HOW TO HIT B2B DIGI TRANSFORMATION GOALS IN THE NEW NORMAL
B2B leaders must think through how transformation efforts will be shaped over an extended period by constrained resources and buyer uncertainty.
Forecasts for a rapid acceleration of digital transformation as B2B businesses recover from the Covid-19 pandemic are plentiful. The important role digital has played during the crisis has taught business leaders important lessons in using technology to sustain customer relationships and maintain operations. Navigating the crisis has given corporate decision makers a new understanding of and willingness to utilize data driven tools and digital channels to engage with suppliers and customers. However, forecasts provide B2B business leaders with little useful guidance on where and how to invest. And, they fail to take into account the fact that most fail to achieve their return on investment goals.
To guide their digital investment decisions B2B leaders must think through how transformation efforts will be shaped over an extended period by constrained resources and buyer uncertainty. Resource constraints will result from depleted corporate balance sheets as well as sluggish demand from corporate customers that will need time to fully recover. Uncertainty will also factor in a new normal as buyers and users sort through a myriad of questions about hiring, workplace dynamics and supply before they can rebuild their confidence, set more ambitious goals and make greater demands on their suppliers.
Focus on Top ROI Opportunities
The implication for B2B suppliers is clear – future digital transformation initiatives must be laser focused on opportunities with the highest potential to deliver return on investment
Digital transformation opportunities range from those that improve margin such as automating a labor intensive activity (by for example using a chat bot to replace a call center interaction) or generating demand such as improving the customer experience (by for example making it easier for customers to evaluate product alternatives through a digital product comparison tool). Focusing on opportunities that both generate demand and increase margins is the key to generating positive ROI in uncertain times. One example of an opportunity that improves margins and builds demand is using digital segmentation tools and data analysis to improve targeting. The improvements both lower media costs by weeding out poor prospects and boosts demand by making messages more relevant and tailored to high potential targets. Improved targeting has the advantage of being a relatively small investment that can be implemented quite broadly in an organization very quickly – within weeks of data analysis.
Based on our examination of more than twenty successful cases in B2B digital transformation and discussions with over two thousand B2B executives we’ve built a matrix to depict where the digital transformation opportunities with the highest potential to generate ROI are likely to be found. The opportunities skew toward increasing margin and generating demand among existing customers rather than acquiring new customers. Lower marketing and selling costs as well as higher conversion rates for existing customers make demand and margin building less risky than trying to win over new customers. The opportunities in our matrix also skew to measurable, lower initial investment areas such as those that improve the customer mix – digital marketing customized to high potential target customers is an example. The highest ROI opportunities in the matrix do not include big, but potentially high-risk, blockbusters such as building broad new service platforms or bold business model redesign. These have the potential to disrupt an entire industry or create lasting competitive advantage but take time to bring to market or may cause unpredictable channel conflict.
In uncertain times and with limited resources, big bets should take a back burner (limited to piloting, testing and evaluation) in favor of focusing on areas with the greatest potential to deliver measurable results more quickly with less risk.
Select Opportunity with the Highest Potential for Your Company
We have identified six high potential opportunities areas that B2B suppliers can focus on to maximize ROI in their digital transformation efforts. Within each we have highlighted an initiative that’s been proven to succeed by a B2B company.
Segmentation and data-driven targeting
The opportunity to improve the customer mix through better segmentation and targeting was discussed previously. It is worth noting that segmentation and data-driven targeting is as effective in driving relevance among existing customers as it is helping to acquire new customers. Glenigan, a provider of detailed information about construction projects in the UK to contractors and building material suppliers used data and analytics to segment and better target their customers. By using analysis to weed out low potential or irrelevant audiences and to focus on best prospects they increased leads over a six-month period in 2019 by seventeen and half percent and cut cost per lead by twenty percent.
Targeted, direct e-commerce
Almost every B2B supplier has an opportunity to provide a targeted part of its offering to existing customers without disrupting the larger ecosystem or causing overt channel conflict. This is particularly true if the monetization model provides the offers via a subscription model or in solution bundles that makes pricing comparisons across channels difficult, if not impossible. Setting up direct to customer businesses is remarkably quick, low cost and impact generating because so many of the operational and programing aspects can be outsourced. Impact on margin and demand are immediate and very measurable. Cytivia (formerly GE Lifesciences), a large supplier of advanced compounds for medical testing and research, has built a large direct ecommerce business to serve customers who need to quickly fill orders for commodities and basic compounds. The ecommerce offering keeps cost to serve down and provides ready access to competitively priced offers that builds demand.
Account based marketing (ABM)
ABM (an integration of sales and digital marketing to target, cultivate and persuade corporate decision makers and influencers through personalized and company tailored communications and engagement) is probably one of the most cost-effective ways to build relationships with decision makers in existing and new buying centers within existing customers. It lowers the cost to serve even the largest customers by shifting much of the work of the sales team to digital marketing while leaving time for sales to close the largest and most important leads. It is ideal for encouraging multi-purchase, up selling and cross selling. SAP deployed ABM against the largest 10% of its customers who make up more than a third of its revenue. Through its efforts it created twenty-seven million dollars in new pipeline opportunities and progressed fifty-seven million down its pipeline.
Tailored customer experience delivery
Tiering customer experiences, in particular sales and technical support, in a good/better/best architecture based on customer size and buying potential is already quite common among B2B suppliers. Their sales efforts are often organized in some form of national, regional and general accounts. Digital allows further tailoring by customer need allowing some customers to self-serve others to seek more intense guidance and yet others to create hybrids based on their needs and moments in their customer experience. Smart provisioning of tailored guidance and advice combined with a tiering scheme running in the background can improve customer stickiness by serving customers when and how they prefer while delivering substantial cost savings. These schemes can start simply with top customers receiving highly personalized attention and other customers working through call centers and online. Salesforce.com utilizes a tailored customer service model effectively. Customers can access a full set of education, support and buying functions online or seek more personalized recommendations over the phone or through individual meetings. High potential customers can receive the support of a full team of Salesforce professionals armed with expertise and advice tailored to their industry or to their individual company needs.
Signature services and offers
One of the best ways to improve margins and generate demand is to sell high-margin, value added services or launch new high margin offers to existing customers who demonstrate the willingness to buy more. This enables suppliers to reap the bulk of the revenue from the customers who want it most and avoid the significant up-front costs and investment needed to provide services and offers to the broader market. As these signature offering become sources of competitive advantage among high value customers the supplier also learns what it takes to succeed and deliver effectively. They become, in effect, a test bed for future, more broad scale offerings. Brenntag, the global chemical distributor with 500 warehouses supporting 72 different countries launched Brenntag Connect, a signature service in its industry. It enables Brenntag corporate customers to digitally connect with their suppliers supported by access to individual documentation, historic purchasing data, and other self-service components. Since its launch in 2019, Brenntag Connect has received over 1,800 customer registrations and is due to launch in America and Asia in Q1 2020.
Digitize and streamline analog experiences
This is a classic and proven tool in the digital transformation portfolio of moves. When done well automation can generate substantial savings in cost to serve and reduce or eliminate the customer pain points that can drive churn. These moves must be handled carefully however in times of uncertainty and tight resources because the processes that lend themselves most to digitization and streamline can take a lot of time to unravel and make less complex without harming customers or generating errors. The key in all transformations is to equip and enable teams to work quickly and well. In this opportunity area employee enablement is even more crucial because the threat of becoming bogged down in unraveling complexity is so great. Crete Carrier, a leading U.S. trucking firm used Robotic Process Automation (RPA) and AI driven approach to streamline and automate the tedious, time consuming but customer critical task of delivery and pick up scheduling. The solution saves labor provides 24/7 scheduling access and helps Crete snare coveted appointments at times of day that are least likely to encounter delays. Improved performance makes Crete more desirable to the customer and improves efficiencies.
Make it Happen
Research over the past three years has consistently pointed to two crucial transformation enablers, effective use of customer data and empowering employees to work in more agile ways. We’ve found that the effective use of customer data requires a commitment to building a data strategy, assembling a 360-degree view of the customer and integrating technology and data through a customer engagement “stack” of useful platforms. Empowering employees requires a human-centered examination of the organization to identify gaps in the DNA (strategy and purpose), Body (governance, resource allocation, structure), Mind (talent, teaming, training) and Soul (culture and routines). Laser focus on specific initiatives must include investing time and resources to address the data and employee needs to carry the initiatives out.
Interested in learning more?
Fred Geyer, a senior consulting partner at Prophet, and Joerg Niessing, a faculty member at INSEAD, are authors of The Definitive Guide to B2B Digital Transformation. More information about the topics covered in this article can be obtained at their website B2BDigitalTransformation.com
For more information of the Human Centred Transformation Model download the 2019 study Catalysts, the Cultural Levers of Growth in the Digital Age, a Global Research Report and the recently published 2020 issue: Catalysts in Action: Applying the Cultural Levers of Transformation.
If you’d like to discuss opportunities for your business to maximise your digital ROI in the new normal, reach out today.