Traditionally, studies show that digital transformation in B2B arrives around 3 to 5 years later than digital transformation in B2C. However, it is evident that the Covid crisis has brought a very strong acceleration in B2B, simply because the choice was clear: either the company transforms and survives, or not.
The results in terms of acceleration in digital channels, such as e-commerce, for example, were evident: a recent McKinsey report points out that B2B companies in Brazil increased the contribution of the e-commerce channel by 62% (on top of sales totals).
The profitability that arises from these initiatives is also evident: B2B companies that have transformed themselves digitally have profitability up to 5x higher than traditional ones. But there is a big gap here: only one in three companies is accelerating their transformation process in view of their relationship with other companies.
This is because of the lack of clarity about what are the necessary steps to change the relationship style that B2B companies have with their customers. If we still believe that, while the world is changing so quickly, in B2B that “traditional” relationship, of face-to-face or telephone service, just because “it has always been like this”… we are totally wrong.
The truth is that the experience we all have in B2C, using marketplaces, e-commerce, apps, omnichannel and so on, shapes customer expectation in B2B. For example: if I, a purchasing executive for a fertilizer input company, buy my children's gift on Children's Day online with a click through Mercado Livre, why shouldn't I expect the same when I buy the phosphorus needed to produce my product?
Thinking from this point of view, there is no longer any way to deny the evidence. The form of relationship between companies in B2B is destined to change urgently.
Advantages of digital transformation
The starting point of this discussion is about the role of the digital environment and new technologies in this context. While the topic is often seen as a threat (will we all lose our jobs to machines?), the reality carries with it great advantages.
I primarily highlight three, among several, for our B2B discussion:
- Increases the frequency of touchpoints in the (more complex) B2B relationship journey;
- Allows you to collect data and information to then better personalize the experience;
- It enables new business models, for new B2B commercial formats.
Let's analyze it by parts.
- New B2B relationship journey
A recent study by Accenture estimates that, on average, in a single B2B purchase, 20 communication channels are used, including price comparison and after-sales tools. If this isn't an urgent call for omnichannel, what else is?
That is, if the consumption journey in B2C is already complex, in B2B it can be more. On top of that, we put the Covid-19 crisis, which “prohibited” our salesperson from going to the end customer and meeting in person to negotiate and relate commercially. The result is the “low-touch economy”, a term introduced by the Board of Innovation in 2018 to define a relationship economy with as little physical interaction as possible – which has also strongly affected B2B.
As an example, see the complexity of the relationship journey of malls, which spent months behind closed doors. Recently, in a lecture for Aliansce Sonae, I had the chance to talk to Rafael Sales, the company's CEO, who told me that, among the various initiatives they have taken, in response to a changing world, are marketplace projects for shopkeepers, drive-throughs and lockers in malls.
Omnichannel + low-touch economy in the vein!
Think about it: digital, coupled with the physical experience, helps you increase the frequency of touchpoints and, consequently, the capillarity of customers you can reach.
Let's do a quick math: a street vendor can visit a maximum of 4 customers a day, selling supplies for a beauty salon. This means that he can have a portfolio with a maximum of 100 salons – and he will not be able to pay a monthly visit to all of them.
This limitation is the reason why, at L'Oreal, where I was digital director, the number of salons to which we sell directly is around 5000. But there is a catch: Brazil has around 200 thousand salons; how to reach them?
This is where digital comes in. We launched an online education platform, L’Oréal Access, with the proposal of a marketplace, so that the company could increase the reach of salons within the online environment.
But, in the midst of all this, we have to make a consideration: the B2B journey is already so complex that it is not up to us to make the scenario worse. On the contrary; We need to simplify as much as possible. Or, as Duke University psychologist and professor Dan Ariely would say, “reduce friction.” That alone – which, after all, involves designing the digital B2B journey as intuitively as possible – makes digital seen as an ally, rather than being “fighted” from within the organization.
- Customized Big Data
What is the main consequence of increasing the touchpoints in our B2B customer journey, thanks to digital? We collect information. We generate data.
In the past (or still today), how much information does a face-to-face visit or phone call generate in the system? Little or nothing, right? Most of the time, just what is essential to include in Salesforce.
But Digital enabled (and generated) the data economy, in which, now, we already account for 44 Zettabytes of information volume in the world. If you don't know, be careful not to be taken aback by surprise: in the last 10 years alone we generated 90% of the data that has existed since the beginning of humanity.
This makes it possible for us to understand much more about the customer – who, in B2B, is much more empowered than before, thanks to digital. Because?
First, because you have more access to information and can compare prices, read reviews, get information, etc. Second, because digital has lowered entry barriers to markets and fostered competition even in traditional B2B sectors. Third, because switching costs are lower: you are no longer in the hands of a supplier just because he is closer geographically, or because you think he has the best price (while you can find out online that he is not). , and you can switch providers more easily.
As a result, we need to adapt our B2B relationship more to the specific demands of our interlocutor: less standardization, more personalization. And this is only possible through the use of data.
Especially because, as human beings and consumers, we have always wanted to be treated in a personalized way. Think of Starbucks: it welcomes us with our name written on the glass, and even if it sounds silly, it makes all the difference.
In B2B it is like this, if not even more important, since the expectation of personalization is very low. This can be reflected in terms of pricing, for example. Yaskawa, a 10 billion dollar Japanese company and the world's largest producer of robot parts, uses artificial intelligence to be able to make more assertive commercial proposals - and managed to reduce the time to prepare a proposal from 8 days to 1 day. This has promoted considerable growth to the organization and increased the accuracy of their budgets, leading to a higher conversion rate.
- New business models
This new B2B relationship journey, coupled with the power of data and digital, allowed the emergence of new business models, more focused on the B2B customer.
An example is the subscription model.
Adobe, in 2010, sold perpetual licenses for Creative Cloud as a unit for $2500. CEO Shantan Narayenu saw that the subscription model was beginning to emerge and could transform the market. With great courage, he changed Adobe's sales model to a subscription model, where he charged $50 a month. Initial result? For the first 2 years, Adobe's profits are down 60%, but today they are 3x higher than in the year of the move.
Why? Because digital allows new business models, which generate more value for the customer, and we cannot disregard this in the B2B relationship journey.
Another model that has been transforming both B2B and B2C is that of marketplaces. They are growing in all sectors, even the most traditional, such as agribusiness. Recently, at an event, I heard Ivan Moreno, CEO of Orbia, Bayer's agribusiness raw materials marketplace, talk about the exponential growth of the platform, and I was really amazed. And look how cool: marketplaces also help small players, as they provide an important sales channel.
Going even further when talking about platform models, there may even be a super creative combination between B2C and B2B, as the video game Fortnite did. The Epic Games game, which today is the most played in the world, has more than 100 million users on the platform and is now monetizing on B2B. It allows real brands to “advertise” in-game, such as Nike, which launched its new sneaker on the platform.
Or, even more innovatively, during the pandemic we saw the promotion of live shows sponsored by big brands. A concert by artist Travis Scott brought together 12 million people listening to him live. What face-to-face event would get such a number of people? Not the biggest imaginable...
Where are we in this transformative scenario?
Well, after all that, you might be thinking: this is really cool, but where is the human being? What is our role, after technology and digital indelibly transform B2B relationship formats?
What I have to say to you is: don't be scared.
Thanks to the digital transformation, our role is even more reinforced: instead of spending energy and time on manual work, we can act in a complementary way to machines, exercising more typically human skills, such as creativity, critical thinking and emotional intelligence, among others.
The transformation we are experiencing allows us, at the same time, to develop a less transactional and more relational role. And, let's be honest, less boring; after all, which salesperson wouldn't want to “outsource” the part of charging a return from that customer wrapped up to a chatbot, while he can allow himself to chat about football with that customer and strengthen the relationship even more?
That's why it's critical to embrace digital transformation in B2B! In general terms, it can lead our work to more strategic (and, why not, fun) paths – which, in turn, makes us happier. And everyone wins in this equation.
What's stoping you from embracing the digital era?