Consumerization and Partnerships

The time when Business-to-Business (B2B) sales marched to their own drum — focused around the product and disconnected from the “customer-centric DNA” of Business-to-Consumer (B2C) — is gone forever: Customers have grown accustomed to a different experience, with constant information and integration as well as enhanced and rapid services throughout the journey.

But the carryover of the consumerization experience is only one part of the story. The other change is the one B2B is undergoing in a fundamental yet complementary way: from transaction-based relationships, to partnerships. B2B is no longer simply about doing a “one-time” sale; instead, it is about building trust in the long run. This is increasingly becoming the case with the arrival of the Internet of Things (IoT), where the connection between suppliers and clients can only be strengthened and cemented. Strong market trends are reshaping the B2B environment, and companies need to adapt rapidly if they are to thrive.

“Customer Centricity" is reshaping B2B

While the product itself may previously have been the glue holding together the B2B relationship, it is now — and will continue to be the case over the next decade — all about the customer and his journey from initial identification to aftersales.

The initial customer contact starts more and more online: It is becoming increasingly easy to investigate, look for alternatives, spot suppliers and partners, and price products and services without ever having to leave the computer workstation. The prospective B2B customer, therefore, needs to be “captured” earlier through new channels such as online marketing, social media, or specific blogs. Furthermore, initial questions have to be answered fast to avoid losing the customer to the competition, given the pressure of ever-escalating market speed. Take the example of an industrial company in Germany that developed an “instant quoting” application for engineered parts, increasing its capacity to answer client requests rapidly and efficiently and maintain contact while making sales.

The B2B client increasingly is looking for an integrated experience, after the initial contact, with personalized and tailored offers. Customers expect immediate information about the status of their orders, systematic tracking, speed, reliability, and adaptability of deliveries, as well as options to tailor various services to their specific needs. Furthermore, administrative and burdensome elements of the transaction are to be smoothed out, creative payment options are to be proposed to the client, and, more generally, 24/7 rapid and efficient service is the new normal. In the B2B world of tomorrow, the client is more than ever the central figure. And while the product remains essential, refined strategic customer segmentations and tailored services will be reinforced as key differentiators.

Eventually, aftersales and retention will become an essential component of the story: while it is good to have made a sale to a client, it is even better to retain that client for the future in a recurring model. Empowered by an open and competitive world — along with easy to use “plug and play” systems — customers will be able to make even more rapid changes. In the same way, we also foresee customer loyalty being up for grabs, raising the importance of retention. Industrial players setting up “relays” at client sites is one example of sustained service, as it is and will be more and more about the permanence of the “customer-centric” interaction. (See Exhibit 1.)

Exhibit 1: B2B client relationship drivers

^{Source: Oliver Wyman analysis}

From “Transactions” To “Partnerships”

Pushing the expected evolution one step further, it appears that B2B clients are more and more looking for long-term “partnerships,” rather than “one-shot transactions”.

B2B is increasingly about co-innovation and co-development: together shaping the product best adapted to the client’s needs. This evolution is triggering win-win adaptations that reduce costs as well as lead-times while supporting growth. Going one step further, B2B clients increasingly expect suppliers to take into account the expectations of the final customer in a new B2B2C mode of thinking — hence standing ready to fine-tune the components of their offer. In terms of co-innovation and co-development, a leading apparel manufacturer teamed up with his machinery and chemicals suppliers, triggering optimizations that benifited the suppliers as well as the final client. Another more broad example is the Hydrogen Council, a global initiative that promotes collaboration between stakeholders in creating innovative sustainable energy solutions.

Second, the request for proposal (RFP) process will continue to evolve from “price triggered” to “trust-based.” New features such as transparency, tailored interactions, or preparatory investments will become increasingly key, demonstrating the will of a supplier to build something strong and sustainable. While the aspect of price will of course remain crucial, new differentiators will weigh more heavily in the balance. Take the example of a forklift producer that adopted a winning partnering posture during a large-scale RFP, offering innovative, tailored transparency on features, services, and prices combined with high-level adaptability and counsel. In this win-win deal, the supplier won a much larger and more sustainable market than it initially expected, even if it had to concede a slight decrease on its margin.

Finally, suppliers will be asked to take greater responsibility for their products’ performance during operations and have to put themselves into the shoes of their clients even after delivery and installation. This evolving trend is driven both by a new client mindset that is seeking “real understanding” of their needs and by Internet of Things technologies that trigger greater performance transparency and new maintenance models.

While it is true that customers have more possibilities and initiative to switch suppliers based on opportunities, the emerging partnership model would seem to be a means of stabilizing relationships and countering the volatility trend.

Customer relationship of the future

In rapidly changing markets that offer a wide range of affordable new technologies, the key to B2B supplier success lies in shifting from price to service and partnership. Of course, the price must be in line with the market, but more importantly, the supplier must be able to offer B2C-like information, tranparency, speed, reliability, adaptability, and availability — while simultaneously investing in a long-term partnership. Of course, B2B companies will need to adapt: Sales and marketing will need to work together more than ever leaving behind the former silo mindset, while operations will need to gear up so as to handle the rapidly increasing and constantly changing client demands. Data will be at the center of the strategy. Shared internally and partly externally data will become a key to unlocking end-to-end performance. The transformation of B2B, one that is based on trust and confidence and aimed at creating value for the entire ecosystem, has begun and will only accelerate.