Learning the Basics of B2B Payments
In this article, we explore some common use cases and best practices for using quotes in online B2B.
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If your business sells to contractors, you’ve worked with contractors, or you are a contractor then you’re likely familiar with the concept of a quote. A quote is similar to a bill of materials, an order, or an invoice. It is a document that is exchanged between business and customer that contains a list of items and prices. When selling B2B online, offering quotes can help give your business an edge over the competition and provide a great purchase experience for buyers.
In this article, we'll take a look at some common use cases for online B2B pricing quotes and answer some frequently asked questions about quotes.
The reason that a quote exists is price protection. The business commits to offer the items listed on the quote for a specified period of time. This gives the buyer a window of time within which to make a decision. This is important, as the buyer might be using quotes as reference for a project that requires budget approval from a manager—or the buyer might be bundling these items to resell in some sort of job.
Here are two hypothetical examples that illustrate how quotes could be used to empower businesses.
Sarah is outfitting a new coworking space. There are three conference rooms and she needs a VOIP phone system, a television/screen, Wi-Fi routers, and all of the cabling to get everything connected. Her company requires her to get bids from three vendors before they sign off on a purchase. When Sarah visits a wholesale coworking supplies website, she quickly finds the items she wants, adds them to her cart, and requests a quote. After a quick signup process she logs in to her account, sees the quote, and sees that the price is locked in for 7 days.
The other two vendors do not have this system and instead require Sarah to fill out a “Quote Request” form, write out what she wants, and then wait for a sales rep to call and confirm the details. It takes three days before she has finalized quotes from the other two vendors. Sarah was frustrated because she knew exactly what she wanted but the sales reps from both companies pressured her to buy more items and more expensive versions of all of the things she requested.
Ultimately, Sarah presented the options to her boss. The prices were comparable from each vendor but she recommended that they purchase from the wholesale coworking supplies website because the website was easy to work with. Her boss approved the expense, she logged back in to the website, clicked on the quote, and went through a standard ecommerce checkout process to place her order. She immediately received an order confirmation email and hours later received a shipment notification email.
George is a contractor. His specialty is installing home security systems. He has a two-step sales process. The first step is a consultation where he visits the homeowner, walks around their house, and writes down a variety of pertinent details. The second step is to come back a few days later and present his plan and estimate of expenses to the customer.
Between meetings George takes all of his notes and creates a list of materials that he will need for the project. Security cameras, cabling, Wi-Fi routers, external hard drives, backup power supplies, etc. He then finds all of these items on the wholesale home security website and requests a quote. He uses the price on the quote as his estimated materials cost.
When George provides an estimate to the customer it is in a “time and materials” format. This means that George will invoice them based on his hourly rate of $100/hour for the actual hours spent plus the cost of materials. His estimates are quite accurate given the price protection of the quote and his experience. In order to keep the estimates accurate he sets an expiration on his estimate that matches the expiration date on the quote from the wholesale home security website.
A lot of homeowners in George’s area are currently looking at upgrading their security systems. George is able to juggle dozens of outstanding estimates because the wholesale home security website allows him to save multiple quotes within his customer account. When a customer calls or texts him saying they want to move forward he is able to quickly log in, select the saved quote, and purchase the items.
The answer to this question depends on the type of experience that you’d like to provide for your customer:
Small businesses might use spreadsheet templates, folders on their computer, and emails to create and manage their quotes. If you’re working on just a handful of jobs per quarter this low-cost and manual method might be right for you.
Sales-driven organizations might initially gravitate toward using the Configure-Price-Quote (CPQ) functionality offered by their customer relationship management (CRM) program. The benefit of this approach is that the status of multiple quotes can be reported on by the organization. However, the downside of this approach is that CRM programs are often not built with a customer-facing interface. Therefore, the customer might not have a portal where they can log in and see quotes. This means they’re managing all of their outstanding quotes in their email inbox.
Ecommerce-driven organizations will likely gravitate toward using a quoting tool embedded in their B2B ecommerce website. This makes it easy for a customer to build their own quote instead of waiting on a sales representative to do it for them. Additionally, a quote on an ecommerce website is visible within the customer account and can be easily transacted using the ecommerce checkout process.
Large organizations may have a hybrid model where some customers buy online and some buy through the sales team. In these cases it is beneficial to offer multiple options for the customer. If they want to build their own quote online, that’s great. If they want to call their sales rep, that’s great too. Regardless of how the quote is initially developed, the two business systems—ecommerce and CRM—should be integrated to share information. The systems should be synchronized so that the customer has all of the self-service capabilities on the website even if the quotes are generated in the CRM system. Additionally, management should have the reporting visibility in the CRM for any quotes that were generated on the website. This type of functionality requires bi-directional API integration and can be difficult or impossible if quotes on the website are powered by an app or plugin.
A quote is provided to lock in a price for a customer. Most companies will at some point experience both pressure from leadership to bring in revenue as soon as possible and rapidly-changing cost structures.
One important consideration when determining an expiration date is the length of time the customer needs to make a decision. If a quote expires in an hour it might not give Sarah enough time to get approval from her boss. It might not give George enough time to present his estimate to the homeowner. Quote expiration should give the customer enough time to make the decision but not enough time to drag their feet. This will vary by industry. A general rule of thumb is that the larger the quote the longer the time until expiration should be.
A second consideration when determining an expiration date is the timing of cost changes for your items. If your costs are increasing every week then you probably need to limit your quotes to a 7-day expiration window. If you guarantee a price and your costs double you might be underwater on the quote. Keeping expiration timelines short limits the risk of a quote having low or negative margin.
The third consideration when determining an expiration date is when you’d like the customer to make a decision. If you are held to monthly or quarterly reporting by management then you might set the expiration date to the last day of the month or last day of the fiscal quarter. This incents the customer to make a purchase within your revenue reporting window.
One last word of caution around quote expiration: do not bluff. If you set an expiration window for 7 days, then let the quote expire. The customer is gambling by letting the quote expire. If you let the customer transact on quotes beyond the expiration date you lose credibility. This is an important area to operate in with integrity.
There are a lot of businesses that should not offer a “request a quote” feature on their website. Here are some examples:
Thankfully, some B2B ecommerce platforms offer functionality like Price Groups. These capabilities let you conditionally allow customers to purchase items at a specific price when logged in to their account. This means that they can build their basket and checkout without all the back-and-forth hassle of a quoting system. You can also set customer personalization rules that specify which products they can access, which shipping methods are available, and which payment methods are available. By implementing all of these rules you can provide a fast and intuitive purchasing experience for your B2B customers.
If you sell replenishable goods like office supplies or snacks you can use wish lists (also commonly called Project Lists or Item Lists) within the customer account to make it easy for a customer to keep track of commonly purchased items. If a customer desires an automatic shipment of certain items on a regular interval they might set up a subscription or a standing order. These methods reduce time spent in the ordering process for both the business and the customer and are in many cases preferrable to offering quotes.
Successful ecommerce businesses are always evolving. They’re adding new features and functionality to their website to better serve their customers. If you think adding quotes to your website will be a meaningful improvement, you'll want to figure out the best way to accomplish it. The allure of apps is that they’re easy to install and plugin without a developer. If there’s an “easy button” for quoting with an app then you should give it a whirl.
The problem with apps is that they often exist in silos and do not work well with each other. Applying predetermined customer group discounts to a quote might not be possible with an app. Additionally, apps often have limited API support. This means that you might have trouble connecting your quotes to another business system.
If offering quotes is going to be a major part of your online B2B pricing strategy you’ll want to look for an ecommerce platform that has robust quoting functionality built into the core software. This functionality should be supported out-of-the-box and have API touchpoints so that you can integrate with any external system.
The ideal quote request process for online buyers should look something like this:
As more buyers turn to online ordering, it's important to have a shopping and quoting experience that makes the purchase process easy and frictionless. To learn more about how B2B businesses can provide a convenient and personalized shopping experience, check out our guide on optimizing your website for the modern buyer:
Benjamin Arp is a Miva Sales Engineer focused on driving ecommerce growth. He’s helped hundreds of ecommerce merchants develop their growth strategy, evaluate existing systems, and create plans to grow sales. In addition to working with merchants one-on-one, he is a regular contributor to the Miva blog and hosts webinars on a variety of ecommerce topics.