Should 2024 Be the Year Your Business Closes?
We know it well. You are tired of listening to consulting threats about what digitalisation is doing to your otherwise well-run B2B business: ‘Digital or Die’, ‘The Wolf Comes in the Clothes of Amazon’, ‘Unless you get control of your data, you will be thrown from the competition train’. But this time, it's not us – the digital advisers – who say it. It is the sector itself. After all, we have to respond to that.
Read Novicell's assessment of the B2B sector's transformation needs in digitalisation, and which tools you can use to prepare your business for 2024.
In a survey of managers in Northern European B2B companies, 77% of respondents believe that if they do not press the e-commerce accelerator now, they will be out of the market in five years, i.e. in 2024 (which is right around the corner). Surprisingly, the concern is greatest among the companies that are most digitally mature, while the ‘newcomers’ are not nearly as concerned.
The explanation may be that the development runs at different rates depending on the industry. What the remaining 23% of the survey evaluate can only be guessed at. Maybe they don't see digitalisation as a threat at all, maybe they are fully digitised, or maybe they see it as what Blockbuster’s then Digital Director stated in 2010:
‘We’re strategically better positioned than anybody out there.’
Blockbuster assumed that Netflix was not a threat. Let's just leave that for a moment...
If you look out into the digital landscape, there are some trends that indicate that you can move your foot from the brake to the accelerator.
- B2B e-commerce revenue alone in Denmark increased by 4.5% from 2017–2018
- It is estimated that Amazon Business will hold 10% of the US B2B market by 2021
- Several analyses show that the companies that have achieved high maturity in the digitisation of their business are typically also the ones with the healthiest business
- 73% of B2B buyers want a more personalised B2C-like customer experience
It may not affect your business today, but the digitalisation of the B2B sector is figuratively compared to standing in the middle of an escalator on the wrong side. You have three options: run up, follow the stairs or stand still. The outcome is obvious.
Where do you stand?
Digital maturity can be extensive to assess, but at least it is no longer just a matter of whether your products or services are available digitally or that you are systematically collecting leads from its platform – that is basic hygiene.
This is more similar to the fact that, in the early 2010s, when you had to make your business more energy efficient you ended up only taking the lowest-hanging fruits and replacing your energy-heavy bulb with a more environmentally-friendly one. But changing the bulb is not enough.
E-commerce towards 2024 goes right into the belly of your business. We are talking about long-term strategic investments that have a horizon which extends to more than Q3 sales figures.
How fast do you have to get up the stairs and how flexible is your budget?
There are a lot of ways you can streamline business processes to improve customer retention. As a starting point, a well-crafted digital strategy is good – even with a well-functioning e-commerce solution – as all companies have unique challenges and potential. However, if we look more broadly at the B2B sector, there is a special movement that all businesses should be aware of.
The demand for greater service agility on the part of B2B customers is a movement that is strongly motivated by the experience they have as a private customer. They have the same expectations whether they are trading on ASOS or on wholesale.com. They do not distinguish. They want an eBay experience: Me2B.
All major international marketplaces, therefore, invest heavily in, among other things, easier payment methods (PayPal) for their B2B segment. They know that ease of doing business is a key competitive parameter.
The more general investment picture we have seen over the past years has primarily focused on internal processes. Digitising business processes makes a lot of sense and is needed by most companies, and as is often visible, traceable and with good profit realisations.
Let's take an example:
One concrete example is the work on an improved cost-per-invoice (CPI). An average CPI is 15 GBP – for small- and medium-sized B2B companies (US figures). Those who are ‘best in class’ have a CPI of DKK 1.7 GBP – and with 59% faster expedition for the benefit of both companies and customers.
This mantra, however, has also led to the fact that digitalisation has often focused on continuous streamlining, as this is traditionally what one competes for – the cheapest and best price for the right market. But this is often at the expense of investments in what to grow from: good and loyal customers.
Doing the same thing often has to go hand-in-hand with constantly assessing other parts of the business model. Are there new moves and are we in sync with our customers? Having a strategic focus on your customers does not mean prioritising internal processes. It is an important interplay.
‘Ease of doing business’ has unlocked potential for the B2B sector. It corresponds to the transformation the banking sector experienced with the implementation of online banking. Not only can you minimise the costly, physical customer managements with a better and easier online service, you can meet customer requirements:
- 86% of B2B decision makers would rather make an easy re-order online than talk to a sales manager
- 72% want self-service access to accounts and orders
- Lack of quick feedback from one's suppliers is the biggest B2B pain point, more so than price
There are not many requirements that can live up to today’s standards. As a consequence, almost half of your B2B customers are probably looking for a back-up supplier.
Would you switch your bank if they didn't have online banking? Probably. Think like a B2C customer and then act.
The opportunities to minimise ‘cost to serve’ thus meet the risk of losing customers – customers you have spent years winning. Your competitors may not initially be the ones with the marginally lowest price, but they make it easier to be a customer. Good service is a competitive parameter and digital self-service offers great potential for your business with a gain on both external and internal lines.
As mentioned, the potential and pace of digitisation is different for B2B. So, the headline is not to digitise your customer service, but to work your specific business into the equation:
- Most B2B businesses are not built on volume of customers and fast transactions like B2C. There are often fewer but deeper complex relationships, and a single customer departure can have disastrous consequences for the business. For example, would you reject a high-paying customer who insists on retaining the personal analogue service, despite your business pushing for digital? Hopefully not.
- The complexity of (re-)purchasing decisions is very high and often with many decision makers over a long period of time. Digitising in this process is not the only priority.
- There is a great difference in the service complexity of the relationship between a contractor company that purchases standard plumbing components from a wholesale company to a shipping company, where a high degree of flexibility is essential with their suppliers in, for example, handling their freight and customs.
So before embarking on a ‘net banking process’ to streamline its e-commerce, Novicell will always recommend a digital service strategy that will typically include these three key activities:
- Get the customer journey mapped out and thus break down where it crashes into the overall experience of your business from attention to purchase to re-order. Are there any actual issues in your service model, or is the shoe pushing somewhere else?
- Perform a thorough audit of your customer data, related business processes (Business Process Mapping) and a mapping of the IT landscape to support the data you want to display to the customer. It is your foundation for long-lasting and efficient digitisation.
- Decide who we should service, how and with what priority a service catalogue must be prepared. A service catalogue is a division of customers according to importance and with what efforts/channels, both physical and digital, the customer must be serviced with when they meet you – offline and online.
A customer base is the best foundation for digital survival, and it has never been as critical as it is now. Not for the customer's own sake but for your business. Customers have – as never before – the opportunity to easily assess your competitors with a click, unless your service level meets the B2C experience. Their dependence on you is not only determined by your personal relationship with the customer or marginally cheaper products, but also how easy it is to be a customer with you.
On the other hand, if you understand your customers, you can be at the forefront of potential challenges. You can also plan where and when your customers would like to engage in a dialogue so that they can quickly and easily receive services or reorder products, as if it were a payment with MobilePay.
2024 may be a long way off, but if you want more than ‘changing the bulb’, it's a good idea to invest in how you can most efficiently move faster up the stairs now and meet the customer’s needs. With that horizon, five years is not a long time.