What B2B can learn from B2C
May 15, 2018 | NEWS
(and why it should be the other way around)
As anyone who’s ordered on Deliveroo can testify, tracking your order as it wings its way across town to your home is rather pleasing. While perhaps not essential, knowing the exact time your Indian will arrive is handy.
We now expect this level of service from consumer brands and services, but most B2B businesses – in construction, catering, or outsourcing – have been slow to match it. Why is it that we can place a £30 Amazon order at midnight, and track delivery every step of the way, but a business customer buying £30,000 worth of tiles can’t get the same buying experience? As important as our shopping is, the scheduled arrival of critical building materials is surely more so.
As a result, challengers from B2C have already arrived. Amazon is gaining share in B2B distribution, Uber for Business is taking valuable market share away from incumbent taxi services, and so on. But how long until they disrupt other sectors? How long before Uber Eats, Deliveroo or Just Eat disrupts the catering sector by offering, say, a more convenient and personalised lunch service than the office canteen?
Possibly not very long.
All is not lost, however. While many B2B companies have been slow to adapt to our personalised digital age, others have become trailblazers in their industry.
Turning the tables
Before we go further, let’s address some of the key reasons why B2B is behind. Barriers to growth include: outmoded IT systems; a product-focused culture that hasn’t paid attention to shifting customer expectations; and a reluctance to reorganise and update branches, warehouses, contact centres and other critical infrastructure.
However, it’s not too late to turn the tables - far from having structural disadvantages, B2B should lead the way:
B2B businesses enjoy an extraordinary depth to their customer relationships; they have knowledge of the individual buyers and the organisations they work in. They often know their customers personally, speak to them daily, and work with them for several years – unlike grocers and consumer goods businesses. And let’s not forget, insurgents targeting B2B markets start with none of this.
With this in mind, here’s how B2B businesses can take advantage rather than get left behind.
- Embrace digital marketing
Digital advertising has revolutionised consumer marketing – and should soon do the same for B2B. Customers are more likely to search for suppliers online, check review sites and respond to targeted adverts on social media. Retargeting (adverts that follow you across the internet), Facebook advertising, and native ads (such as sponsored articles and videos) have transformed the playing field in B2C.
Meanwhile, the B2B sector has too often clung to the traditional direct approach: relying on legacy relationships, referrals and assumed customer loyalty. This must change. The idea that B2B procurement is purely rational, that the buyer is not impulsive or influenced by brand, is mistaken.
Digital marketing also allows decisions to be made on "real data" not "anec data": by measuring activity (clicks) and asking questions (in pop-ups or mini quizzes), marketers can gauge real time interest in products and services and adjust pricing and propositions accordingly – either in real time using algorithms or retrospectively.
- Redesign proposition with the end-customer first
One of the greatest changes in B2C over the last decade has been the rise of much more focused propositions. We’ve seen this dramatically in retail, where there rise of discounters like Lidl and Aldi, and the rise of premium grocers like Marks and Spencer have won significant share at the expense of incumbent mainstream grocers.
Elsewhere, highly segment-focused service providers such as Saga, Sportpursuit and Monzo, are winning market share thanks to targeted services and a ‘look and feel’ that customers believe is personalised to them, despite the offering not being bespoke in the true sense (i.e. expensive to deliver!).
In B2B, the more enlightened players have been doing the same, winning their share of the market and growing margins too, proving that understanding the end customer is always key. In the field of TIC (Testing, Inspection & Certification), players such as as Asia Inspection have disrupted the large incumbents with a tech enabled, customer first proposition, winning both SME and blue chip customers along the way.
- Accept the new customer service paradigm
Ultimately, the customer service paradigm has changed. In some respects our expectations are higher: we expect tracked orders, instant invoices and automated reports. But in many ways, our expectations are lower too. Millennials are notoriously phone-phobic; they prefer to self-serve online, prefer remote delivery to face-to-face – anything but pick up the phone.
The benefits of this are clear – more frequent, automated customer interaction delivers profits but also more customer engagement which generates the data on their behaviour that can improve proposition and grow share of wallet.
As for Generation Z, the jury’s still out on the challenges they’ll pose to marketers and employers. However, one thing is for certain: unless B2B learns the lessons of the consumer brands that Gen Z grow up with, it will be Amazon delivering the building supplies and game over for B2B.
Bennet Summers is a Partner at OC&C Strategy Consultants
Nigel Stirk is a Partner at OC&C Strategy Consultants
Vivek Madan is a Partner at OC&C Strategy Consultants