Organizational Impact of Digital Transformation
B2B Digital Transformation: Organizational Impact
Business experts continue to observe fundamental shifts in the business economy due in large part to disruptive and competitive developments in technology. In the B2B economy, eCommerce has become a catalyst for digital transformation. B2B players that adopt and execute a well-planned eCommerce strategy are quickly becoming disruptors in their markets and see the opportunity to expand their footprint.
As this digitally enabled world rapidly emerges, manufacturers and distributors are feeling the disruptive influence of the more agile and innovative competitors who are, quite simply, easier to do business with. To remain competitive, each organization must embrace digital transformation, its challenges, and its opportunities. Most companies are not prepared for the revolutionary changes that lie ahead which will permeate all areas of their business.
Digitally Transformed Companies are Digital-First Companies
The B2B shift toward digital eCommerce is predicated on the fact that today, nearly all B2B buyers’ begin their research on the internet. Studies show that well over 60% of the B2B purchasing decisions are made, using online tools, before B2B customers contact the seller. As a result, B2B sellers need to have a presence online providing the information and capabilities where their customers start forming and executing their decisions, using search engines, third-party sites, manufacturers’ websites, and distributors’ websites.
Digital Transformation Changes Everything Within a B2B Company
When companies decide to craft a new eCommerce strategy, they often underestimate the impact it will have on internal operations. There is a tendency for people within the organization to perceive the approaching eCommerce plans as either siloed from their existing channels or as a first generation portal, often with low transaction volume. But it will be something much bigger than that.
In reality, a digital business will be multi-channeled and it will embrace the entire organization from the beginning, as it transforms the organization into a digital-driven, digital-first company to reach customers where they are, on the devices they choose to use, at the times that are convenient for them.
Digital transformation impacts B2B businesses in deep and profound ways. Let’s look closer at how these impacts affect every area of business.
Marketing: Being Where the Customer Is
Marketing efforts to acquire and retain customers will become key initiatives. And digitally transformed B2B organizations need to know how to market digitally.
In digital-first B2B purchasing world, companies that aren’t where their customers are looking online quite simply won’t be considered by them. B2B sellers need to buy keywords and understand how to optimize those keywords so that their brand and message is retrieved in organic and paid search results.
Website designs, need to be as interactive, appealing and as easy to use as favorite B2C sites, simply because that is what all users now expect. Great user experiences, that reflect the needs of the various B2B personas, take a level of skill and expertise to ensure the right outcome.
Sales: Changing Roles
The Sales department tends to feel the impact of digital transformation as soon as channel shift starts to take place. Monitoring the shifts from the customer talking to a salesperson on the phone or meeting with someone in person, to making purchasing decisions and buying for themselves via a self-service online portal are important activities to monitor.
It is equally important to address sales compensation up front as digital initiatives are unveiled. Incorporating the efficiencies that digital technologies bring into the overall sales cycle while preserving sales rep compensation as the value of their sales activities increase is vitally important. Strategies that preserve a “win-win-win” for customers, sales reps, and sellers will pay the highest dividends.
Customer Service: Rising Expectations
The leaders in both B2B and B2C eCommerce have dramatically raised the bar when it comes to customer service. Most B2B organizations have some work to do to reimagine customer service to reflect these new expectations.
The impact on customer service is one that is often overlooked when new online strategies launch. Suddenly the seller’s company is open 24/7/365. And that means customer service needs to be available 24/7/365. Many organizations have yet to establish call centers that are properly resourced for this model.
If a buyer is working late and has a question, will they look for providers who have resources available in real-time or wait until 9:00 a.m. the next morning for an answer? Trends show decreasing loyalty if needs can’t be met in a timely manner.
B2B companies that have success mitigating this impact think differently about how they support their customers. They may need to give their customers a multitude of different ways to reach them, from email, to chat, to a phone, and make it very easy and clear for their customers to reach them, despite the challenges that go along with this round-the-clock coverage.
Supplier Relationships: Shifting Channels
Supplier relationships in the digital transformation can pose an external channel conflict similar to the internal channel conflict described previously. Distributors may suddenly find themselves competing with their own suppliers and manufacturers who increasingly sell directly to customers.
Resolving issues about channels can be very complicated. Distributors, in particular, need to prepare not just for competition from other distributors, but increasingly from their own suppliers. This is a business problem inherent to B2B digital transformation. Building a value-added ecosystem that incorporates services and products will become a key differentiator in distribution.
Operations and Infrastructure: Tapped for More Value
Manufacturers and distributors probably need to revisit their infrastructure in light of digital transformation as well. As the pressure for shorter delivery times continues to increase, it is likely that an organization’s logistics and delivery services will need to change as well.
The same is true for returns. Making it easy for a customer to initiate and execute a return from an online purchase is important.
Technology and R&D: Investment Increases
As of only a couple of years ago in the B2C digital realm, Amazon was believed to be spending three times the retailer average on research and development.
For manufacturers and distributors, determining the necessary level of investment in digital transformation is new territory. The investment in the technologies, services, and related resources for marketing, internal staffing, and adoption programs is more broadly based than other technology-related initiatives from the past and demands a new approach. Allocating a percentage of top-line revenue over a multi-year period of time to invest in all aspects of the journey is important. A fragmented approach will not work.
Organizational Models: Redevelopment and New talent
New demands on the organizational model pose the greatest impact for companies on the digital transformation journey. Companies can’t just go buy a technology platform; they need the right people and the right processes in place to effectively handle all of the aforementioned changes and challenges in the various areas of the company. People and expertise are very important and a combination of hiring experienced resources from the outside along with developing internal resources is a healthy approach. Having programs to attract and retain new talent in a highly competitive marketplace is an important HR initiative.
As competitive pressures rise, customer expectations continue to shift and new technology emerges, manufacturers want to ensure their channel is keeping up. Learn how they’re doing so.
In our newest Wholesale Distribution eCommerce Success Story, we heard from Macpek, a leading distributor of heavy-duty vehicle parts and car wheels. Steven Wark, Information Technology Director at Macpek shared how Macpek has experienced success since the...
Small distributors have a massive advantage over their bigger competitors where data-driven marketing is concerned. They just have to follow some simple steps to building a centralized data source.