nuance in industry are fascinating to me every day. And there are far more businesses in this country that sell goods and services to other businesses for commercial use than there are businesses that are retail or open for everyone to come in and buy.

Sarah Segal:
But my question also is, where’s the money at? Like, you know, the percentage—does it make sense? Is the money really in one, B2B or B2C?

Jaci Russo:
Yeah, there are more dollars moved in the B2B space than there are in the B2C space in the 23 years that I’ve been doing this.

Paul Downs:
Are you typical of all businesses? I’m still very suspicious of this question. Because A) we don’t know what the definition of a business is. We don’t know how many of them there are. Are there any boundaries, in terms of size? Is the size dollars? Is it employees? And then, the amount sold: Is that in dollars? Is that as a percentage of revenues? Like, all this is so vague, I just have a hard time with it.

Jaci Russo:
I would define B2B—we’ll just start there—with a business that sells a good or service to other businesses. And by contrast, B2C, business to consumer—the typical way to kind of differentiate those, in just layman terms, is, in the B2C space, you typically have either a website or a brick-and-mortar store that is open to anyone. Just about anyone could buy and use the things you sell. And so, if you look at a company that manufactures lug nuts that are to be installed in the U.S. on 18-wheelers, that’s not a regular thing that everyday people need. But shampoo and soap are. So there’s your kind of two differences.

Paul Downs:
Okay, that’s a definition. I mean, if the answer that Loren kicked out actually reflects that definition, sure. But sorry, Loren, what did you say was the percentage of businesses by this—

Loren Feldman:
Seventy-five percent.

Paul Downs:
Seventy-five percent of all businesses are primarily B2B?

Jaci Russo:
Yes.

Paul Downs:
I find that difficult to believe. Because, again, I don’t know what the definition of a business is.

Loren Feldman:
I think you’re asking some good questions, Paul. I think there are answers to them. But I don’t have those answers. I do think there’s still an interesting conversation to be had here, though, about what it takes to sell B2B and why you guys chose to do it and how you wound up where you are—and the questions that the person asked on the subreddit.

Paul Downs:
Well, I will say that I’ve done both, and that for the first couple of decades of my business, I was primarily business-to-consumer. And then we switched focus in our business to other entities besides consumers: could be business, could be government, could be military. But it’s not consumers. It is way easier to make the sales to anybody but consumers, at least what we sold, because it was a high-cost, high-commitment item.

Sarah Segal:
I was gonna say, it depends on the price.

Paul Downs:
Yeah. In general, yeah, it’s easier to sell to businesses because the person you’re talking to, it’s rarely their money. That makes it a hell of a lot easier.

Loren Feldman:
Jaci, did you make a deliberate decision to specialize in B2B?

Jaci Russo:
We started in B2C. My first couple of years of clients were all clients in a B2C space: auto dealers and restaurants and furniture and casinos and hospitals—all kinds of general retail, B2C. I realized about 2008 that the shift that was happening in the advertising industry was going to dramatically change media buying and traditional advertising and my future. And we had a real skill-set in the strategy. And we had started to do some B2B work, and we had started to be more involved in the creation of strategic planning. And we liked that better, and quite honestly, it was more profitable. And so we transitioned.

Loren Feldman:
Did you have the same sense that Paul had, that it’s easier to sell to businesses than to consumers?

Jaci Russo:
I think so—not for the same reasons that Paul just mentioned. Because a lot of the businesses that we work with, we’re working with the people who own the business. And so it is their money. But I find that it’s easier, because it’s specific. And I think anytime you can be specific, it’s going to be a lot easier to have a plan for what you’re going to do, to be more successful with that plan, to know what is and is not working, to implement that plan.

Retail can be so much wider, and therefore vaguer, because it’s like: Who are you selling to? You’re trying to sell to almost everybody. That’s going to be a very hard success. I’ll go back to the lug nuts for 18-wheelers. There’s a finite number of companies that are buying lug nuts for 18-wheelers. So, it’s a lot easier, I think, to be successful when you have a finite, specific number of people to go sell to. You just have to get to know them really well, develop a relationship with them, and sell.

Loren Feldman:
Sarah, you sell your service to other businesses. But some of them are buying your services to try to reach consumers. Do you think about this much? Does it make a difference to you: B2B, B2C?

Sarah Segal:
We have both. So we have a lot of lifestyle clients, but we always have a handful of B2B clients. I have to say that I agree with Jaci that B2B pays better. I mean, it just does.

Jaci Russo:
Don’t tell the others! [Laughter]

Sarah Segal:
Yeah, they have bigger budgets. You know, it’s there. They’re bigger industry. They are harder, in terms of what we do, in terms of press and media and social media and content. They’re harder to service those, because you’re always challenged and trying to—some of them just want trade recognition, but most of them come to us because they have the trade already, but they want to break through into general business coverage. And so we do a lot of content and news creation on their behalf, which is a lot of work. So, while they pay better, we’re also having to do a lot more strategic thinking for them.

And then in terms of the lifestyle, they’re easy, they’re fun, they make the day go by quickly. You get satisfied when your client is featured in Vogue, or in some lifestyle publication, like a Pop Sugar or what have you. That’s fun. So I like having both, because I think it gives us a balance. And we’re able to take learnings from each kind of client. We’re learning different strategies and tactics.

Loren Feldman:
So the person who wrote this question on the subreddit has a slightly different perspective than you guys, I think. His question suggested—the headline was “B2B is difficult.” And it was making the point that other businesspeople who this person is trying to reach don’t want to be reached a lot of the time. They’re not asking for the kind of outreach this person is trying to do.

Sarah Segal:
So, bad outreach, I’m gonna say. Because—sorry to interrupt you, Loren—on any given day, my inbox has at least 10, if not 15, cold emails or follow-up to previous emails of somebody. I don’t know why. I’m like on some sort of list where people are trying to guarantee me calls to grow my business. I get those all day, every day. I actually posted on LinkedIn a complaint the other day about people putting “Thoughts?” in the subject line to try to make me not realize what it was. And they all use the same tactics over and over again.

It’s very rare that I get one that is valuable. I got one the other day, and I kept it because it was smart. It was a great way to reach out to me. I didn’t need the particular service, but the woman provided me with insights about my company and free stuff, something valuable for me as a business owner. So that was good. It wasn’t just a, “Hey, I can guarantee you 25 calls so you can grow your business.” I don’t love the deluge of cold emails, but I’m open to thoughtful strategic targeted emails.

Jaci Russo:
Those people are selling, and they’re selling—and I’m using air quotes—with false promises. There’s no social proof. They don’t know you. They don’t know what they can deliver for you. They are lying. And they make all of our industry look bad. And I’m going to revisit my need for some licensing and rules and regulations around it. But that’s a topic for another podcast [episode].

But the ones that you saved are the same ones that I save every once in a while, the ones that cut through the clutter, because they’re not selling. They’re sharing information of value. They’re serving. They’re delivering something that can help us with our jobs. So the person who started this on Reddit: Sure, nobody likes being sold to. I went to dinner with my in-laws last night, and my father-in-law was on a rant about TV ads, and how horrible all the TV ads are. And I was like, “Well, if you don’t want to be sold reverse mortgages and hearing aids and Medicaid supplements, stop watching old-people TV. I don’t know what to tell you. But that’s what they’re doing, is they’re selling the things that they think the audience of that TV station wants to watch.”

Sarah Segal:
I just want to add to that: For example, we pitch media, right? And a reporter can know that if we’re just throwing spaghetti at the wall and blasting them. Or if we’re reaching out to them individually and looking at what they’re reading and really getting to know them before we reach out. You can tell.

Jaci Russo:
Oh, you mean doing your job? Yeah.

Sarah Segal:
Yeah.

Jaci Russo:
Yeah, it comes through loud and clear. When professionals do their job and have research and expertise and put thoughts together, then it’s not spam. It’s sharing and serving. And that will get you in the door most of the time.

Paul Downs:
I think that the fundamental insight for the person who asked the question on Reddit is that, if what you’re doing isn’t working, think about what you can do to make it better. Are you pitching a good or service that’s a commodity, and you’re just spamming people and hoping for a point-one-percent return or something? I’ve run into some tough moments in my business and always got the advice from people who knew me well. It’s like, you’re trying to blame the economy. You’re trying to blame this. You’re trying to blame that. Don’t. Do a better job, and you’re gonna have a better outcome.

So, we don’t really know this person on Reddit, what they’re trying to sell, what their approach is, and then complaining, “It isn’t working.” So rather than put the onus on the people who are getting whatever crappy message this person is sending out, I would suggest that that person figure out why their message is generic, poorly timed, not relevant, to the people that are receiving it, and try to figure out a way to do this differently. Because business owners have problems just like everybody else.

I have, in the past, actually responded to pretty much a cold call that was extremely helpful and has ended up saving me, oh, probably $100,000 in credit card fees. And that was someone who contacted me cold but had a very compelling pitch that, “Hey, I’m pretty sure that you’re not getting a good deal from credit card companies. And I’m absolutely willing to explain to you exactly what’s wrong. If you just send me your current statement, I’ll analyze it for you.” And I was like, “Yeah, I’m sure I’m getting ripped off by this terrible bank. So why not?”

And it turned out to be a great relationship and has been extremely valuable to me. So that person sent me something with a reasonable action I could take and that was likely to be applicable to me, because we charge half a million bucks or more in credit cards every year. And he timed it right, too. So a lot of our ability to respond to messages is also just like what’s happening that particular moment when it comes across. And that’s just luck.

Loren Feldman:
Paul, I realize it was a while ago, but when you made the shift from selling furniture to consumers to making conference tables specifically for organizations of various types, was there a learning curve for trying to reach that different customer that you had to go through?

Paul Downs:
I would say, yes, there’s always a learning curve whenever you do anything new. And it’s been a while. We, at first, tried pretty much the same playbook that we had been doing with consumers, and we found that it was just easier to close the deal. And as I said, in my case, we’re selling an expensive item. But it’s not something you could just spam a million people and sell a table. They’re looking for a table. And both in the residential and in the business context, those people were contacting me and saying, “I need what you do. Now, show me what you’re gonna do.”

And what we found was, the same playbook worked way better for the business and government clients, because the person making the decision was rarely spending their own money. And if they were a business owner and they had contacted us, then they already knew what they were in for. And these people are usually fairly prosperous, and the money just wasn’t that big of an issue for them. So it was a much easier business for us to be in. Transaction costs were lower, the sale cycle was faster, and I didn’t have to watch a husband and wife sitting across the table from me fighting about what their dining room should be. So it had a lot of pluses to it.

Loren Feldman:
Jaci, when you made the shift, did you feel like you had to go through a learning curve as well?

Jaci Russo:
Well, we had started to do a lot of transitioning already. So where we were all B2C for the first few years, then we were kind of starting to bring in some B2B and appreciating the nuances, the differences, the larger market that we could work in, the profitability, and really the fact that the industry was changing. And if we were going to stay rooted in traditional media-buying, we were going to lose that battle. And so it was a very quick learning curve, because we’d already started to make inroads into that area.

And it was probably 18 months of meetings and discussions internally around: Who are we going to grow into? Are we going to go all-in on an industry? Are we going to become a bank agency or hospital agency or lawyer agency? Are we going to stay a media buying agency? Or is it going to be this B2B branding thing? And it was pretty much unanimous that that’s where our strengths were, that’s where the profitability was, that’s where our future was. And so, then it was a quick transition, because we all bought into it.

Paul Downs:
Yeah, I want to add one other thing that we learned after doing the business for a while, which is that businesses have a vast range of different ways that they actually purchase things. And so, probably the biggest learning curve for us was making sure that we knew how to look like a credible vendor to the Department of Defense, or Lockheed Martin, or some of these big businesses that are expecting a certain level of, you know: What does the proposal look like? What is the look and feel of doing business with you?

If you come off as a small, person-in-a-garage kind of business, that’s not going to cut it for a lot of situations, because what the people who are buying for businesses fear the most is that they make a mistake and somebody calls them out on it. I mean, nobody ever wants to make a mistake with a client, but it can happen. But if you do that, and you scuttle somebody’s career who chose you over the other options, that’s a really bad thing. So we had to learn to look extremely competent to large organizations with people who were purchasing things all day, every day. And I think that that is actually a fairly heavy lift for a lot of very small businesses. How do you look credible? What do you bring to the table that convinces somebody that you can actually do the job?

Loren Feldman:
Clearly, all of you sometimes deal with people in businesses who are not necessarily the owner of the business, but sometimes I think you do deal with the owner. And I wonder how you think about approaching that. The question from the person on Reddit, I understand your responses—that that person is probably going about it the wrong way—but it did raise an interesting issue, I think. What’s the personality of a business owner like when you’re trying to sell them something? You’re all business owners yourselves. I suspect that’s probably helped you figure out how to do this. But I’m curious, when you’re dealing directly with someone like you—another owner—is there some approach that you think about? Any of you?

Jaci Russo:
No, I just give them the password and slip them the secret-grip handshake, and I’m in. [Laughter]

Paul Downs:
We have segmented the people who call us into I think 15 different types. And one of them is the boss-direct, which would be dealing with me. And yeah, those people tend to have a particular personality. But the basic way we think about them is that this is somebody who called us because they want what we offer. And let’s assume that resources aren’t the issue. Most of our boss-direct clients are running businesses that go from 20 to 200 million a year. If they want to spend an extra five grand on a feature on a conference table, they’re just gonna do it. Just like buying a car—if they want to buy a Lamborghini, they do it. If they want to buy a Toyota, they can do it.

So it’s not about trying to trickle information. It’s just: Show them what they asked for, put a price tag on it, say, “Here it is, pal. When do you want to get started?” And so it’s a different psychology than other kinds of buyers, because a lot of other buyers are very, very different and require a different playbook. And that is something that you can only learn by having to deal with a pretty wide range of different types of clients.

Jaci Russo:
I want to acknowledge what Paul just said, because I think that is the takeaway for this whole hour. So if you learn nothing else, he clearly said he uses 15 different segments. So the takeaway here is: When you know your data, when you know your target-audience segments, you know them well enough to have 15 different variations on that, and then he can adapt, because he knows that they’re coming from a different place. They have a different power and authority. They have a different want and need. They have different pain points. They have different rationales.

So he is not using what I think our Reddit new best friend might be doing, which is kind of a one-size-fits all approach, or what Sarah and I get inundated with all the time, which is, “I can guarantee you 25 new clients a month,” which is bullshit. So what Paul’s doing is doing it the right way. He knows his target audience so well. He knows how to segment them so well that he’s serving up the right piece of information with the right motivators to the right person to get the right answer.

Loren Feldman:
And on that note, I think we should move on to a different topic. Well said.

...

Read Full Podcast Transcript Here