It’s not fair. Some B2B companies really do have an unbeatable advantage. New research from McKinsey points to a specific path for digital transformation as the defining factor allowing some B2B leaders to post operating profits 8X greater than their peers on 5X greater revenue growth. In fact, overall, these leaders can post an average profit growth of 13.5 percent while the rest of the industry watches their margins shrink.
Look closer and you’ll see that not all digital revolutions are equal either. The majority of companies turn to digital tech to reduce their costs in the back office or optimize their operational process efficiencies. Those are noble goals, but that’s not where the money is. Digital really makes a difference in sales and delivering a better customer experience.
Here are six concepts to where digital can help your company join the ranks of the B2B revenue leaders.
1. Digital as a strategy
At most B2B companies, digital is a low-level decision for team leads. The C-Suite doesn’t want to micromanage technology decisions of those in the trenches. That’s why only 10 percent of B2B managers surveyed cited digital as a priority for investment priority.
That small but influential set of digital leaders are seeing the best returns from making digital a top-level strategic decision, coordinating purchasing and execution across the organization.
2. One continuous branding
Buyers think of your company as a single entity with various buying channels, like online, mobile, field sales, brick-and-mortar, etc. That’s not how many companies organize their customer experience, though. Sales and mobile, for example, may be managed by different executive leadership with conflicting priorities, separate branding and a completely different customer experience.
The fact is, though, that buyers who cross B2B channels spend more than single-channel buyers. Cross-channel integration, facilitated by digital interoperability, can have an enormous impact on your bottom line. The average B2B buyer goes through a decision journey involving six channels or more, and conflicting experiences drive them to the competition. Financial leader ING saw their profits soar by 23 percent after coordinating their omnichannel on a strategic level.
3. Customer 360
The more you know about your customer, the better you are at generating the kind of solution they really need. Despite many advances in recent years, only 15 percent of B2B sales leaders said that they have a 360 degree view of the customer.
Better targeting with digital automation and analytics boost sales by 8 percent on average, and that’s just the beginning of more accurate sales processes. Social selling in coordination with digital tools help sales present B2B buyers with the precise data and content they need, covering industry- and company-specific topics.
4. Deeper insights for better sales decisions
The close tends to get all the attention, but preparation is the real workhorse in sales success. Better quality decisions in pre-sales prep like qualifying leads, writing bids, adjusting deal renewal language have been correlated to 40-50 percent more new business and 80-90 percent retention rates. All of that can be accomplished by applying digital decision-support tech early on. Automated applications connect finance to accounting to ERP systems so that sales can see every aspect of the customer’s relationship to the company.
These digital links produce insights on service issues, what happened during support calls, finance challenges the customer faced and much more. On the other end of the process, operations gains visibility into the sales pipeline to make better decisions about resource planning and delivery schedules.
5. Moving to a culture of innovation
Everything is faster now thanks to upgrades in mobile coverage, supply chain enhancements and rapid transportation. B2B companies tend to be behind the times in terms of sales cycles and delivery options. Less than 15 percent are using the ready-shoot-aim process of rapid prototyping to get to market faster. B2B leaders are getting there first, giving them an edge in innovation and customer experience.
They can’t survive by acting alone, though. The accelerated business environment makes collaboration with external partners more crucial. A telecom studied by McKinsey shorted their get-to-market development time from six months down to under 12 weeks thanks to digital processes and automation. Partners are more willing to make agreements when they see you can imagine, test and build innovative customer initiatives faster.
6. Let digital redefine your KPIs
Shaking things up is never easy. That’s why most companies use digital to make tiny, marginal adjustments to processes. Real revenue growth, however, comes from allowing the capabilities of digital reinvent your entire organizational structure and redefine you key performance indicators (KPIs). Big changes bring bigger improvements in profitability.
The first step is coming to an agreement on what your real goals are and how you will measure the effectiveness of digital initiatives. Only 17 percent of managers today can even say what their digital metrics are and what they want to achieve.
Building digital momentum
Although the effects of digital transformation may be sweeping, they don’t have to happen all at once. The most important point is to assure executive buy-in and consistent support for adopting digital practices on the front line.
You may have to start with small wins and build momentum before you redesign customer-facing practices from the ground up. Bring in training and transition experts to help guide you through the rough patches. Ready or not, the world has gone digital and the B2B companies adapting to that new reality are reaping big rewards.