Focus on B2C vs. B2B - the era of collaborative engagement (part 2/6)

This is the second in our series of blogs focussed on the era of collaborative engagement that businesses are stepping into.

The eras of personal productivity and organizational productivity were inherently both very inward looking. This made sense given that:

  • the technology required for external collaborative engagement with consumers had either not been invented or was in its infancy
  • there was clear line of sight ROI that could be driven by attacking the lowest hanging fruit first - i.e. improving average employee efficiency, and overall organizational efficiency

In 2013 the ability to interact directly with consumers is greater than its ever been, and its no longer enough to simply improve profit margins by driving internal efficiencies. Lets look at each of these topics in a bit more detail.

Improved ability to interact with external constituents:

Interaction with consumers usually occurs in the context of three business functions - marketing, sales and customer service. The most obvious change that has occurred since the dawn of the Internet is the increase in the number of communication and collaboration channels available for each of these business functions.

 

Business Function Channels.png

Marketing: Until very recently marketing was largely analog and outbound. Even the term inbound marketing was not coined until 2005. Fast forward to 2013 and marketing's focus is almost entirely digital, and increasingly inbound. The technologies that were required to supercharge inbound digital marketing - SEO, blogs, and social media platforms - came into their own in the 2000's. Beyond providing marketing an outlet to build brand awareness and loyalty, blogs and social media have combined to enable collaboration between brands and consumers, ultimately giving consumers a much more immediate and larger say in shaping a business' products and services. In parallel, outbound marketing technology is also improving significantly. Outbound marketing efforts are moving past simple demographic targeting to hyper-targeting consumers based on their personal preferences and whereabouts.

Sales: Even though e-commerce sales average less than 6% of total US retail sales, the percentage has been increasing every quarter. With the increased adoption of mobile and social commerce the percentage of total retail sales represented by online sales will start to increase at an even greater pace. Additionally, the technology available to physical sales representatives, ranging from insurance agents to in-store sales representatives, is improving leaps and bounds. As we look into the future, with the emergence of big data, wearable technology, and augmented reality, online and offline sales will, in some sense, begin to merge. It's only a matter of time before your general purchase preferences are known from the minute you walk into a store, and your sales experience is customized based on that.

 Customer Service: It wasn't until the early to mid 2000's that Unified Communications across legacy voice and early web channels began to see serious adoption. VoIP technology within the enterprise only began to get deployed in the early 00's, with most companies spending the bulk of the 00's converting their legacy telephony infrastructure to VoIP. However, while this was happening social media began to emerge and it was no longer enough to offer customer service agents a unified view of the customer across traditional channels. Today customer service organizations have to be concerned about real-time multi-way conversations on everything from forums to blogs to social media platforms. Moving forward, leading customer service organizations will begin to use data and predictive analytics to take a much more proactive approach to offering customer service, thus helping turn a potentially negative tweet into a positive one.

Improving profit margins by driving internal efficiencies:

After the post-World War 2 boom decades of the 1950's and 1960's, US corporate growth began to suffer setbacks in the 1970's. A confluence of events, ranging from the OPEC-led oil embargo to the rise of Toyota led Japanese lean-manufacturing, began to disrupt American industry. However, coming out of the tumultuous 70's Apple and Microsoft heralded the beginning of the PC era. The productivity gains available from moving corporate workforces away from largely pen, paper, typewriter and timeshare terminals, to the Macintosh or, more likely, a Wintel PC were immediate. As this was happening the groundwork was being laid for the adoption of TCP/IP in corporate settings everywhere. Adopting a common networking standard was key in the evolution of client-server computing. By the early 90's, most companies had built out LAN and WAN capacity and the timing proved perfect for the release of SAP R/3. Starting in the early 80's, operations engineers had started to look east for inspiration on how to compete with Japan Inc., and found what they were looking for in Kanban style lean production. With the release of R/3 the technical capabilities finally existed at a low enough price point that companies began en masse to ruthlessly apply the principles of lean production across their entire supply chain, which was by now largely global. How successful did the combination of the personal productivity era and organizational productivity era end up being at driving corporate profits? Look no further than the chart below:

 Credit: The Atlantic

 Credit: The Atlantic

The argument we are making here is not that there are no longer personal or organizational productivity gains to be had. Rather, we believe that improving efficiencies will no longer be enough to differentiate companies from their competition. Technology and the economies of scale that were once available only to the largest corporations are now available to even the smallest startup. Hence, as the cost side of the equation begins to even out, in order to outperform competitors companies will have to grow their top line and this can only happen by building better products and services, accurately targeting the right consumer, and by creating an overall delightful consumer experience.