Why You Should Do Things That Don’t Scale in B2B

The driving motive of any business is profit. There are two ways to do this - by bringing down costs, and by increasing prices.

Increasing the price of your product is not a sustainable strategy, hence, one of the most effective ways to increase profits is by bringing costs down; primarily through automation. Automation helps you with scaling up really fast without inflating your operational costs equally.

But here’s the thing: automation cannot always come to your rescue. There are some things that are better done manually rather than through automation.

Where automated solutions are not ideal

Building personal relationships

Sales is often seen as a number game, and your success simply depends on the number of people you reach out to on any particular day. This also explains why you have robocallers selling you insurance and loans.

But this might not work for a lot of B2B players simply because it’s a small world and the pool of prospective buyers is quite small.

For example, the market for a label printing service could simply be the manufacturing facilities in the region. Depending on your state, this could be in the low hundreds to high thousands. To be successful, you will need to establish a personal relationship with these businesses.

By automating outreach, you could potentially run out of prospects in a matter of days.

Networking cannot be done at scale and is a largely manual grind. This also becomes important for high-ticket products or services that buyers don’t typically purchase on a whim. Here, building awareness and trust are critical. This takes time, and cannot be automated.

Bespoke client requirements

There are products and services that cannot be mass-produced. While you can still use automated marketing techniques to get an appointment with clients, your USP is still being able to make things personalized to your client’s requirements.

Corporate branding firms are a good example of this - this is an industry where service is done to client specifications. While you can automate your outreach, you are still limited by the number of clients you can sign up at any point.

Replacing automation with personalized outreach can help sell a higher value service that ultimately could help increase your average revenue per client.

Early traction

‘Do things that don’t scale’ is advice popularized by seasoned investor Paul Graham in one of his early essays on the same topic. While the advice is primarily geared towards B2C companies, it applies equally to B2B organizations, especially those in their early stages.

Businesses that are just starting out do not enjoy trust, credibility or authority. Consequently, there is little that separates them from competitors. Business strategies that work for established competitors may fail to work for startups in their early stages, especially with respect to sales engagement and conversion.

By doing things that don’t scale, you establish a sort of USP that is difficult for established competitors to replicate. And this way, early-stage startups build credibility among a small circle of buyers who then turn advocates for your business, and help build a larger customer base over time.

For example, Stripe is a popular payment gateway solution that is today valued at nearly $100 billion. But back when they started, they got their first customers by doing something that cannot be done at scale - the team manually installed the software for each of their business users.

By making the installation frictionless, Stripe was able to get its first users, who provided them with crucial customer insights that helped them establish trust and authority as a secure payment gateway. This translated into more customers over time.

WuFoo is another example of this phenomenon. Before they grew big enough to be acquired by SurveyMonkey, the online form building application became a customer favorite thanks to their personalized gratitude notes. These notes made customers feel valued and acknowledged, and helped spread the word early on.

Why doing things that don’t scale makes sense in B2B

The fact that ARPU is higher in B2B models compared to B2C models is probably the foundational reason for using different trade techniques. In this business model, investments should be made carefully and wisely.

Invest in a focused manner by targeting clients with the most potential and symbiosis with your products. Once a clientele is established, this ensures a much higher return on investment.

This is because of the high worth of bulk purchases or due to the expertise, sophistication and value of goods and services offered. As mentioned in the previous section, once a rapport is built, you can expect regular high-value orders.

This in itself yields higher profitability. Since the value of products being sold is higher, even fewer clients mean higher revenue. B2C aims to bring in the multitude through techniques like lower prices, which may even drop below market price.

So despite a vast pool of buyers, their profits may not be as high. B2B distinguishes its products in terms of class and worth. This made-to-order specialty service brings in larger profit margins.

Better networking and partnerships

Sales prospecting is important in B2B setups. In fact, they are quite central. The entire process of lead identification is difficult and time-consuming.

Even creating possible patronage requires a significant gestation period during which there may be no earnings. More so than anywhere else, the sales team has to be informed, tactical, and excel at communication.

Creating a one-on-one relationship to persuade and strengthen your case is of prime importance. It can’t be a mere impersonal sales call that has no insight into the singular characteristics and vision of the client.

Sales within B2B are harder. The sales team has to build credibility in front of seasoned professionals who have years in the sector. This requires technical expertise and in-depth knowledge of the market.

You have to emphasize your USP vis-à-vis competitors because there are many vendors to choose from.  This business model thrives on quality, sophistication and standards. Clients are very firm in their quality evaluation.

So once you cement your standing and generate good relations within the sector, you can start to scale up. In ecommerce B2B set-ups, scalability is even quicker and you can establish economies of scale faster as well.

Wrapping up

Let’s be honest - doing things that CAN scale, as well as automation in business, is a good thing. It helps a business optimize their resources and maximize their gains. However, indiscriminate automation is not. Also, automation is not a strategy that can be used universally.

There are instances where a manual grind makes more sense than automating the process. This is important for B2B businesses that operate in a closely-knit industry because you have only one chance to impress a client - and it better be done through a personalized approach, than through automation.