These days, the following applies: should companies miss the opportunity to capitalize on digitization, they quickly get sidetracked. But does this also apply in the context of B2B? The experts of the CiM, professor Christian Belz and Dr. Michael Weibel, have discussed the significance of digitization for B2B enterprises.
In the business world, hardly any buzzword is as omnipresent as digitization. Is the impact of digitization being overestimated?
Belz: Digitization as a trend is old, vague and yet fashionable. Companies eagerly bundle all of their old initiatives under this heading. Consultants comprehensively recognize the new access to their customers, so it seems. However, just talking about it does not lead to big changes. The key word ‘digitization’ needs to be increasingly substantiated.
Especially in sales, digitization is omnipresent and regarded as miracle cure for every problem. However, it is hardly expedient to begin with the technical solutions and to only look for an appropriate sales application in the second step. It begins with customer processes, activities in sales, the mode of communication and collaboration envisaged with customers. This also includes opportunities for standardization and modularization. In short: digitization as such is not being overestimated but it is approached in the wrong way. One could argue that the cart is put before the horse. This phenomenon is called ‚solutions looking for a problem‘.
Does B2B play a special role in this context?
Weibel: First, B2B is extremely diverse and the differences between companies are often enormous. Second, the products and services of B2B companies are usually highly complex. Third, some B2B companies only have a few customers. This influences the quantity of sales that can be achieved. Digitization only pays off where we have large numbers and can exploit economies of scale. B2B companies should keep this in mind before making the rash decision to use digital solutions simply because these are ‚en vogue‘ right now.
Where do you see realistic possibilities to implement digitization in B2B companies?
Belz: Forerunners of digitization in the B2B sector were mostly suppliers with a technical background. In the context of industry 4.0, the goal was to gain customer’s interest in one’s new products and services by means of marketing and sales. In the high-tech sector almost everything is ‚high‘: the technology, the risk, the speed. Only one thing is ‚low‘: the reception by the customer.
Marketing needs to pursue these initiatives. But please without making the same mistakes. It does not suffice to install sensors everywhere and make everything measurable. We should use the generated heap of data as well. In sales, the customer’s inspiration in early buying stages, specification of needs, comprehensive customer evaluation or ‚self advisory‘ can be digitally supported and translated for simple transactions. Thereby, success factors that need to be considered are distribution, effectiveness and costs. Within the company, novel communication solutions can help to bridge distances and avoid silos.
Weibel: On a strategic level, it is of relevance whether digitization fosters the emergence of new business models in the own sector. Within this context, providers should ask themselves the following questions: Do new competitors emerge that operate at lower costs, and hence reduce one’s own competitiveness? May it also be reasonable for B2B firms to integrate already established digital intermediaries such as Amazon Business or Alibaba? Or is it most effective to address the market with one’s own digital solutions, in order to tap into small niches on a global level by means of e.g. an online shop? This requires particular care: digitization has the greatest impact when solutions are re-thought and not simply a digital version of the pre-existing concept.
On an operative level, one has to select the most effective instruments for the own company from the digital toolbox, in order to accompany the customer management procedure in a focused manner. Opportunities range from community marketing and augmented reality to digital customer processes, chatbots, etc., to name but a few. Particularly effective is a combination between online and offline communication. Brochures can be broadened with web-based contents including videos or slideshows, which the customer can access via an app while flicking through the pamphlet. However, B2B companies should act with caution: gimmicks are not enough. Sometimes, best practices within one’s own market or another sector give important impulses on how digitization can be utilized purposefully.
Are customers well ahead of their suppliers when it comes to digitization, and thereby establish new rules for the market?
Belz: An increasing number of B2B customers standardize their procurement steadily step by step. Tendering and e-procurement are the relevant keywords. Suppliers have to move within the newly established rules of the game. Thereby, opportunities to differentiate oneself from other suppliers are being reduced.
Weibel: With this in mind, it becomes particularly important that what comes before and after the procurement process is designed correctly. A qualified business relationship should be developed long before e-procurement happens. Additionally, the current transaction can be seen as a chance to extend or reinforce collaboration with the customer. Companies need an entry ticket to secure a good spot when it comes to procurement.
How does the role of sales and marketing change through increasing digitization?
Belz: It is the joint mission of sales and marketing to entice the customer to make a purchase. In B2B, customers have already covered 60% of their decision process by themselves before even getting in touch with a supplier. For instance, they inform themselves on the internet in advance and prepare for procurements internally. It is the task of marketing to pave the way for sales people to engage in customer processes already at an early stage and on a positive note. This is called lead management. Sales should take on qualified customer leads and follow up on them. Also: At best, customers are able to qualify themselves gradually with the supplier’s guidance through the process.
In your opinion, how should B2B companies deal with the megatrend?
Weibel: Everything is changing and not a stone will be left standing. At least this is what the gurus of digitization predict. As if – the principle of innovation is that: everything remains. New systems usually do not replace old ones; they are complementary. Also, followers often are more successful than pioneers as they are able to avoid major and costly mistakes of first mover companies.
‘Onward to the essentials’ is no bad advice. Classics in marketing and sales remain topics such as solution business, management of key and small accounts, customer processes, tender management, value selling, document management, trade fairs, … – the list goes on. Maybe digitization can help to tackle these tasks but expectations should not be driven too high. Companies need relevant topics and contents for their customers. This is the best prerequisite. Only then the mode of communication should be chosen.
Belz: In marketing and sales, B2B companies often have a lot of groundwork left to do that is much more important than digitization. Sometimes, one has the impression that those responsible like to avoid current challenges by bringing up new topics. Generally, I believe that, in the context of digitization, standardization is not being discussed enough. The aim should be to progress from any product or service to a professional and case-specific solution that adds customer benefit in every case.
Thank you very much for the interview.