How digital transformation also affects and changes traditional customer relationships
The digitalization of business is in full swing. Even if your B2B enterprise does not contain any e-commerce components, and your business relationships are mainly built on personal contacts you should not ignore the topic of digital transformation. Our partner Dr. Alexander Schubert explains what kind of impact the digitalization can have on even the most conventional business partnerships and, why a strong brand identity is essential in order to thrive in an ever changing digitalized environment.
Some time ago there was a video shared on YouTube which showed a toddler being unable to turn the pages of a children’s book. The book simply did not react to the swipe movements of his index finger. Also in my own experience, when I read a hardcopy book after having read an e-book for a longer time I sometimes catch myself trying to swipe on the paper pages – a quite embarrassing experience. This is only one example how digital media can influence our behavior, viewing and listening habits, movements, expectations and practices.
How does this relate to Business-To-Business?
It is remarkable that many managers, particularly those of small and medium companies, still believe that the digital transformation concerns mostly large companies who are active in mass markets and therefore need high scalability of their business processes, whereas in B2B-focused SMEs only personal relationships and face-to-face contacts are key to success. Of course, below the surface there is an increasing number of digital tools in use, e.g. cloud based IT applications, CRM and database programs, but the “real” business relationships and the reputation of one’s own brand seem to be quite immune to the digital hype.
This perception is based on fateful misunderstanding. As the toddler example shows it is often the normal, real-life day-to-day behaviors which are unconsciously being affected by the digitalized environment.
If we take a closer look at typical B2B customer relationships we see several critical challenges evoked by the digital transformation:
- Instant access to information. Printed collateral materials, brochures, catalogues or pricelists are still valid to create positive brand impact at exhibitions and in direct customer contact (especially if they are of high quality and represent the brand properly). However, highly professional buyers on clients’ side increasingly expect instant digital access to all information, anywhere and at any time. Technologically this is not a problem but psychologically it is a game change. Because, it implies total transparency and comparability of the offer, and even more so the power of information and interpretation on the customer’s side, as he often seems to be better informed than the supplier himself.
- Real-time RFP processes. Many expensive sales and negotiation training courses are of no value if the proposal processes are only conducted through online portals. Not only in “real-time bidding” procedures but in any kind of online tenders, conventional soft skills and relationship building tools, such as friendliness, body language, hospitality or client entertainment are no longer relevant. Reinforced by increasing sensitivity about compliance rules the terms and conditions are mostly dictated by the buyers.
- Response time. Through social media and power e-commerce brands such as Amazon, Zalando et al. consumers are used to very short response times as per their requests. E-mail response within 48 hours, even within 24 hours are not quick enough anymore, the customer expects the answer at once. Why shouldn’t this apply to B2B customers too? The leading brands set the pace, the smaller ones must follow, fast!
These examples demonstrate that the competitive pressure, customers’ demands, and need to action are constantly increasing. Nevertheless, the digital transformation does not only cause problems and challenges. It also provides huge opportunities – for those brands who positively embrace change, and put themselves into the driver’s seat rather than just react and try to cope.
- The great paradox of digitalization is: It’s not (only) about technology. On the contrary, it is the human factor that counts. Individualization, personalization, interaction, cooperation, these are all based on technology but aimed at human relationship. Companies, who understand this can utilize the seemingly anonymous algorithms to bring their brand to life, win loyal customers and build sustainable relationships.
- Customer Experience (CX). The customer is king – this phrase was often claimed and rarely delivered. In the digital age this has begun to change. Through CX the customer immediately recognizes if he is valued and put in the focus by a company or not. To deliver on this promise you need the right people who have a deep understanding for the value of customer centricity. Not only techies and nerds, but empathetic relationship builders who act and interact according to your company vision and your brand values.
- Community building. What traditionally has been achieved by fairs, exhibitions, road shows, and customer events can be raised to a new level by digital and social media. Of course the internet can not be a replacement for live meetings and personal contacts. However, whereas these meetings can only take place a few times a year, the relationships can be extended via digital communication on an ongoing basis. Via digital platforms a client community can be kept alive and engaged permanently. Again, for this you need employees who live up to your brand values and are dedicated to producing relevant content to keep your brand ahead of the curve.
- Value co-creation. Value co-creation is the supreme competency in customer relationship building. In the automotive industry it has been established for a while. Top tier suppliers are fully integrated in the OEMs’ business processes and value chains (which can be risky as we have observed at VW recently). Through digitalization it has become much easier and less capital intensive to create innovative business models and partnerships. You can provide your customers – and yourself – a platform on which you can not only communicate but also sell joint offers and create added value.
Conclusion: The answer to the digital challenge is a brand-led business conduct which puts people and brands at the center.
If you consider digital transformation only as an investment in IT and digital platforms, you miss the true challenges and opportunities that are involved with it. Technology can only provide the digital infrastructure for the customer relationships. The relationship itself however is driven by the people in your company, their attitude, their commitment, and their dedication to the customer. Customer Experience means to understand what drives the client, what keeps him up at night, which problems he wants to get resolved, and of course the creativity and resources to fulfill these needs.
The new customer sovereignty that comes with the digital age must be answered by a new empowerment of employees. They must be enabled to take the initiative and act responsibly at all relationship levels and touchpoints. And, in order to align all their initiatives in the interest of the company and its mission you need a strong and deep-seated brand identity that defines the framework and guidelines for any communication and interaction.
If you establish this as a maxim for your company you have a good chance to position yourself as a strong brand and stand apart from the crowd of commoditized offers in the digitalized environment.
15.09.2016, Dr. Alexander Schubert, Partner brandrelation consulting, Hamburg