Creating Strong Digital B2B Channels at Industrial Companies

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By Chris Angevine, Ruhan Meyer, Jannick Thomsen, and Rodney Zemmel

The digital solutions common at many companies are new to most industrials. How can digitization take root in this complex industry?

Industrial companies realize that digitization is more than a buzzword and know that e-commerce, data analytics, and other solutions will transform every aspect of their businesses. Some have even set ambitious goals to reduce costs, increase revenues, or improve cash management through digital solutions, with many focusing on the digitization of sales and marketing as more end customers migrate online. This move is well considered, since research suggests that the number of B2B customers using digital self-service channels to research and evaluate products rose from 20 percent in 2016 to 30 percent in 2019 across industries. New or repeat orders made through digital B2B channels rose from 40 percent to 50 percent over the same period, representing trillions of dollars in value.

While industrials understand the importance of digitizing sales and marketing, few have embarked on extensive efforts in this area, and those that do often struggle with execution. After all, customers are accustomed to online B2C sales channels, which businesses have been perfecting for years, and expect industrials to deliver the same seamless experience across platforms. In most cases, however, they still fall short. Their deficiencies are becoming more obvious because COVID-19 has forced many companies to limit face-to-face interactions and increase online services, and that shift may become permanent. A recent McKinsey survey of B2B leaders showed that most respondents expected to be able to meet with customers in person by the start of 2022, but only 15 percent expected such meetings to be the norm going forward.

We recently analyzed more than 350 industrial companies to gauge their digital prowess—basically, the extent to which they were investing in digital tools and analytics—and determine if this had any impact on revenue growth or total returns to shareholders (TRS). The results revealed that a select group of companies stand out from the pack when it comes to driving performance improvement through digitization. The insights from this research, combined with our work with industrials, allowed us to identify some common success factors for digitization, including a clear focus on impact, employee buy-in, cross-functional collaboration, and a detailed implementation plan. This article reviews these concepts, as well as the benefits of a strong digital sales and marketing function. The next article in this series will provide more details about the framework for implementing digital initiatives at industrials.

Digitization can help industrial companies address their most common pain points.

Improving the end-to-end customer experience

In their lives as consumers, B2B buyers have become accustomed to researching products, placing orders, and tracking packages online. While industrials lag behind their B2C counterparts in digital capabilities, their customers still have the same expectations for top-notch online services.

Some companies within the industrial sector, such as the distributor Uline, are leading the charge to digital and transforming its role in the overall ecosystem; rather than a multiweek process that involves mountains of paperwork, endless touchpoints, and manual credit approvals, new customers can create accounts instantly and receive credit approval through a secure, one-click process. Additionally, companies are improving the customer experience via easily searchable online catalogues with personalized recommendations, web chats or video calls with experts, and online how-to videos.

Unlocking new sales opportunities

When cultivating new customers, digitization can make outreach both simpler and less expensive. It will be particularly helpful with small accounts that many industrials have hesitated to pursue because of the low return on investment. Further, companies can use data and analytics to identify accounts that currently generate little revenue but have the potential for strong growth. Sales and marketing efforts that target such groups may produce better results than more widespread, unfocused campaigns.

Improving efficiency

Through automation, digital tools can create efficiencies in three important areas:

Product, service, and order fulfillment. Digitization helps companies simplify their product offerings. By concentrating on the core products and solutions that matter for most of their customers, they can drive operational efficiencies. Digital tools can also help companies standardize lead times and make them more transparent; this will improve customer experience, since a lack of visibility into order tracking is a common pain point in the industrial sector.
Commercial strategy and execution. Sales teams can accelerate deals by removing manual touchpoints and minimizing the time spent on administrative tasks, such as resolving issues after the sale (for example, invoice issues). With opportunities for both in-person interaction and online self-service, customers will also have more contact options, which could increase both loyalty and satisfaction.
Customer service and transactions. Automation can streamline customer service and make it easier for people to interact with companies. For instance, chat bots, available around the clock, can answer many common questions for customers. Such features are standard at most B2C companies but have not yet gained traction within industrials.

By automating many processes and touchpoints, digitization will reduce the time that salespeople spend managing existing accounts, which now amounts to about half of their work. Automated solutions may be particularly appropriate for mundane but critical tasks, which can consume more time.

Lessons from past transformations

While the imperative to increase digitization is clear, the path forward can be complicated. Too often, industrials push for digital solutions because they see their competitors launching initiatives and fear missing out. In their haste, they may launch ambitious campaigns without appreciating the enormous resources—time, money, and staff—required. And some may incorrectly believe that a silver bullet, such as a capable implementation partner, will guarantee success when the reality is more complex.

Through our experience leading digital B2B transformations, as well as our survey of 350 industrial companies, we discovered that companies can escape common pitfalls by taking a more thoughtful approach. They can also win by forming partnerships with other businesses or vendors, such as systems integrators or website designers, to ensure that they have all the expertise required to deliver a complete solution. Here are the tactics we observed in the most successful companies.

Focusing on what matters

It sounds simple: companies should focus on the areas that will have the most impact when implementing digital solutions. But a surprising number of B2B companies launch efforts that generate little operational or financial improvement. To avoid this trap, companies should begin with the clear articulation of a problem statement, such as “above average churn for the industry” or “substandard lead generation results in low customer acquisition despite high funnel conversion rates.” When seeking solutions, they should concentrate on changes that will tangibly improve the customer experience and eliminate critical pain points, such as by providing a seamless reorder process and easy order tracking, rather than striving for perfection in all areas. Likewise, companies should prioritize efficiency initiatives that will produce the greatest time savings.

CONTENT SOURCE: McKinsey

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