Build a Better B2B Business: Winning Leadership for Your Business-to-Business Company

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Here are six areas where digital leaders excel. Far from standing on the sidelines, B2B companies have embraced the digital revolution. Most are outpacing consumer companies in digitizing back-office workflows and resource planning and in modernizing their existing IT architectures. Digitization has made providing consistent, high-quality customer interactions a competitive differentiator, no matter the channel. B2B companies need to adjust accordingly. Right now, however, selling models remain firmly planted in the offline world. Company websites, though rich in product descriptions, are often little more than digital brochures that fail to provide an easy way for customers to buy.

And while sales teams are working harder to navigate deals that stretch longer and involve multiple influencers and buyers, they often lack or are unable to apply the analytics needed to manage the sale profitably, understand who the real decision makers are, and what sorts of outreach might prove persuasive. B2B players must contend with shrinking product shelf lives, greater price transparency, and a changing cost basis on the one hand while simultaneously growing the capabilities needed to create consumer-like experiences on the other, with personalized service and hassle-free purchasing across platforms and devices.

Nontraditional players like Amazon Business and Alibaba are already cashing in on this trend by providing business buyers with simple and convenient digital marketplaces. So what to do? Our research is clear: Rather, the B2B companies that master these areas are generating 8 percent more shareholder returns and a revenue compound annual growth rate CAGR that is five times greater than the rest of the field.

The study shows that B2B companies trail consumer companies in terms of their overall digital maturity: While that might not be surprising—B2B companies, after all, generally contend with a more complex environment, longer deal cycles, lengthy RFP processes, the involvement of many vendors, decision makers, and influencers—comparing the scores of B2B and B2C companies was helpful in order to reveal and better understand those areas where B2B companies could most profitably improve. Moving up the digital curve matters because B2B digital leaders turn in stronger financial performance.

Top-quartile B2B players generate 3. Our research shows that six digital practices have an outsize impact on performance. These are the areas in which digital leaders excel and where B2B companies can do better. Outperforming companies create digital strategies that are designed to make and shape markets, and they back those efforts with the necessary resources.

How to raise your DQ

At most B2B companies, however, digital strategy is a sideshow. Initiatives are less likely to be anchored in customer needs and often falter from insufficient investment. Only 10 percent of the B2B companies in our survey, for instance, said that digital was a top investment priority. When held off to the side, digital strategies often splinter into smaller initiatives that are too diffuse to gain momentum and too limited in scope to make a material difference.

As a result, top-quartile B2Bs across sectors have an average DQ of 44, compared with 50 for consumer companies. To make its digital strategy the de facto way of operating, GE consolidated each business unit under a chief digital officer. GE also went on an ambitious hiring spree, bringing in thousands of new software engineers, user-experience experts, and data scientists to acquire needed skillsets and embed the right innovation mind-set.

Strategic shifts like that are hard. They require gaining management consensus around a shared vision, challenging time-honored institutional truths, and learning new skills and practices on the fly, but it can make a huge difference. B2B buyers who interact with multiple channels, such as field sales, online web stores, and so on, spend more than those who only purchase from a single channel.

Taking advantage of that fact takes strong cross-channel integration. Mobile especially has changed the way B2B decision-makers interact. More than 90 percent of B2B buyers use a mobile device at least once during the decision process, 3 3. B2B leaders are doing things differently. At the Netherlands-based bank ING, for instance, corporate clients have a single point of access to real-time account overviews, customized reporting, and the ability to execute payment and hedging transactions wherever they are in the world.

To make that happen, the bank had to overhaul its customer-data processes and make it possible for information to be updated across all channels automatically. Now customer-service personnel, marketers, and account managers can track where a customer is in his or her decision-making journey and respond with tailored offers and advice. Our benchmark shows that only 15 percent of B2B companies feel they have a complete view of their customers versus 20 percent of consumer companies , and only 19 percent say they understand the customer journeys that matter most to core segments versus 31 percent of consumer companies.

By contrast, top-performing B2B companies are using advanced analytics to improve their insights-generation capabilities and deploying tools that help marketing and sales understand what offers, content, and services will hit the right notes with key segments. At an electronics manufacturer, for instance, marketers could tell when a prospect opened an email, but their customer-relationship management systems had no way of tracking how long a customer spent reading that email or what action they took next.

To gain more predictive muscle, the company invested in next-product-to-buy NPTB analytics that presented a list of recommended actions, scored by relevance. More effective targeting insights helped the company increase sales by 8 percent. Advanced analytics can also help sales reps navigate a more crowded purchasing environment. Those insights were funneled into a specialized iPad app that reps could use in the field. If the app flagged that procurement was likely to be engaged, reps could press a button and generate tailored punch lists and other add-ons designed to meet procurement specifications and simplify the RFP process for internal buyers.

The digital practices that drive high performance

In tests, the iPad tool shortened the selling process by about 30 percent and increased conversion by 8 to 10 percent. Similar data-enabled marketing practices allow B2B companies to create highly targeted campaigns that can break through the noise and forge meaningful relationships—a critical capability in a competitive or fragmented market. Vestas, a wind-turbine manufacturer, knew from customer research that turbines could play a major role in driving down business costs, but most companies still saw them strictly as an energy-solutions provider, which was narrowing their market.

To change perceptions, they used customer analytics to create a campaign focused on gaining the attention of Fortune C-level executives—the lead decision makers for their product. Customer-decision-journey analysis revealed that busy CEOs were more likely to engage if presented with targeted data that addressed company-specific issues.

So Vestas partnered with Bloomberg BusinessWeek to hand deliver a series of custom page inserts filled with company-specific data that spelled out tangible wind-energy benefits. That targeted, data-driven campaign helped Vestas achieve a ten-times improvement in conversion rates.

Effective presales activities—the steps that lead to qualifying, bidding on, winning, and renewing a deal—can help B2B companies achieve consistent win rates of 40 to 50 percent in new business and 80 to 90 percent in renewals. But that level of success requires close coordination from front office to back, and while many B2B companies have done a good job automating the back office, they fall short when it comes to connecting those processes to the front end.

That lack of integration can lead to multiple customer handoffs between functions, long turnaround times for quotes, missed delivery dates, and a proliferation of unnecessary technologies, applications, and data. DQ leaders do it differently. They use automated decision-support processes and other tools to link finance, accounting and ERP systems with customer, sales, and order data to generate a degree view of the customer across the business.

That interconnected network lets sales teams access all the client service, support, and financial information they need prior to their customer interactions, and it gives operations teams greater transparency into the sales pipeline to assist with resource and delivery planning.

Improving the business-to-business customer experience

A building-materials supplier improved its qualification rate, for instance, by using order histories of existing customers and analyses of prospective markets. In our experience, customer-experience leaders in B2B settings have on average higher margins than their competitors.

In cases where companies have undertaken broad transformations of their customer-experience processes, the impact among B2B and B2C players has been similar, with higher client-satisfaction scores, reductions of 10 to 20 percent in cost to serve, revenue growth of 10 to 15 percent, and an increase in employee satisfaction. Consider one IT-services provider that found itself battling emerging low-cost players in a maturing industry. Executives realized that customer satisfaction was increasingly becoming a way to stand out from its lower-cost rivals, but its net promoter scores were much lower than those of its peers.

To respond, the company launched a customer-experience transformation in The company redesigned a set of 20 customer journeys end to end, addressing all dimensions of customer experience—process, customer tools, performance management, and employee mind-sets. After 12 months, its negative net promoter score had turned positive, and a year after that, the company was outperforming the industry average. For example, another IT-services provider served 30, employees at a large global client. Each employee reported multiple small incidents each year.

Improving the business-to-business customer experience | McKinsey

Minor though the incidents were, the overall volume caused so much dissatisfaction that the client threatened to switch providers. The company responded by making drastic improvements to its incident management, broadening the focus from only severe incidents to also include minor, high-frequency incidents that annoyed every-day users. Make no mistake, however.

Indeed, a B2B company requires specific strategies to differentiate itself via customer experience. For example, one European corporate bank wanted to optimize its corporate-lending process. This process entails providing multimillion-euro loans to client organizations to meet strategic objectives, such as the purchase of new machinery or growth through acquisitions.

Taking up the customer journey it sought to improve, the bank faced multiple stakeholders in many of the individual client organizations it served. Many had differing needs. Others would only participate in different parts of the lending journey.

Legal teams worked out the details of the contract, and payments officers arranged interest payments. To understand the perspectives of these different stakeholders and their needs, the bank typically had to undertake a complex mapping exercise. Such a plurality of stakeholders also creates complex buying behaviors.

Even though B2B purchases are commonly assumed to stem from rational decisions, in our experience they hardly ever do. Overall total cost of ownership is never the only decision factor. Other factors also influence decisions, such as long-standing relationships with procurement teams and the general reputation of suppliers. Another challenge to B2B customer-experience efforts is the fact that customer journeys are simply more complex than those for retail customers. B2B companies often have more offerings and services than B2C companies.

The offerings are also highly tailored to individual customer needs and often consist of different products and services bundled together. In our experience, most B2B companies have far more critical customer journeys on which to focus than the ten that many B2C players average. B2B journeys also tend to be long, complex, and quite technical, and consist of a continuous interaction of services and sales touchpoints.

Journey experience and operations are often fragmented by account and location, involving multiple teams in different departments. For example, the export-financing journey of one financial institution involved four organizations: The journey required one and a half to two years to complete and included many highly technical components that bedeviled redesign efforts. Among the technical elements that required expertise to redesign were detailed financial data, as well as extensive compliance inputs and risk assessments.

The financial institution therefore included a lawyer and a financial analyst in its customer-experience-redesign team to ensure enough technical expertise to address these elements. They include taking the following actions. An elevator manufacturer supplied elevators to large office buildings and residential complexes.

Build a Better B2B Business

However, the manufacturer overlooked two major customer groups. Presidents of housing-owner associations turned out to be strong influencers in purchase decisions on elevators. Their complaints ended up with facility managers. The investigation revealed that a key element in customer satisfaction for housing-owner associations was proximity to their vendors. Presidents of these associations are now involved in all key moments of the journey, including face-to-face meetings with sales representatives and field technicians.

In addition to providing the desired proximity, the elevator manufacturer made its activities and the status of breakdowns more transparent for both the housing association and facilities managers. B2B journeys often grow complex because they must accommodate the special needs of small percentages of the client base.

Such relationships require specific tailoring, extra services, or additional checks. Splitting the journey into standard and specialty tracks can minimize complexity for a majority of clients, resulting in easier journeys for clients and significantly lower costs. One European corporate bank radically redefined the customer journey into three tracks, helping clients and employees better understand how complex international financing deals could get approved. An express track was set up for relatively easy deals that entailed low risk and could be executed with fewer checks, smaller teams, and shorter timelines.

An advanced track for more difficult deals included extensive auditing, the addition of senior executives to the working team, and more interactions with the client. Between these two was the standard track. After reviewing a proposal, loan officers map the risk indicators and choose the track that includes the most conservative approach to processing the deal exhibit. Managing rework and incidents. Rework is often a cause of significant delay for a B2B customer, extending the length and increasing the complexity of B2B customer journeys. The culprit is often internal control procedures, internal auditing, or compliance requirements.

For example, an IT-services provider required its internal purchasing department to validate the acquisition of new equipment purchased for clients, which delayed the completion of transactions by more than two weeks. However, customer expectations were quite different, given that some equipment and IT services such as cloud space can be purchased in a matter of minutes from online vendors such as Amazon. But smartly front-loading internal auditing by, for example, preapproving batches of similar purchases allowed the IT-services provider to remove the time-consuming control procedures from the customer journey, improving satisfaction.

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