Customers’ expectations are fundamentally changing
Creating a differentiated customer experience in today’s market is difficult, especially with behemoths like Amazon, Apple, and Uber fundamentally changing the benchmark. By offering the right products and services in the ways that modern buyers prefer, they have completely reset customer expectations. This means that the bar for securing customer loyalty is not just higher for those companies, but for all companies, regardless of business model.
This is typically how the paradigm of customer service changes – shifts that begin with B2C firms end up changing how B2B companies operate. Today, even B2B customers don’t stay loyal to a brand when expectations aren’t completely met. Incumbents are constantly facing new challengers ready bend over backwards to win over customers. Consequently, it’s critical to offer agile, customer-focused experiences to stay in the game.
That said, what makes for a great consumer-facing experience is not completely aligned to what makes an exceptional business experience. There are many core concepts that carry over, but the business experience must account for the needs of multiple stakeholders and partners, and the fact that delivering on customer expectations involves coordination across an increasingly complex value chain.
Today, doing this successfully requires digital transformation.
To meet customer expectations, digital transformation is key
The reason why digital transformation is the critical success factor in customer-experience initiatives is because the types of insights that are truly paradigm-altering are data-driven. Most companies have done a thorough job isolating and removing the inefficiencies that are easy to observe – digital transformation is required to find those lingering inefficiencies that are only detectable by analyzing hundreds of datasets at once. Digital approaches, grounded in data analysis, make it possible to transform every facet of customer interaction – whether that is responding to customer demands, making decisions faster, or restructuring operations to make the customer’s life easier.
Digital transformation in manufacturing is happening quickly. More and more digitally-instrumented equipment is coming online, which is generating an unprecedented amount of data that can be used to improve the customer experience. The ability to analyze this data and apply the insights to improving engagement is what customer experience (CX) disruptors are using to create differentiation.
The opportunity to improve customer experiences isn’t strictly for B2B firms. B2B2C companies also stand to gain from an approach grounded in digital transformation. In this blog, we’ll be looking at digital transformation in the B2B sector. In Part 2 of the series, we’ll look at the impact on B2B2C manufacturers.
Opportunities for CX in B2B manufacturing
B2B companies have traditionally focused on cost optimization and driving inefficiencies out of the manufacturing process as a way to increase margins. As a result, most firms are running very lean, and it is getting harder to squeeze more out of already-efficient processes. This is forcing manufacturers to look for other ways to differentiate. While differentiation takes a number of forms, in almost all cases, it centers on improving the service provided to customers.
In a B2B environment, customers are other businesses that participate as part of a greater value chain. Because manufacturing customers are other businesses, it changes the dynamic in transforming the experience. Stakeholder maps identifying which roles are most important help to focus transformation initiatives. Similarly, considering different stakeholder challenges and needs at different points in the value chain can also help to identify areas of opportunity. Next, we’ll explore several examples of digital changes manufacturers are making to enhance the customer experience and stand out from the crowd.
Proactive engagement via a digital supply chain
A big challenge for many manufacturing customers is getting accurate and timely insight into a complex supply chain. Historically, these supply chains have been largely paper-based and highly regulated. But today, digital supply chains enable businesses to become more proactive rather than purely reactive, and offer a more customer-centric experience.
Take, for example, a silicon manufacturer. They manufacture the raw materials used as part of a chip-making process. Their customer, a chip-maker, in turn provides chips to OEMs, which embed chips in computers sold to businesses as well as end consumers. If the silicon manufacturer misses a delivery date—whether it is in or out of their control—on a silicon shipment, it can have cascading effects on downstream business partners and customers. Being transparent about status by using GPS and RFID technology, and proactively offering a solution, preempts a potential customer satisfaction issue and strengthens customer trust. This trust is what businesses thrive on. If trust is lost in business partners, a firm will find alternative ways of doing business.
Immutability and traceability in the supply chain
Blockchain, which is the underpinning platform of Bitcoin and other cryptocurrencies, is showing great promise in creating a distributed transaction ledger of goods or value transfer as it moves through the supply chain. Blockchain does an exceptional job of creating a single, comprehensive, shared chain of data and logic, called a smart contract, which is an agreement between business partners to achieve a finished product.
Think of a smart contract defining the T&Cs of an agreement, but in digital form. When an event is triggered and the transaction is submitted to the chain, the smart contract is executed on every node in the chain to read or write important, tamper-proof data and enforce the terms of the agreement. These transactions can occur when there is an exchange of goods or value between business partners, or when an important event happens that affects the participating organizations – like part maintenance or failure. Coupled with technologies like IoT, blockchain is creating opportunities for manufacturers to transform the way the supply chain is recorded. For example, with raw material or component provenance, blockchain technology can be used to prove validity and authenticity of luxury goods or even provide accurate traceability of where a part originated in case of a recall. This new level of reliability ultimately provides the customer with a better brand experience.
Transparency across the value chain
In B2B scenarios, manufacturers typically operate as part of a value chain to deliver goods or services to end customers, in partnership with other businesses. Processes and data across business partners can be digitized onto a common platform to provide greater transparency to the entire value chain, instead of keeping information siloed in individual entities. This holistic approach helps enable better service for end customers, and ultimately builds customer trust. A great example is the manufacturing and sale of a complex product like an airplane to an airline. There are many different components, manufactured at different suppliers, that make up the product that is ultimately sold to an airline. Having a common platform supports transparency throughout the manufacturing process, both across business partners as well as with the end customer.
Better demand forecasting
One of the hardest things plaguing many manufacturing organizations today is the ability to accurately predict demand for their products. If the forecast is not accurate, organizations either run the costly risk of carrying too much raw material or WIP inventory, or the brand-damaging risk of not being able to meet customer expectations and missing delivery deadlines. Either one is costly to the organization. With today’s technology, product managers and production planners can use vast amounts of historical data integrated with public data (like weather) to better and more accurately predict when and where a product is needed. In more advanced scenarios using IoT, organizations can implement self-stocking devices that initiate a reorder of materials when a particular threshold is met.
Monetization of add-on services is one way that businesses can create mutual benefit for both sides of the relationship. These services, usually grounded in data and intelligence, typically provide customers with an aftermarket experience that adds value to the good or service. A good example of this is a predictive maintenance service. If a manufacturer can monitor the conditions under which a piece of equipment is operating, they can alert the operator of a potential failure before it happens. They could even dispatch a field agent to fix the source of the issue before a malfunction occurs, resulting in greater uptime and hence a better experience.
One face to the end customer
Today, most manufacturing companies are organized around product lines or business functions that run in silos. Each silo operates as its own business, owns a P&L, and in many cases, data is not shared across the organization. This results in operational inefficiencies that are not centered around the customer and how they interact with an organization in its entirety. This type of structure has historically driven cost out of the manufacturing process, but doesn’t necessarily improve the perception of a brand – and can result in inconsistent experiences. Today though, the consensus among analysts is clear: if the customer is not considered from product design through the delivery of the finished good, organizations run the risk of becoming irrelevant in the market.
In large organizations, there are often many customer journeys, depending how the organization is serving a particular market segment, so it is also imperative to account for those variations yet still drive consistency. The bottom line is that it’s critical to break down barriers to engagement both organizationally and incentive-wise to provide a cohesive customer experience no matter which part of the organization is involved. Modernizing and digitizing those experiences and mirroring what is happening in the B2C space with apps and data-driven personalization is what separates the disruptors from the rest of the pack.
Digital transformation has the potential to revolutionize B2B manufacturing. From putting real-time information about logistics in the hands of manufacturers and customers to creating value-add services that improve the customer experience, there are many possibilities for digital-based improvements.
Digital transformation can make a major impact on firms in the B2B2C sector as well. In Part 2 of this series, we’ll be looking at how digital transformation can bridge the gap between manufacturers and customers.
For more information about how Microsoft can help support digital transformation in your B2B environment, visit https://www.microsoft.com/en-us/microsoftservices/industry/manufacturing.aspx