The Top 10 Digital Transformation Trends in B2B
Once primarily a vehicle for streamlining internal processes, digital transformation is assuming a different role in the B2B sector. Several trends are in turn facilitating this shift and creating new dynamics in an evolving market.
A Shift in Emphasis
As the wave of digital transformation advances across the globe, more companies are realizing that the best way for new technology to drive sales is by improving the customer experience.
Drawing from online surveys of 229 U.S.-based B2B decision makers in a range of industries, including manufacturing, financial services, health care, and telecommunications, in companies having at least $25 million in revenue, The 2019 FPX Digital Transformation Study confirms this trend. The emphasis is now on digital transformation as an initiative which delivers better customer experience, rather than focusing on internal restructuring or operational improvement. These latter qualities may, however, emerge because of the transformation that makes enhanced CX possible.
Of the 68% of respondents currently engaged in a digital transformation, 58% cite providing a better buying experience for customers as a key goal. 95% of those polled agree or strongly agree that "digital transformation funds are best spent on improving the buyer experience." And 98% say enhancing the buyer experience is the best way to drive sales.
For B2B sales, that buyer experience is increasingly customer-led. With greater access to information and comparative reviews, buyers are laying the groundwork for B2B transactions themselves, through research and due diligence, before ever approaching a vendor. B2B companies emphasizing the digital customer experience must therefore change their marketing tactics to provide tools and resources for customers engaged in this form of self-service marketing. For complex products like cars or aerospace parts, customers need more detailed information, education, and product selection, driving a need for advanced customer-facing technologies.
However, technology is just one of the several major trends currently influencing B2B digital transformation, as we shall see.
1. Technology
The will to achieve digital transformation isn't enough. Organizations must acquire and successfully deploy the right technology if their efforts aren't to be in vain. Besides IT infrastructure and software, the required management and maintenance skills must also be in place. A skills shortage in the IT sector means that rather than looking inward, B2B companies are increasingly having to explore possibilities outside the enterprise for technology provision. This puts a greater emphasis on cloud-based infrastructure and solutions, managed services, and automation.
For 2019 and beyond, AI continues to expand in importance - but for many organizations, it's still only a conceptual technology that may be of interest in the near future. Until they begin to see viable use cases from AI implementation at other companies, their IT spending will focus on other areas.
Automation - while not necessarily directly an AI-related technology - is a necessary step in the development and delivery of digital transformation at this stage. Organizations using robotic process automation (RPA) in conjunction with AI, natural language processing (NLP), and cognitive automation can, for example, create automated processes that can learn, make judgments, and improvise.
Many companies have already undertaken the evaluation and management of robotic process automation projects. These include organizations in finance, government, retail, telecommunications, utilities, energy, and transportation.
When used properly, AI-driven solutions (and other related high-level technologies) can improve the effectiveness of numerous internal strategies including marketing campaigns, delivering actionable insights to sales teams, and accelerating overall business growth. Legacy Systems, RPA, ERP, Punchout, and other topics stem directly from these technologically related challenges.
It's important to start small with AI and look at what can be done to bring it into a company's existing infrastructure, rather than viewing it as a grandiose concept. B2B companies often achieve faster results by starting with small scale projects that build confidence and momentum. Concentrating on areas where they have existing capabilities, clear objectives, and strong leadership backing yields quick wins.
2. Analytics / Data / Business Intelligence
Data analysis and the nurturing of business intelligence are essential in enabling business planners to understand where to make investments in people, processes, and technology. The need for actionable intelligence can, however, lead to overkill, as the amount of data being captured increases in hopes that it can more easily yield insights for determining effectiveness, setting goals, and driving outcomes.
It's true that Business Intelligence and insight are imperative in understanding how the sales team is functioning, and how marketing ultimately impacts the bottom line. But in going overboard on data acquisition without the means to extract value from it, B2B organizations run the risk of being "data rich, but intelligence poor." Data is becoming a larger and larger component - and therefore challenge - for a lot of organizations.
Data analytics initiatives require a clear understanding of the objectives they're put in place to achieve and the resources available to implement them. User and stakeholder requirements (Who will be handling the analysis? Who reads the reports?) will influence the selection of software and services. Businesses should choose their technology or solution partners with these considerations in mind.
With privacy issues at the forefront due to the regulatory requirements of California 2020 and the European Union's GDPR directives, the need for a clear delineation between data, intelligence, and privacy is a top priority for all players.
3. Content & PMI
Though B2B companies are generally much larger in scope than B2C brands, consumers - even the ones who use their products -don't recognize them as much. Content and the creation of brand narratives can boost the processes of building a stronger digital presence while fostering brand recognition.
Content and storytelling can help reach customers and create more brand loyalty, while simultaneously establishing companies as thought leaders and experts in their field. The key is driving product offerings through a clear content program which defines all the necessary aspects that customers will need in order to make purchasing decisions. This, in turn, builds revenue.
With about 10,000 products on a distribution platform, PMIs are extremely important to B2B companies. For B2B marketing, providing in-depth understanding and intelligence on the nature, function, and impact of a product influences the different ways that product information is shared. This is an area where manufacturers and distributors need to incorporate a broader Customer Insight/experience strategy in order to maximize outcomes.
4. Customer Experience/Engagement
Since improving the customer experience has overtaken streamlining as the principal B2B objective, the most important goal of digitalization is to make it easier for customers to do business and interact with a company. To drive additional brand loyalty and keep existing clients, the pressure is on to deliver overall simplicity of use, create experiences to engage, and provide top-line customer service.
The impetus to create the ideal customer experience goes beyond just building a new clientele or keeping current market share. It also drives the personalization aspect within certain sectors of the B2B market - including the 'made to order' industry and heavy industry which may have specific engineering or bespoke specifications to adhere to. The onus is on B2B organizations to meet their buyers where they are - and to facilitate their interactions with the enterprise at all levels.
5. Digital Transformation at the Organizational Level
Technology-fueled change is proceeding throughout the B2B ecosystem. Digital transformation is moving beyond eCommerce and marketing, to embrace the organization as a whole. It's looking at what leadership is involved in decision making, undergoing internal process changes, and even creating new job responsibilities and titles.
Organizations embracing this "all in" digital strategy are appointing chief digital officers (CDOs) or similar executives to take charge of transformation activity in their various business units. These officers may typically report to the CEO of the business unit (who in turn reports to the CEO of the enterprise) and have the final say on platform and process investments.
New recruitment practices for digital transformation are seeking out software engineers, user experience experts, and data scientists to acquire the needed skill sets and embed the right innovation mindset across the board.
These changes acknowledge the importance of operations. The increasing complexity of digital transformation is driving organization-wide transformation for all players and stakeholders. With marketing, operations, supply chain/logistics, digital/ IT/ IS, and other units involved, company culture and talent management are important related issues in driving the success of any transformation journey.
Strategic shifts like this are hard. Management consensus must coalesce around a shared vision, often challenging deeply ingrained institutional norms. Stakeholders may have to learn new skills and practices on the fly. However, an "eyes on the prize" mentality and a commitment to effective change management can see the enterprise through to a bright future at the end of the road.
6. eCommerce/Web
Most enterprise manufacturers and distributors have at least a basic website to their name. This is often how customers experience the brand for the first time. It's also a route for giving employees additional tools and tactics - especially those on the sales team.
Many organizations are still developing and improving the functionality of their websites and eCommerce platforms, both on the user and internal sides. Many are also now looking at how to expand the capabilities of this platform so that it can serve multiple masters. Websites can drive additional growth and revenue - but they can also play a role in capturing more data, sourcing out leads, and boosting customer engagement.
With historical research by McKinsey & Company suggesting that over 90 percent of B2B buyers use a mobile device at least once during the decision process, eCommerce and web strategies must factor mobile access and interactions into their program.
7. Marketplaces
With many buyers going directly to marketplaces for commercial needs, including large scale or business purchases, Amazon has become the new Google for product search. The number of marketplaces is growing, so it's important for manufacturers to maintain the integrity of their products which are being sold by third parties. This calls for due diligence, oversight (for a clear view of which products are on which platforms), and continuous monitoring.
Distributors must keep a close eye on activity in the marketplaces as well, in order to decide the most productive ways to either work with or fight against them.
8. Omni-channel and Multi-channel Strategies
Some B2B companies do have brick and mortar stores, and these must factor into their strategies for omnichannel marketing and distribution. For most organizations, however, omnichannel involves connecting all their internal systems to tie the digital ecosystem together. But for all enterprises, omnichannel or multi-channel integration poses a similar set of challenges.
Each channel - from first engagement with the brand, to sales (including eCommerce, direct or via distributor), website, mobile, and back end support - needs to give a similar level of experience to the consumer and exhibit consistent branding. Since the average B2B customer uses six different channels over the course of their decision-making journey, marketers must design selling models that give a streamlined and seamless experience across all touch points.
For the B2B merchant, this kind of integration requires the end-to-end coordination and the connection of processes from front end to back. A lack of integration can result in multiple customer handoffs between functions, long turnaround times for quotes, missed delivery dates, and the proliferation of unnecessary technology, applications, and data.
9. Social Media Strategy
Traditionally, LinkedIn has been the platform of choice for most B2B companies pursuing a social media strategy. This is largely due to familiarity and ease of use. Performing due diligence on prospective buyers and partners and reaching out to them through LinkedIn's more formalized communication channels ties in with established business practices.
However, Facebook, Instagram, and other more "populist" platforms are starting to play a role - depending on the industry and the target demographic for their products. For example, Facebook and YouTube serve high-earning user bases and are both prime venues for ad placements. Some organizations are also delving into the world of influencers, letting popular personalities or institutions spread their brand messages.
There's a caveat to this, as many are looking ahead to see how social media marketing could change considering both the recent Facebook data security issues and the privacy concerns relating to GDPR or California 2020.
LinkedIn aside, social media isn't the primary means of engaging with a traditional B2B audience, and many questions remain. There is however a healthy interest in the mechanics of social media interaction and how best to turn it to a company's advantage. There's also a pressing need to discover how best to quantify the ROI on social media involvement and how to optimize it for maximum gain.
10. Supply Chain and Logistics Management
It's obviously important for B2B companies to digitally transform the customer-facing aspects of eCommerce. But if the delivery side of the business falls flat, all the technology in the world won't make up for the resulting losses in credibility and revenue. So, it's vital for the supply chain and logistics elements of an enterprise to provide a full delivery experience which matches the customer experience.
New technology is fueling changes in the world of production and distribution. From robotics in the warehouse to linking platforms with the front end, automation and integration are streamlining processes and driving improved efficiency. An agile and sustainable approach to procurement, supply chains, and logistics management is the logical companion to this.
Agile and sustainable procurement practices mandate the use of business intelligence and analytics to help identify the best partners and sources of supply. New technologies improve packaging methods and accelerate packaging processes to allow for a range of delivery models (just in time, Fifo, Lifo, etc.). Centralized control over buying allows for scalability, and results in real time visibility and compliance of each transaction - locally, nationally, or globally. Category management services improve supplier performance and mitigate supply risks while driving innovation and continuous improvement.
Final Thoughts
These trends are all shaping the B2B industry of the future. From understanding how buyers make decisions (and who those decision makers actually are), to opportunities for more personalized content and messaging in all funnels, digital transformation technologies and data management help enable more effective B2B marketing. As B2B marketers cast a wider net and embrace branding and awareness, overall net sales can increase while ensuring brand loyalty.
Since digital transformation enables a more holistic and omnichannel approach to B2B marketing, marketers can shift their focus from just the direct decision makers and/or C-suite to include those who influence purchasing. And with the correct mix of technologies, they can create customer experiences that nurture profitable relationships with all.
Digital transformation trends are set to be a hot topic at B2B Connect 2024, taking place this June at the Rancho Bernardo Inn, San Diego, CA.
Download the Agenda today for more information and insights.