Many UK SMEs continue to eschew the online channel for business to business sales citing complexity, cost and a lack of customer demand. But such attitudes are not only outdated they are fundamentally constraining business expansion and limiting customer choice. 

These organisations claim excellent customer service lies at the heart of their business success. But failure to offer 24 hour product ordering, access to accounts information or stock availability checks is beginning to look far from impressive, especially when compared with the online services offered by the majority of larger competitors.

It is true there is no customer demand for poorly designed, stand-alone web sites. Yet by extending core ERP technology onto the web, an organisation can seamlessly deliver consistent pricing, delivery and product information across a range of sales channels. 

The result is greater customer choice and improved service at a lower cost of sale and a platform for significant market expansion. So how can any SME justify the lacklustre, unintegrated web sites that typify this marketplace, asks Steven Hargreaves, Product Director, XKO

Financial squeeze

Consolidation and the buying power of larger organisations coupled with economies of scale in sales and marketing are combining to create an ever more difficult economic environment - especially for the UK's smaller, independent businesses.  With excellent customer service often the key competitive differentiator, these organisations are struggling to sustain service levels as margins are further squeezed.

So why are upwards of 80% of the UK's Business to Business SMEs still ignoring one of the most cost effective routes for delivering an enhanced service to the customer? 

So many business to business organisations continue to shun online sales and service in the mistaken belief that their customers have no interest in the medium - or, worse, are unable to use it. Yet retail statistics show that these same customers use the Internet at home on a daily basis. 

Broadband has reached 47.1% of UK households. And while it may be the children that use it to chat with their friends or download music, the majority of UK adults will have searched for holidays, checked a bank account, made purchases on Amazon or sales via eBay. They are increasingly sophisticated and expect well run, well designed sites that combine accurate stock and pricing information and secure payment processes. So how can any company persist with the belief that such technologies cannot be applied in business?

Multi-channel model

If organisations want to reduce the cost of sales whilst boosting customer service and, critically, expanding market opportunity, they need to drive far more business online.  By providing customers with extended opening hours - without expensive staff - and online access to key information such as stock availability, pricing, account balances and copy invoices, organisations can transform the quality and availability of their customer service.

However, getting this business model right demands far more than a basic web site - and certainly not one built for £500 by the friend of a friend. This is about creating another channel to market that is tightly integrated with the rest of the business.

Without integration to the core ERP data, a web site is nothing more than another form of advertising; it does not change the service proposition in any way. Even those sites that purportedly support email ordering are actually adding overhead: there is no up to date stock information or customer specific pricing. Emails have to be manually handled and, more often than not, the customer contacted via telephone to clarify delivery times or offer alternatives to out of stock items. The process is expensive and certainly fails to deliver any advance in customer service.

Furthermore, given the complexity of commercial price books and the effort required to manage and maintain price data, opting for a separate catalogue to support the online presence is, quite frankly, madness. Information will without doubt become out of sync, fundamentally compromising customer service and reputation and ultimately profitability.

Integrated ERP

Rather than attempting to bolt on a web site to the core business, organisations should look at expanding their ERP technology to the web. With this approach, a business can ensure pricing, distribution and customer service strategies are seamlessly extended to the new sales channel - offering customers a choice of direct, telephone and online interaction with guaranteed consistency.

Secure online access then provides customers with pricing information that reflects negotiated discounts as well as current inventory and up to date account information at any time. This enables customers to manage account inquiries in their own time, and significantly reduces the manual, administrative overhead.

Without such tight integration, a company cannot know the cost of servicing each customer order, based on product margin, cost of handling and delivery, making it impossible to maximise the value of each customer interaction. Once in place, an organisation can begin to drive customer traffic towards this lower cost of sale channel by, for example, offering discounts or promotions for orders placed online.

Business value

An integrated web site offers extraordinary market expansion opportunities, at a low business cost. For example, using automated back to back ordering, a customer request for a product can be ordered direct from the manufacturer to be drop-shipped to the customer. At no time does this organisation ever touch the product or the paperwork, slashing handling costs whilst improving the overall level of customer service (not to mention the saving in CO2 emissions).

A small number of our customers have begun to leverage this technology to transform their business - from the distribution company offering a white label web site service to its retailer customers - and a commission for every product sold online - to the builders' merchant now gaining 70% of annual revenue via eBay.

It is only by integrating the web site with ERP systems to support automated ordering, pricing and delivering scheduling that these organisations have been able to offer the levels of service and pricing required to generate significant additional business.

Many organisations are already exploiting ERP to deliver efficient operations, innovative customer pricing and flexible delivery options. But far too few are maximising that investment by adding an integrated online channel into the mix.  For smaller organisations, success depends upon offering customers informed choice and excellent service.  Failing to add the web to traditional field, counter and telesales channels is undermining both.