Unlocking value in B2B: Navigating impact of digital
Digital transformation has become a pivotal goal for businesses across industries, with the recognition that embracing digital technologies can unlock substantial value. However, the critical question lingers: have businesses truly invested enough in creating value to harness the full potential of digital synergies? In this article, I delve into the realm of B2B dynamics, shedding light on the frameworks derived from various research papers that are pertinent to this discussion.
According to a 2020 Salesforce report, a staggering 68% of B2B players now prefer digital channels as their primary method for conducting transactions. This shift reflects a fundamental change in buyer behavior. Studies indicate that over 30% of B2B buyers actively conduct online research to identify suitable products, bypassing traditional sales channels. This preference stems from the ease of access to information on digital platforms, where buyers perceive less pressure from salespeople and greater control over the buying journey.
Understanding 'Value' in B2B context
In the dynamic world of B2B interactions, the concept of value creation is paramount. However, defining and delivering “value” can be a complex challenge. Unlike tangible products, value is inherently subjective and constantly evolves based on specific contexts. This presents a critical question for B2B organizations: how can we ensure we’re delivering value that resonates with our customers in the ever-changing digital landscape?
Let’s explore this concept further. Traditionally, businesses focused on providing “value in use” – the inherent utility of a product or service. However, in today’s digital age, a more nuanced approach is needed. We must consider “value in context” – understanding the specific needs and circumstances that shape a customer’s perception of value.
For instance, a B2B software company might offer a core product with various features. While the features themselves hold inherent value, a busy marketing team might prioritize features that automate tasks and save them time (value in context) over advanced analytics tools (value in use) if their immediate goal is campaign efficiency.
Now that we know that ‘value creation in context’ is of prime importance lets understand how a context could be defined. Context is group of certain circumstances which helps to provide a picture of whole overall situation. Unless and until we understand the context value-creation efforts could result in mere waste. Value creation when considered with the context of space and time can be unboxed into four important parts of structural, relative, relational and mental network which going ahead is divided into 8 sub-parts. Let’s try to understand these sub-parts.
Source : Understanding value creation in digital context: An empirical investigation of B2B – Daniela Corsaro, Alessia Anzivino
Structural network dimension in B2B
The structural network dimension in a B2B context refers to the analysis of the network of relationships and interactions surrounding a specific customer. This network includes various stakeholders that influence the customer’s decision-making and business operations. Understanding this structure is crucial for B2B organizations to deliver relevant value propositions and build successful partnerships. The two important considerations here are:
1. Specifying network boundaries
The rise of digitalization has undoubtedly transformed the B2B landscape. In this increasingly interconnected environment, traditional boundaries between organizations are blurring. The ease of access to information and resources can lead to a sense of “everyone knows everything and everyone provides everything,” raising critical questions for B2B organizations:
- Who are our competitors? The lines between competitors and collaborators can become increasingly fluid, making it crucial to continuously monitor the evolving ecosystem.
- How do we collaborate effectively? With diverse players offering similar capabilities, establishing clear boundaries and fostering a collaborative spirit are essential for mutual success.
Many tech companies have started having partner ecosystem to provide support and convert local sales opportunities. Imagine a company in Microsoft’s partner ecosystem starts building its own CRM. What kind of threat this could be?
2. Define resource combination
In the B2B world, resource combination refers to the strategic utilization of various resources, including expertise, technology, and assets, to deliver value to customers. This process becomes particularly important in the digital age, where:
- Customer behavior has evolved: Customers are better informed and have more options at their disposal. They may leverage their buying power to extract concessions, particularly in traditional, physical product-based environments.
- New competitive dynamics: Digitalization empowers businesses to compete globally, potentially diminishing the relevance of relationships and local advantages in purely price-driven scenarios, as your example of the bidding process demonstrates.
Therefore, B2B organizations must carefully consider the optimal combination of resources to deliver value and achieve long-term success. This requires a shift in focus from:
- Simply offering resources in isolation to creating unique value propositions that effectively address customer needs and challenges.
- Focusing solely on price-driven competition to building strong relationships based on trust, mutual understanding, and a commitment to collaborative success.
Mental network dimension
In the B2B context, the mental network dimension refers to the internal cognitive processes and perceptions that shape an organization’s decision-making. It encompasses various factors that influence how a B2B organization understands and interacts with its environment. The two important aspects according to us are:
1. Aligning Perceptions
Diverse stakeholders may interpret the same value differently, shaped by their unique needs and perspectives. In the realm of digital web calls, while a deal may be reached, the perceived value stemming from the interaction could vary among participants. To mitigate such disparities, it is imperative to emphasize the importance of open dialogue and information exchange within and beyond organizational boundaries.
Negotiations often center on securing a larger share of the pie at a lower cost, but it’s crucial to recognize that sometimes, what’s truly needed is an entirely different cake altogether, tailored to specific requirements.
2. Visualizing Concepts
In the digital realm, grasping the customer’s perspective can pose a significant challenge. Unlike traditional face-to-face interactions where verbal and non-verbal cues offer insights into the client’s understanding, digital web calls present a different dynamic, especially when clients opt to keep their cameras off. While showcasing the value of an offering may not be arduous for a salesperson, the true difficulty lies in comprehending the customer’s context and tailoring value accordingly. It necessitates concerted efforts from both parties to bridge this gap effectively.
Moreover, instances arise where a product fails to deliver expected results simply because the client utilizes it in an unconventional manner.
Relative network dimension
The relative network dimension in B2B analyzes how an organization’s position and connections within its ecosystem influence its success. The important elements in it are:
1. Anchoring elements for comparison
With increasing servitisation the parameters for decision making are increasing and it is becoming increasingly difficult to benchmark products for the value proposition. Dematerialization has become faster due to the continuously deacreasing capex for client. Service or product providers thus need to decide on parameters which are robust to the changes in client’s ecosystem.
In the automotive industry, consumers once focused on fuel efficiency, horsepower, and safety. But with car-sharing and subscriptions, factors like connectivity, maintenance, and on-demand help matter too. This shift challenges traditional car benchmarks, pushing manufacturers to prioritize user experience, service reliability, and adapting to new mobility trends to stay competitive.
2. Balancing the relationship portfolio
Relationships in digital world can be different than in physical world. In physical things are more stable. Imagine a phone book that has contact numbers of your friends, relatives, family doctor etc. You will exactly know whom to call and rely on in certain situation. But in digital world relationships are fluid. It may exist today and disappear tomorrow. Think about, how difficult is to unfriend a person on Instagram or Facebook? So you have to make investments in relationships carefully. There should be systems for constant monitoring, prioritization and conflict management.
You have a group chat with several friends. It’s constantly active, but it’s hard to give everyone individual attention or know who needs your support the most. It’s a balancing act to maintain all these connections.
Relational network space
The relational network space in B2B refers to the web of connections and interactions between a company, its suppliers, partners, competitors, and influencers. Analyzing this network helps B2B companies understand how these relationships impact their value creation and competitive advantage.
1. Managing real time adaptations
In the past, information about customers took time to reach sellers, giving them ample time to prepare. However, in today’s fast-paced digital world, updates from potential customers arrive instantly, and they’re bombarded with offers from multiple sellers. In such competitive scenarios, the ability of salespeople to create urgency is crucial. Therefore, a framework enabling quick adaptation and response to customers is essential. A mobile CRM integrated with social activity trackers could provide an effective solution, allowing salespeople to stay on top of everything.
Put yourself in the shoes of a salesperson promoting a fitness tracker. A prospective customer shows interest online but suddenly goes quiet. Leveraging your mobile CRM, you swiftly review their previous interactions to identify potential reasons for disengagement. Whether it’s offering a discount or addressing specific concerns, you adapt in real-time to reignite their interest and propel the sales process forward.
2. Softly Intermediating
With the continuous rise in the number of data sources, salespeople are evolving into resource connectors. They’re tasked with gathering, analyzing, and contextualizing vast amounts of data to align with the value proposition. This demands a delicate approach, seamlessly integrating into the customer’s buying journey while positioning ourselves effectively.
Picture this: a waiter takes a customer’s order, only to return from the kitchen with news of ingredient unavailability, leaving customers frustrated and disappointed. Now, envision a scenario where the waiter has a real-time inventory system, instantly providing information on available ingredients. The convenience and value this simple system offers to customers are undeniable. It streamlines the dining experience, eliminates unnecessary delays, and enhances customer satisfaction.
A thorough analysis of the entire ecosystem should be done to identify potential synergies or currently leaking value based on above theories.
