Only one-half of manufacturers and brands currently have e-commerce websites. In today’s digital-centric world, what could possibly be the cause of this? E-commerce best practices have been well understood for over fifteen years, capital costs of e-commerce systems have come down dramatically, and over 90% of business buyers – and just about every single consumer – are using the web for research, and many for purchasing.
Business buyers – YOUR buyers – are planning to make 55% of their work purchases online within the next two years. Those companies with e-commerce initiatives are realizing incremental revenue from current and new customers, driving meaningful improvements in gross margins, and reducing customer support costs. Yet only half of manufacturers and brands have e-commerce sites.
Why is this? What’s the problem?
Leadership — or the lack of it.
Take heed, B2B executives: Now’s the time to deploy an e-commerce initiative — before it’s too late.
E-commerce initiative: Keeping up with buyers’ needs
In the B2B world, many manufacturers and brands are struck with organizational inertia. “If it ain’t broke, don’t fix it” is a common mindset – even if not expressed – of divisional and executive leadership. Whether they realize it or not, companies are tied down and limited by their processes and traditional ways of doing business, and in some ways are victims of their own historical success.
Traditional selling channels – the direct sales force (outside and inside), distribution and resale partners, telesales, catalog, and other methods – have driven many companies to tremendous revenue and profit levels in their categories. These legacy sales channels will forever continue be an important part of the buyer-seller relationship in B2B industries.
However, the world has changed. While these companies are living in collective inertia, customers’ expectations have organically shifted. Today’s B2B buyers expect to have a buyer-focused purchasing experience, often based on their experiences making retail purchases in their own personal lives as consumers.
The fact of the matter is that this purchasing experience has shifted either directly to, or is heavily influenced by, digital means. And as younger professionals come into the workforce, “digital native” is no longer a name for a category of buyers – it’s every single buyer B2B organizations sell to.
The roots of organizational inertia
Many executives continue to ignore these trends and forgo an e-commerce initiative at their own peril. Why? Change isn’t easy, and it’s particularly difficult when business performance continues to sustain at somewhat acceptable levels through traditional sales channels, and the change agent (in this case, the e-commerce expectations of business buyers) is completely unfamiliar to the executive-in-charge.
Inaction is the result – somewhat driven by fear, somewhat by not knowing where to start. But the reality is that ignoring digital transformation isn’t sustainable, and customers are forcing change. Here’s the good news – companies that are listening are being rewarded – massively. Why shouldn’t you be one of these companies?
Digital transformation isn’t just about opening up an e-commerce store. It’s not about hiring an intern to manage your website. True transformation comes about by looking at the organization, its processes, and its people, and figuring out how to change the entire organization. Successful change is incremental, more evolutionary than revolutionary.
However, these changes are uncomfortable for the organization, across multiple functions. Intestinal fortitude is required! Leaders will be confronted with real tests of leadership.
E-commerce initiative: The leadership imperative
There are four key foundational elements of organizational evolution necessary to prepare for and execute a successful digital transformation.
1. Re-defining leadership – from the very top
Digital transformation simply won’t occur with this one single ingredient: senior leadership driving change. This needs to come from the very pinnacle of the organization. The CEO, but even above him or her, the Board of Directors (or owners of the firm) need to not only buy into the goal of becoming a digital-first organization, but also need to embrace this change and find ways to incentivize and empower the entire organization to evolve.
2. Get the right people on the bus (and the wrong people off of it!)
Leaders cannot be successful without the right team around them. This is not a new concept, but one that is difficult for B2B companies to accept and adopt. The ‘right team’ must go beyond loyalty to the organization (which does have value), and include a healthy dose of new digital expertise and a willingness to embrace (not just accept) change.
3. Establish cross-functional alignment and accountability frameworks
B2B organizations of all sizes contain departments that are impacted by digital transformation. Sales teams can view e-commerce selling as a threat to their customer relationships and compensation structures. Marketing budgets and traditional approaches are challenged with new digital marketing methods. Finance must account for revenues through new selling channels.
IT has brand new systems to integrate and maintain. Customer service is handling orders through new channels, and concerned that customer self-service via the web will make their roles irrelevant. Fulfillment must ship individual orders in smaller quantities using unfamiliar shipping methods. There is virtually no aspect of the organization that is untouched by digital transformation. As a result, cross-functional involvement and communication related to digital efforts is critical.
4. Hire real e-commerce experience, and give your leader real authority
To enable digital transformation, B2B organizations need to hire people with relevant e-commerce experience who can lead and drive this change, with the full support of the CEO and Board. Without knowing what to look for in this leader, too often B2B organizations look within the company to promote (typically to the IT department) for this expertise.
It isn’t that internal leaders can’t succeed; but they frequently lack the skills and experience to understand what’s necessary to drive digital engagement and e-commerce sales. Moving outside of the traditional “promote from within” approach of many B2B organizations, companies should strongly consider bringing in someone from a B2C e-commerce leadership role to fill a similar role in the B2B enterprise. Companies should look to provide real authority to these roles.
Many times, I see the leader that B2B companies appoint to run their e-commerce operation has less than five years of total experience and holds a title such as e-commerce manager or web coordinator. This role must be empowered to be a change agent. Anything less diminishes the organization’s ability to execute and drive true transformation.
Organizational evolution enables transformation
Ultimately, the organization itself must learn how to be comfortable with an e-commerce initiative, even if this is accomplished piece by piece. One of my B2B clients, for example, built an e-commerce store for its employees to buy its own products as a first step. This storefront was internal only, but by doing this, they were able to show the entire organization that it was not only possible to sell their products online, while also demonstrated the value e-commerce brings to their customers.
The road to digital transformation isn’t an easy one. It’s not flat, and in some cases it can be very long. There are bumps along the way, and there will be roadblocks. But having empowered and accountable leadership in place, with the right experience, skills and knowledge, is the first step.
Of course, I’m here to help. Reach out to me at bbeck@guidance.com and I can help you break through the inertia, establish collaborative structures, and create a path forward towards Digital Transformation.
