In 1998, Joseph Pine and James Gilmore published an article in Harvard Business Review, “Welcome to the Experience Economy.” They wrote:
“From now on, leading-edge companies—whether they sell to consumers or businesses—will find that the next competitive battleground lies in staging experiences.”
Two decades later, more than two-thirds of companies surveyed by Gartner expected to compete mostly or entirely on the basis of customer experience (CX), and three-quarters increased their CX technology investments compared to the previous year. This should come as no surprise. Companies that invest in excellent customer experience are more profitable, report revenue growth, and bring in significantly more revenue compared to companies that fall behind in customer experience. The reason is simple. Great customer experience inspires customer loyalty, which in turn leads to increased share of wallet as those customers choose to spend with the brands they’re most loyal to. Research by Forrester offers evidence for the effects of high quality customer experience on improving business outcomes:
- Increased customer retention: “On average, when companies solve customer problems quickly, their customers are seven times more likely to stay with them”
- Higher cross-sell and upsell potential: “By focusing on making OK or good experiences better — creating defining moments — firms can receive a 9x higher revenue return”.
- Increased revenue: Data suggests that “for mass-market auto manufacturers, improving CX by 1 point [in Forrester’s CX Index] can lead to more than $1B in additional revenue”.
While many studies and statistics linking accelerated business growth to CX investments have largely been focused on business-to-consumer (b2c) markets, today’s business-to-business (B2B) customers increasingly expect an excellence of experiences similar to those they encounter as consumers. And evidence that the boundaries between B2C and B2B customer experience expectations are blurring is mounting. 85% of business buyers say that the experience an organization delivers is as important to them as the quality of products and services it offers, 67% want to have their needs anticipated, and 76% want to have their unique expectations understood.
Additionally, sentiments traditionally attributed to connections individual consumers have with brands, such as an emotional bond, are gradually finding their way into B2B relationships. 66% of business buyers report having an emotional link to the brands they buy most from, and 89% says that positive customer service experience makes them more likely to make another purchase.
Business buyers are no longer satisfied with having products and services pushed to them on suppliers’ or sellers’ terms. They have come to demand not only that products and services meet their unique business needs – but also that the ways in which these products and services become known, available, sold, delivered, and aligned with the buyers’ own desires, all help to create value and minimize waste.
A growing significance of CX in B2B markets has been a developing trend for some time now. But the year 2020 has put new pressures on companies. Many businesses have accelerated the digitization of customer interactions, thus expanding the boundaries of the world of the possible, creating a new set of CX expectations, and driving customer adoption of digital experiences. In the new business climate, shaped by the pandemic, 84% of business buyers expect companies to accelerate their digital initiatives and 80% expect to conduct more business online.
Delivering excellent experiences is not an easy task. It requires an understanding of customer needs and expectations in a world, in which those needs and expectations change fast. And B2B organizations face additional challenges. They must contend with a distinct aspects of their relationship with customers:
- B2B organizations often access their markets through a network of partners. That complicates B2B customer journeys significantly, and requires not only considerations for the experiences customers have with partners, but also for the experiences that partners themselves have with B2B providers.
- Decision cycles for B2B buyers are much longer than those for consumers. They involve multiple decisions makers, each of whom may have their own unique needs and objectives that a B2B supplier must understand and meet.
- End-to-end customer journeys involve multiple stakeholders holding multiple roles within buyer organizations. For the buyer that may necessitate different levels of access and visibility to information at various stages of the journey; for the seller it means managing not just one contact and relationship, but many.
- B2B organizations often deliver complex solutions that require high-touch, expert interactions over extended periods of time. In-person and long-term relationships have therefore traditionally been a hallmark of B2B customer interactions.
- The order of magnitude of customer lifetime value is much greater for B2B organizations. Customer retention is therefore a priority much more acute for B2B companies; the cost of losing a customer is much greater.
- B2B companies have fewer opportunities to “wow” their customers or to respond to insights on customer preferences. This is perhaps the most important point from the perspective of customer experience. B2B purchases are often prices “capped,” limited by budgets and lists of approved vendors, and are usually preceded by lengthy periods of deliberation. There is therefore greater pressure on B2B sellers to demonstrate the value of their offering and to minimize time to realize that value.
What does it all mean for B2B organizations? Where will B2B companies focus their CX-related investments next year? Here are a few predictions. To drive business outcomes by improving customer engagement through seamless CX, B2B companies will focus on:
- Omnichannel interactions management
- Predictive capabilities with AI and IoT
- Business-to-business system integrations
- Data mining and sharing
Ready for your organization’s CX transformation? Find out how Globant can help.
Special thanks to Robert Sherman and Sean Kennedy for their insightful feedback and suggestions that have helped enhance this article.