Submitted by C.L. Jenkins on Tue, 21/03/2023 - 11:52

Conventional wisdom has it that there is little point in focusing on the customer experience in a B2B context. After all, a B2B customer is rarely a single person but a group of decision-makers, often working in different functions, making it difficult to track or influence their purchasing decisions.

However, thanks to the emergence of digital technologies and the transformative effect they are having in the consumer world, B2B executives are increasingly seeing the value of a customer experience (CX) strategy. In sectors such as consumer packaged goods, change is afoot, with new market entrants disrupting the traditional value chain. Where buyers would typically place orders with sales representatives from a number of different firms, digital newcomers such as Udaan and Elasticrun provide a platform through which they can order whatever stock they need from one place and have it supplied by a single provider.

The value of B2B to be transactions is often high. Achieving competitive advantage through enhanced customer experience is, therefore, likely to have a positive effect on profitability.

According to a 2022 McKinsey study, 71% of business buyers would spend $50,000 or more and 27% over $500,000 on a single transaction without any face-to-face contact with the seller. As well as improving a firm’s chances of winning business in a competitive market, research has shown that a CX strategy also results in improved performance and sustained customer loyalty.

But the challenges remain: the B2B setting is a complex ecosystem of suppliers, partners, customers and a diverse set of people involved in the customer experience. And while the practitioner buzz suggests that B2B firms are beginning to see the possibilities of a CX strategy, to date there has been very little academic research into this phenomenon.

To redress this balance, we studied the sales, marketing and digital operations of 30 global industry leaders from B2B firms across a wide range of sectors and geographies with a mix of product and service providers. We wanted to find out to what extent CX-centricity is part of their thinking and how advanced they are in implementing that thinking.

What is CX-centricity?

A CX-centric firm is one which believes the goal of marketing is first and foremost to understand and meet the needs of the customer, deliver value to them and create a satisfying customer journey in order to achieve sustained loyalty and growth.

In contrast, a ‘relationship oriented’ approach uses relationships to sell products or services and is more focused on individual transactions and on maximising profitability. This can result in scrimping on quality or customer support to increase margins and, ironically, may lead to lower profitability as a result of higher customer dissatisfaction and churn.

Insights from B2B firms

We found compelling evidence of a shift in mindset among the firms we talked to. This was exemplified by the Chief Technology Officer of an i-gaming service provider who described how their firm is changing the way it serves its customers: “… we, of course, provide world-class products but we are also looking at improving our customers’ lives a small bit every day.”

Towards CX-centricity: 5 things B2B firms are focusing on

From our in-depth interviews, we identified five evolving shifts leading to a CX-centric transformation.

1. Cultivating a CX-centric culture

Increasingly, B2B firms are looking to embed a CX-centric philosophy throughout their businesses, not just as an add-on to the marketing department. The marketing manager of a parts and logistics business described this process: “… for companies that are not customer-experience minded at all, I would say, yes, to have a function to kind of create it first but in fact, within the five years, it’s kind of incorporated in the company.”

2. Converging to customer solutions

To increase their competitiveness, B2B firms are increasingly shifting to providing solutions rather than products or services, with a particular shift to end-to-end customer solutions. The Senior Director of an IT services provider discussed the need to make such a shift in order to differentiate themselves: “…the end-to-end journey these days is maybe … start on the Google search but it ends with my after-service met by supply chain data with a feedback towards my manufacturing partners etc… To be able to solve that problem for clients, you actually need to be a more end-to-end service.”

3. Gaining proximity to consumers

What’s known as ‘consumer immediacy’ is becoming the norm in the B2C world, but this is not so much about creating touchpoints as it is about getting closer to customers. Again, we are seeing this replicated in the B2B world, as described by the SVP of a commercial vehicle manufacturer: “… formally, we may not become B2C, but informally, yes… we are coming closer to the customer, whether it is product experience, delivering product promise, whether it is services, aftermarket support or … even resolving customer issues… So, we are coming closer to the end customer, I would say, every day.”

4. Moving towards digitalised marketplaces

For B2B firms, what is known as the ‘Amazon effect’ – customers expecting ease of doing business through digital technology – has become both a challenge and an opportunity. Our firms confirmed the prevalence of this thinking, with firms that have already implemented a digital marketplace looking to be more proactive in this regard. For example, the Product Manager of a Social Marketplace describes how they are adopting personalisation functionality for their B2B customers: “… because you saw this product, here are some other products that may be of interest to you…”

5. Sharing more knowledge transparently

B2B firms seem to be shifting their mindsets around data ownership. Where previously, they would be resistant to sharing technical knowledge with their customers, now they are increasingly seeing the advantages of doing so.

Different priorities at different stages

From our analysis, it became evident that our B2B cohort of firms are at three evolving stages of CX-centricity which we categorised as ‘acknowledging’, ‘responding’ and ‘maturing’.

The insights emerging from this study can help managers in B2B settings gauge how far along the CX-centricity journey they are and therefore which aspects of transformation they need to prioritise in order to make further progress.

Insights for CX strategists

For example, if a firm is in the ‘acknowledging’ stage, it needs to put its energy into creating a CX-centric culture. If, on the other hand, the firm has evolved to the ‘responding’ stage more by accident than design, putting in place CX sponsorship at the executive level will be an urgent priority. For those already at the ‘maturing’ stage, the emphasis should be on inculcating a continuous improvement culture.

Insights for senior leaders

For senior leaders, a key takeaway is that firms within their ecosystem will all be undergoing similar challenges and similar journeys. As well, therefore, as developing and implementing their own organisational CX culture and strategy they need to look at the wider context and engage with industry forums or regulatory bodies to tackle barriers such as a lack of interoperability, data sharing and common standards. Similarly, if they encounter resistance to change from customers, senior management needs to reach out to communicate the benefits of transformation.

Our research has clearly demonstrated that developing a customer experience strategy is already very much part of the B2B landscape. As value chains continue to be disrupted, new technologies come on stream and B2B firms increasingly engage with the end-customer, this trend is set to continue. Understanding both the drivers of and barriers to change will help firms get ahead of the competition and develop high-value, long-lasting relationships with all their customers.

Gautam Jha, PhD student, University of Cambridge

Picture Credit: EmirMemedovski