The Digital Disruption of B2B

While consumer brands and retailers are grabbing the limelight when it comes to digital disruption and innovation, a bigger transformation is occurring in the B2B space.

It is true that companies such a Burberry and Amazon are reinventing the customer experience with mobile apps, richly interactive websites, digital marketing and omni-channel engagement. But, when it comes to breadth and depth of changes to core business, go-to-market strategies, and the dynamics of the marketplace itself, B2B often leads the way.

Consider:

  • Grainger is one of the biggest online retailers in the world (US $2B). As a B2B organization, they are focused on transforming their business through eCommerce growth from its current 25% of total sales to up to 40%.
  • 93% of B2B companies highlighted digital as the number one sales tool used, followed by the direct sales channel at 75%.
  • B2B companies are heavier users of most social media tools/sites (e.g., Twitter, blogs) compared to B2C organizations, and trail only slightly in use of Facebook and YouTube.

Anecdotally, the change has been as broad as it’s been dynamic. Two years ago, the common push-back was something to the effect of “our guys (long-time customers) don’t really use that stuff (digital).” Today, even the most traditional B2B companies are benchmarking Apple, Amazon and Lexus to stay competitive.

Key Drivers of change

  • CONSUMER behaviors are driving BUSINESS customer expectations. Yes, B2B customers really do expect an Amazon experience from every company with which they do business.
  • Manufacturers and Distributors are becoming direct competitors. Owning and maximizing the customer relationship and share of budget is becoming increasingly critical to company success for both groups. Manufacturers (such as Motorola Solutions) are making strategic moves to own the entire value bundle (devices and enabling services), while distributors (e.g., t3 Networks) are fighting back by further extending their vertical expertise and integration capabilities.
  • Ecosystems and touch points are replacing traditional channels. “Omni-channel” only scratches the surface of the reality of engagement ecosystems; sales, service, commerce and catalogs are melding on the desktops and in the hands of customers.
  • Anytime, anywhere is quickly becoming table stakes. Mobility is no longer an option or a guaranteed advantage. And a mobile app is not the answer. (See: Mobile is Dead. Long Live Mobility!)
  • Disruption, Transformation and Change are the new normal. Companies can longer think and invest based on projects that are “done.”  Market leaders understand that decisions must be driven by strategic direction, not just MBOs and quarterly ROI. (I’m looking at you sales-driven companies.)

Digital is Transforming Traditional B2B

These changes are challenging everything from basic beliefs and definitions about value proposition and service, to core business structures, processes and ownership in B2B. And the focus and hard questions have been elevated from Digital Marketers and IT to the C-Level and Board Rooms.  As examples:

  • Channel Shift is transforming marketing, sales and service. How should your sales compensation be structured when customers increasingly prefer scanning / ordering from the shop floor instead of waiting for a rep to walk in with a yellow pad?
  • Value is being redefined by aggregation, personalization, knowledge and service. Today many employees hold on to their knowledge as the basis of their value to the company. To succeed, employee insights and best practices need to captured, shared and managed through personalized, customer-centric digital ecosystems. What needs to evolve in your culture and your incentives to reduce knowledge hoarding?
  • Competitive benchmarking often drives disadvantage. Leadership has realized that they can’t create advantage by copying what a competitor has already done…especially given the increased rate of change in the digital space.  Read more: The Risk of Competitive Benchmarking
  • Agility is the primary driver of sustainable advantage (Read more: 2012 and the Agility Advantage).
  • Organizational silos are the biggest hurdle to keeping pace, as digital drives unprecedented convergence of business units and services in ways for which few traditional organizational structures, owners and process were ever designed.

Solutions to these challenges aren’t typically simple or short-term. What’s clear is that these challenges can’t be solved by tactics (e.g., redesign a Web site, do a mobile app) or technology (e.g., buy the latest software platform). To find answers, executive leaders across the B2B spectrum are re-evaluating their core business and asking themselves the fundamental question “why should we exist?” to define the right path forward.

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