Speaker 1:
Welcome to Insight Exchange, presented by L.E.K Consulting, a global strategy consultancy that helps business leaders seize competitive advantage and amplify growth. Insight Exchange is our forum dedicated to the free, open, and unbiased exchange of the insights and ideas that are driving business into the future. We exchange insights with the brightest minds of the day, the most daring innovators, and the doers who are right now rebuilding the world around us.
Gavin McGrath:
The internet is here to stay. Today we're focusing on the evolving landscape of B2B digital commerce with exclusive insights from L.E.K Consulting. I'm Gavin McGrath, partner and managing director at L.E.K Consulting, where I lead strategy and advisory work as part of our digital practice. Coming up, you'll hear a discussion on the importance of digital commerce strategies in B2B sectors, common barriers and successful execution techniques. To provide insights on these topics, let's welcome our experts, Corey Highfield from L.E.K Consulting and Jared Abelson from Simpson Strong Tie. Would you please each take a moment to introduce yourselves?
Corey Highfield:
Thank you Gavin. And hello everybody. My name is Corey Highfield and I'm a partner in L.E.K.'s industrials practice that focuses on building and construction and the crossover of digital. So I spend a lot of my time in the digital commerce space, largely B2B as you think about industrials and building construction more specifically, and I'm crossed over with Gavin and Jared on this topic more specifically a few times in our past.
Jared Abelson:
Thanks, Gavin and Corey. I'm Jared Abelson. I head up the e-business department for Simpson Strong Tie. We're a structural engineer building products company. We've been in the industry for 70 plus years. Probably the building you're in has some of our product in it. We make the metal connectors that hold all the wood together. We've since branched out at many other product lines. I oversee the e-business department, which is marketplace management, our authorized online reseller program, our B2B customer portal, which is our commerce site for B2B, e-commerce, marketing through the channels and digital support.
Gavin McGrath:
Thanks to you both for being here. Well, let's start with this. What makes digital strategies crucial for B2B commerce success? A lot of people seem to recognize the role of the digital channel, but what makes this critical for action?
Jared Abelson:
Well, I'll start out with the stat, which is probably the first and only stat that I'll use this entire podcast, but it's really critical as a B2B manufacturer, 55% of B2B buyers are now actually transacting through digital channels. So that's all the way from 98% of search, product search starts online, and now half of that is being transacted without a rep or anybody in that decision tree. So if you're not shoppable online, you're going to cease to exist, especially as the demographics start shifting younger. Their preferred channel is online. They don't want to call in, they don't want to email. They want to do everything themselves at their time. Also, your competitors are online. You may not even know who these competitors are because they're not the traditional ones you're used to competing with. Amazon and other marketplaces made it really easy for knockoff companies and offshore manufacturers to come in and create marketplace-only brands.
Gavin McGrath:
What are the most common barriers you see Corey? Things that hinder effective digital strategy adoption.
Corey Highfield:
Question Gavin, because there's a lot that can get in the way for companies adopting and driving forward their digital strategy. I think there's four that I would highlight just at a top level. One, pricing and integrity. Two, digital maturity or digital immaturity. Three, pervasiveness of digital stakeholders that impact the brand or the image of the company. And then lastly, product information consistency. I'll just touch on each of these quickly. So as we think about pricing integrity, the ability to really maintain price across channels is critical to avoid that race to the bottom, which you can see on some online channels, and that will ultimately undermine both physical store sales as well as other online channels if you're selling through multiple sites. So having consistency here is key to maintaining customer trust and sustaining high levels of profitability. Next, as you think about digital immaturity, what you see is companies that are digitally immature, they really miss out on significant growth.
As Jared mentioned. That's where the puck is moving. That's where competitors are going, and that's where your customers want to be. So when we do see digital mature companies acting on their strategies and doubling down, they're able to capture significant revenue growth while those that are slow, delayed or ignore digital strategies really lag behind with outdated processes and more limited market reach. So there's a clear competitive advantage to being a digital immature business. You can lead that digital transformation and you're more likely to become a leader in your space or a leader in your sector. Next, just quickly on brand image, when you're online or in the e-commerce world, there's a range of digital stakeholders that can create challenges to maintaining that consistent brand image. Managing these range of stakeholders is key to having a consistent, reliable, reputable brand image among customers and your distribution partners.
So any inconsistencies that you have online can quickly escalate and really hinder or harm customer trust. So you really need to be proactive in managing this and really leverage your digital stakeholders so that you're enhancing your reach and your capabilities, but it's going to require some more meticulous or more measured coordination to keep that brand image positive and unified across all of your channels online. Then lastly, product information consistency. This is one where a customer comes across different or varying levels of product information by channel, whether online or in store, and that's going to create confusion, frustration, and again kind of decreases that trust in the brand. So really what you want to do is limit these discrepancies, which can cause supply chain issues. They can cause challenges to business relationships. They can harm that brand trust and make sure that the information around your product or your SKUs is consistent across all channels online and in store.
Jared Abelson:
Just to echo some of those points, I don't know who needs to hear this, whatever company's listening, data, data is always going to be your problem. You have to build it into your structure of your company and it all starts with data. You're going to have the greatest pie in the sky idea of what you want to do, give you the biggest opportunity, but if you haven't taken the initial groundwork steps to get your data cleaned up and complete and organized, you're just going to triple or quadruple the cost and difficulty of whatever project's downstream. It's boring. It doesn't get a lot of attention, but data, data, data.
Gavin McGrath:
Jared, can you build on that? As you think about structuring investments and unlocking the points, Corey, and you were just outlining, how do you think about infrastructure development and sort of actioning what you can do with that data?
Jared Abelson:
Yeah, again, you have to do the big boring stuff, which is data infrastructure to get yourself in place. Ultimately, B2B is lagging behind B2C, it's catching up pretty quickly. I think B2B has learned a lot of lessons and there's a lot of opportunity with just blocking and tackling projects. We've noticed we're really able to support our customers at a pretty high level with a lot of just the basics. Everybody wants to talk about AI and all that, where it's coming and what's our AI strategy. That's great. You should have an idea, but don't undersell what you can get done putting in the foundation to get there eventually. You'll see a lot of wins. As we go in and we talk to some bigger customers, we always grade ourselves pretty harshly and think we're so far behind, but the conversations we have with customers, we go in, I'm like, "hey, we can provide you our whole product catalog digitally. Here's a login." Or "hey, we can set up an API to send our product catalog to your system, their jaws drop. There's a lot of foundational wins you can get.
Gavin McGrath:
Well, I'll vouch for you that you're not behind based on everything I know.
Jared Abelson:
Appreciate that.
Gavin McGrath:
Corey, what are the essential steps for planning an investment in B2B digital commerce?
Corey Highfield:
I really like Jared's last answer of one, we don't need to do everything for everybody. So as I think about planning an investment for digital commerce in the B2B setting, it's really tailoring that to your channel and your customer needs, might not be the need that we need to accept Bitcoin, right? But we really need to tailor that experience and that channel to support the business objectives of the customer, to improve that customer experience, to drive satisfaction and to drive loyalty. So really tailoring, especially when you're building an omnichannel strategy, you're tailoring that experience for the needs of the customer within that specific channel.
Jared Abelson:
E-commerce is not one size fits all. You really have to look at it as building a strategy that fits your analog business. This is even more important when you look at more legacy companies like us. We've been around for a long time, over 70 years, and it sounds sort of corny, but it's really the art of the science of how do you move a legacy company into this digital age while retaining what made that company great and leveraging digital to emphasize the core value props that you've had in the analog world. It's pretty easy to slap a, we need to do this, that, and the other thing onto your roadmap, but if it doesn't make sense and jive with the company and the brand, it can do a lot of damage.
Corey Highfield:
Yeah, I completely agree, Jared, and I think that gets to the point around goal definition and tracking. When you're making these investments in B2B, digital e-commerce, you really want to have clear objectives and performance targets, and they're going to be similar in terms of those broader goals that you have for your legacy or your analog business, obviously with some new metrics that you want to track online, but you need to have those signposts to really ensure that you're tailoring the strategy and it's effective as you're rolling it out.
And I think that also leads to, as you think about stakeholder engagement, really effectively communicating the benefits of this digital strategy, not only internally to your broader organization and the different business units that are part of it, but externally to your partners, to your distribution channels, to your customers, which are going to be critical to get uptick and support and momentum for your digital strategy. So by fostering that understanding and that enthusiasm, you can really drive a successful rollout and maximize the impact of your digital initiatives, which to my early point, you should be tracking and defining quite clearly as that, helps set up the strategy overall and the level of investment needed.
Jared Abelson:
I would say also if you're a company looking at what your digital strategy should be, if you haven't already done a customer journey map, that's a great place to start, really understanding the landscape of A, the market digitally and also how your customers and your customer's customers are moving their way through and making decisions along the way. We constantly are referring back to what does it look like? What is the customer experience in this part of the journey or that part of the journey, and that's where we're looking for digital opportunity of how can we surprise and delight our customers at those interactions that they're used to doing analog? Can we add value to that digitally and not just replace because we have to but really enhance that experience in those moments.
Gavin McGrath:
Jared, I should have said it earlier, but congrats by the way, on your e-commerce manufacturer of the year award from Digital Commerce 360 and the B2B E-commerce Association.
Jared Abelson:
I appreciate that. That came as a little bit of surprise. We had some tough competition, other great companies doing really good stuff. Our team was very proud of that, so thank you.
Gavin McGrath:
Like I said, [inaudible 00:14:06] good validation.
Jared Abelson:
Yep.
Gavin McGrath:
So as you think about these various stakeholders and you think about your customer stakeholders in particular, how do you think about which ones to promote to and support as part of your B2B digital commerce strategy?
Jared Abelson:
It depends on which part of the e-commerce strategy we're going to talk about, but ultimately, as a B2B player, we are not selling directly anywhere aligned except to our customer, our existing customers. So really as we think about marketplaces, since we're not selling directly, we're looking to limit the amount of resellers. We really value our partners who are playing in that space, but if we're not going to assume that sale and that relationship, we have to have a much stronger relationship with those partners that are essentially working as our proxies in there. So we're looking at narrowing that down, especially in marketplaces, you can't have 500 different resellers going around doing everything. It's pretty chaotic.
As far as customer sites, we want to support all of our customers selling their products on their own sites. That's a lot of our product data and content syndication capabilities we've built out. We want to support every one of our customers who are choosing to be our partners. That said, different levels of performance online require different level of support from the company. So we are tailoring and adjusting. We have a tiered authorized online reseller program that organizes our resource investment to each customer, and we give lots of opportunity to ensure that customers can move up and get better support. We never want to be telling a customer they can't sell our product.
Corey Highfield:
I also just thinking about that, Jared, having worked with you and the team there, it's obviously scale is a factor, but who of your partners is investing online and who has that growth trajectory that you want to support? To your point, we want to be everywhere we need to be, but also making sure that you're supporting those more digitally native and e-commerce native partners online and putting them in the right tier to be supported and highlighted.
Jared Abelson:
That's a great point. As we've gone down the road on this, we've really noticed that customers play online in a bunch of different ways, or our customers at least. There's customers who say, "hey, we just need to start, open up a website to sell our existing customers who are coming into the store because they say they want to buy it online." Cool, we definitely want to help you with that. But when it comes to how much are we going to invest, that's a pretty low investment on their end. We want to really be partnering with customers who see the opportunity and are going to grow and really manage and drive the channel forward and help us and partner with us to grow the overall business.
Gavin McGrath:
Now, great ideas are worth nothing without plans for successful execution. What role does internal or external communication play in rolling out a B2B commerce strategy?
Corey Highfield:
Well, they're both really important Gavin, you want to be able to, as I mentioned previously, communicate the right messages to the right folks and the right stakeholders both internally and externally. So as you think about internal communication, clear and consistent messaging to ensure that all departments understand the importance of your digital strategy, of your reseller program, of your B2B e-commerce initiatives, what the objectives are and how it fits and aligns with that broader corporate strategy. That will create internal alignment that then will foster collaboration and ensure everybody's working towards the same common goals. Externally, similar but slightly different. We want to make sure that we're engaging with the right partners, the right resellers, the right distribution channels, the right online, the right e-commerce sites, and providing them with the right information. So going back to the consistent product information, we want to make sure that we're giving everybody the latest and greatest and that it's consistent across all channels and we want to give them the training and support necessary for their success.
So to Jared's earlier point, making sure that we are supporting those partners of ours and helping them grow and build out their presence online. So you do that through clear guidelines, regular updates, training sessions that are really going to empower these partners to effectively represent your brand and deliver really strong and even exceptional customer experiences. What this is all going to do both internally and externally is build a cohesive partner network and support engagement online. So as you think about that partner network, you're going to have reinforcing messages between your internal stakeholders and your external partners that then will allow or uphold brand standards, deliver consistent messaging, enable and support quick adaptation to market changes, and really drive customer satisfaction and loyalty.
The engagement that you'll create will be a collaborative relationship built on trust and mutual benefit, not only between you and your partners, but also downstream to your customers or your customer's customers, as Jared was mentioning, and you can got to build in those regular feedback mechanisms, make sure there's open communication that enables that continuous evolution and adaptation to changing market dynamics and conditions. Because it's not a set it and forget it strategy. It is one that you'll continually have to refine and improve and evolve over time.
Jared Abelson:
I totally agree. When you're thinking externally, I think one of the things to keep in mind is you have to be very transparent about your intentions with your customers is you develop your strategy and I think ultimately you need to be sensitive to the position they're in. Their whole business is changing too, as they have to figure it out. Their customer needs are changing.
They may not have all the answers either, and they're just looking for a partner, and if you can go out there and just transfer [inaudible 00:20:35], hey, maybe we're going to try a few things, or this is our goal, this is what we're going after, and just being honest with them, you're going to see come back to you in spades. They'll be happy to jump in with you and help support your digital initiatives if you're just transparent. Internally, ultimately you have to be your own evangelist within your company, trying to push digital initiatives, articulate the goals, be honest with the risks. We do a lot of targeted newsletters internally and externally just about saying, this is what we're up to, this is what we're doing, this is what we're going after, and having data to back it up internally and externally.
Corey Highfield:
I think those State of the Union type communications and newsletters or whatever other format you decide to use internally, externally can be really powerful, gets everybody aligned and singing from that same songbook and knowing where we're marching and what we're marching towards.
Jared Abelson:
Yeah, we found a lot of power. Just the other year we started up a quarterly newsletter to our authorized online resellers that talks about all the new products, the new assets and content that's available, things that we're doing on social media they can co-promote, and really where we're headed, what to expect, and they love it. We've jumped then. It's opened the doors for us to co-produce other materials. A lot of our customers have their own newsletters and that has opened up the doors for us to essentially get free advertising through their networks as well.
Gavin McGrath:
What about internally as you think about management and governance, you've got your various stakeholders that you talked about getting on board and sort of keeping on board, but how do you think about maintaining things around price integrity or the governance of the actual program and sort of monitoring for success and even the data management piece that you touched on earlier, Jared?
Jared Abelson:
Well, we've become very good friends with our legal department, and I think you have to be when you're looking at online is really what external and internal customers are looking for is that decisions you're making are going to play well with existing contracts in place, and you have some ability to protect your brand and protect your resellers online as far as communication and bringing everybody in, e-commerce and digital is a team sport. You can't do anything in a silo. So we're constantly working with the larger sales team, making sure that what we're trying to push with the resellers and coordinating resellers is actually going to translate to what's happening out in the field. Especially with legacy businesses, there's a lot of tribal knowledge and perceptions that are just baked into the way the company operates, and you have to be aware that you're going in and challenging that in some way with the digital strategy.
So you have to really figure out how do you separate the wheat from the chaff of what is perceived reality and what is real opportunity, but be aware that you're going to get pushback and be prepared to debate the merits and have data to back that up internally. And if you can have a pretty coherent value proposition to the larger analog business, they'll jump right on board, especially if you're framing it of how you're supporting them. We're always saying, we don't want to replace you. We're here to help and enhance everything you guys are doing day to day.
Gavin McGrath:
Jared, you mentioned your reseller program. What have you or other companies done in your space to ensure success of those types of reseller programs?
Jared Abelson:
Again, going back to clear and transparent messaging and being very decisive with your goals and setting expectations. Again, we view it as a true partnerships with our partners. Both sides need the wind for both of us to be successful. We've invested in tools that allow us to monitor what's going on our products online so we can bring better insight into what's going on, and we've also made large investments in tools that support our online resellers, so ultimately we're just putting a lot of investment all along the channel to better understand it, size it, analyze it, and support it. There's no shortage of different ways to get involved in the digital channel.
Corey Highfield:
I'm sure you all have seen this, Jared, but I think some of the key building blocks, you need to be coordinated. That's going to get back to communication internally and externally. You need to invest or allocate resources proportionally. So that's tailoring to what we're trying to achieve, and that gets to the continuous performance evaluation. How are we tracking against our key metrics and are we investing to the right level to hit those and how are those aligned with our broader digital strategy and corporate strategy objectives? And lastly, just being adaptable and responsive, right? This is not a strategy plan that we develop and then set on a shelf for five years and dust it off and down the line and try to slightly tweak it. It needs to be continually evolved and updated as market conditions change, as new competitors come into the fold and as channel partners and resellers adapt and become more digitally native as they follow the customer base.
Jared Abelson:
Yeah, I mean, going back to your earlier point about this is not set it and forget it. I think when trying to just overall evaluate how you should play, what you should do, what you should invest in, how do you support it, you need to go in. This is not a single project that you launch, it's out there in the world and you start then your ROI calculator, seeing when you're going to get paid back on it. You're opening up an entirely new line of business. It's going to require support and maintenance, and this is just how your company's going to have to do business going forward.
Gavin McGrath:
Jared, Corey, I really appreciate the time and the thoughts from both of you. We here at L.E.K, we're happy to provide more detailed discussions on requests and invite you to connect with us to learn more about L.E.K Consulting's extensive experience in providing strategic support to businesses and investors, focusing on opportunities in digital commerce, from digital strategy adoption, and overcoming barriers, to executing digital commerce successfully, managing online reseller programs and more. Thank you for listening.
Speaker 1:
Thank you, our listeners for joining us today at the Insight Exchange presented by L.E.K Consulting. Links to resources mentioned in this podcast can be found in the show notes. Please subscribe or follow for future episodes wherever you listen to your podcasts. Also, we encourage you to submit your suggestions for future insights online at LEK.com.
