Omnichannel Commerce: Turning Pain into Gain
Buyer preferences have steadily been cultivating a world where self-service experiences are quickly becoming the norm, but in B2B, self-service experiences have traditionally been seen as “nice to haves.” COVID-19 has changed all of that. What was once a ‘nice to have’ is now a must have to ensure businesses not only survive but thrive in both uncertain times and in the next normal. Although both traditional sales and self-serve approaches to sales are well understood, how they operate together and how businesses move towards self-service has remained confusing. At PROS, we believe businesses that harmonize their channel strategy and push the envelope of digital engagement will be the market leaders of tomorrow.
About the Speaker
John Bruno is an experienced product, marketing, and GTM leader helping to shape the future of digital buying and selling. Bruno, a former head of product at Elastic Path Software, has worked with Fortune 1000 brands, manufacturers, and retailers’ companies advising and shaping their digital and customer engagement strategies. Bruno is a seasoned industry analyst at Forrester research covering eCommerce, Configure Price Quote (CPQ), and CRM and is frequently cited in major publications including Wall Street Journal, Adweek, Forbes, Business Insider, and more.
John Bruno: Hi, I'm John Bruno, Vice President of Commerce Strategy here at PROS. I've been in the e-commerce space for a while now, formerly a research analyst at Forrester Research, product owner in the e-commerce space. But I'm thrilled to be here at PROS, and thrilled to walk you through our approach to commerce and how we see the future of buying and selling evolving. Now, earlier today, you heard from our CEO, Andres Reiner, not just about why businesses need to embrace digital, but really need to become digital first. Think about the digital and self-service channels as the primary route that their buyers will choose to engage with them. So, to walk us through a little bit of how we're thinking about this, I wanted to take a moment and reflect on how businesses who have taken a digital first approach have actually fared to date. So, in short, businesses that have taken a digital first approach have actually fared quite well....
John Bruno: And we've seen the results of that manifest themselves all throughout industry. Whether it's looking at Amazon, one of the most profitable organizations of our time, having their fastest growing business unit be their B2B marketplace. Or whether it's just brands in their respective markets outpacing and outperforming their competition. It's really no surprise as to why digital has taken off the way that it has, and why it's gained the momentum that it has especially over recent years. With 2018 being probably the most pivotal year, where online sales in the United States actually surpassed trillion dollars. And so, it's no surprise to see those successes, but why are they happening?
Really, there are three key elements at play from the consumer side or the buyer side as to why digital commerce has been so effective. For starters, it's this notion of 24/7, always on convenience. It would be great to assume that business transactions are taking place between the hours of 9:00 and 5:00 in their respective time zones. But unfortunately, the world doesn't operate that way. We don't all stick to the same clock work schedule. And as a result of that, when purchase decisions need to be made, they're not always made when the salesperson is available to answer their phone or when the contact center is in their normal operating business hours. And frankly, when you email over an order or fax over an order, the delay between you placing that order, and when it actually getting completed can be a long way the way.
And furthermore, if I'm operating in a business buying scenario, I'm not guaranteed to have the time or the focus to make the right purchase decisions, and I may choose to do that after hours. The second benefit for business buyers is all around purchasing efficiency. Now, in many business buying scenarios, you tend to see a lot of routine or recurring orders. And what that means is, I already know exactly what it is I need. I don't need to do much research. I don't need to validate much of my decision making process. I know what I want, and I want to go through that process as quickly, as easily, and effectively as possible.
Now, when I don't have that luxury of knowing exactly what it is that I need, or what it is that I have to purchase, there's an element of research, an element of transparency that becomes very important to me as a business buyer. I want to make sure that as I'm evaluating your products and services, that I have transparency into what it is I'm looking at. That I know if inventory is available. That I know that this product is actually going to meet the needs that I have, and that I know that I'm paying a relevant and fair price.
So for many of these reasons, business buyers, they tend to prefer engaging over a digital self-service medium as opposed to working through normal, traditional, analog and offline processes. So, of course, there are great benefits for the buyer. But what about you? What about the seller? What about the manufacturer, the distributor, the wholesaler? So for you, there's also a list of benefits. Number one, this is where businesses are choosing to spend more of their money. It's where they're choosing to engage. And so, simply by having a digital self-service presence, or making that channel available to your customers, you increase the likelihood of customer acquisition that is now increasingly become a decision making criteria for many B2B organizations.
Secondly, it's about enrichment. It's about digging deeper into your customer base, being more relevant to them, offering them new products, new services, that they haven't actually explored. And when you offer a digital self-service buying experience, you're removing all of the pressure. There's no one in front of them. There's no one looking over their shoulder. They have all the time in the world to consume as much or as little information as they see it fit in order to make the best buying decisions.
And thirdly, when you reduce that environment to a low pressure environment, when you provide transparency, when you provide speed and efficiency into this process, your buyers tend to value you more. And I think in the digital world, and especially what we've seen in 2020 thus far has taught us, is that the world is a lot smaller than we think. Now, the world is now connected through all sorts of digital mediums, and that only deepens the relationships that individuals have in their respective markets, in their respective verticals. So the world's small, and when you deliver a great experience, word gets out there, people know you for that. And that advocacy from your existing customers can only lead to further growth of your digital business.
So as Andres had spoken earlier, 2020 is not the year that any of us had hoped for, it's not the year that any of us had expected, but it is a year that brings with it a tremendous amount of opportunity, a tremendous amount of potential, and an opportunity to break free from your pack, break free from your competition. And so, what we saw throughout this time period is that, yes, prior to COVID businesses were investing in digital, businesses were investing in e-commerce, and they were starting to reap the benefits. So, prior to COVID, 27% of B2B businesses said that they were making more than half of their purchases online through digital self-service mediums. Now that number has steadily grown from decades ago until today. So, I don't want to make light of the 27%. That is a huge amount of business going through self service channels.
But what's really interesting is that, in the past six to seven months, in which we've lived through COVID, we've actually seen that number increase 10%. So, the 27% that has taken us decades to achieve, we nearly increased that by a third in the last six months. The pace of acceleration in how buyers are shifting the channels in which they do business through is really unprecedented. Which might beg the question, well, what happens next? What happens when we achieve the new normal? And as I like to think about it, almost on a weekly basis my parents are asking me how to watch their favorite show on Netflix or other streaming service. But one of the things that's been really interesting is, they've been more comfortable making purchases online. Now they routinely make grocery purchases online.
So it's not a matter of, oh, this is only for millennials and future generations. Digital has forcibly permeated every aspect of our lives. And so, even after we arrive at the next normal, we're not going to go backwards. That 37% is not going to go down, it's actually going to increase. Because the experiences that have shaped the way that we've done business for the last year and into the future aren't going to go backwards. They're only going to move forward. A lot of businesses have actually taken the opportunity that COVID has presented them with, and used that opportunity to embrace digital. Before a lot of companies I work with would always say, "That's something that we want to do." And it was always underpinned with this notion that, digital and self-service and new and emerging channels were always something that were, well, nice to have.
Unfortunately, COVID has changed all that. Digital and self-service no longer remain nice to haves, they became requirements, they became necessities. Thankfully for businesses though, they've been able to adapt and evolve reasonably well. And that has a lot to do with the nature of how digital platforms and digital selling has evolved. So digital platforms have made it easier and quicker than ever to stand up new channels, to launch something new and fresh and to meet the new expectations of today's buyers. They've also reduced the cost to serve across many different industry. So, instead of having to hire additional head count to go out there and sell your product out in the field, or potentially spend money to embark on new partnerships, new channel relationships, so that you could have wider representation, greater reach within your markets and new markets to reach your customers, digital platforms made all of that democratized.
It made buying and selling accessible to everybody. And lastly, it really impacted the way businesses could think about their spend. Do I want to invest in rigorous training, in more head count, in new office space, or do I want to invest in allowing my employees to engage with their customers digitally and allowing our customers to engage on their own? So, if I could take a step back for a second and really think about how we have addressed the changing climate in recent months, I would probably distill it down to this, when forced to change, businesses have adapted well. And businesses actually have a long track record of adapting well.
And when I think about how businesses have adapted over the years, of course, what made the earliest businesses stand out from the pack? Well, to me, it was one thing, they manufactured and created great products. They saw a need in the market, they connected that need with a solution, and they got very good at building out that solution, and optimizing how they develop and manufacture that solution. But having a great product in and of itself simply wasn't enough. And so, in the early years of businesses scaling, they had to embrace ways in which they could bring that product to market in a meaningful way. And the way most organizations had chosen to do that was to hire direct sales force, was to hire skilled and trained professionals who are able to articulate the value of the product or service that they had to offer to the market.
Very able to distinguish and delineate how their product was different from the pack, how their product rose to the occasion and delivered against the needs of new and emerging markets. But even salespeople in that model can only scale so far. Like I had mentioned earlier, hiring new sales reps can be a costly endeavor. So what many organizations chose to do is, they said, "How can I accelerate the delivery of my product to a mass-market?" And so, what they did was they embarked on different relationships, different channel relationships, whether it was a distributor, a reseller, a retailer, a wholesaler, different ways of getting their product to market in quicker, more scalable, and more elastic means. Increasingly that became the norm.
Businesses started operating in complex channel environments and arrangements where their channel partners could share in their success. And increasingly we moved from building a great product to explaining the value of a great product, to really optimizing how we bring that product to market and deliver it to our customers, into a world where competition started to look a little bit different. And that was a world in which information and data were immediately available and transparent. And this is where we saw the rise of digital platforms. This is where we saw the shift in focus to digital experience. And this is where over the past few decades, we've seen the steady rise of e-commerce. Where we're now able to make our product information meaningful to the market, make it available, make it transparent, allowing our customers to make better, more educated purchasing decisions.
And that's only really the tip of the iceberg. As we look forward, and as customers start to embrace and engage more digital channels, what does that look like? Well, I mentioned earlier that we saw Amazon business become the fastest growing business unit at Amazon. Now, B2B buyers are shopping in all new channels, in channels where you may or may not be present. But increasingly as these expectations, and as these behaviors of B2B buyers continue to evolve, that's going to mean that your channel strategy, your ability to reach your customers is also going to have to evolve.
And we talk about this word omnichannel. And omnichannel tends to mean a lot more to folks operating in more of a B2C or consumer-centric environment. But for me, the word omnichannel and its connotations actually have greater implications in a B2B dynamic. Because B2B purchasing has seen this evolution. We've gone from direct sales forces to complex distribution channels, to digital self-service and direct engagement via e-commerce, to marketplaces. We've seen this proliferation of channels, and for businesses today to be successful, they need to operate in whatever channel their customers are looking to find them in, wherever they are, whenever they are, with the right products, the right offers, and the right solutions.
So, as we look back at how businesses have evolved, as we look back at how businesses have addressed the changing climate of COVID, we talked about businesses reacting well. And that's a good thing. That's a good thing for the near term, but for the long-term, I can say unequivocally, that business reactions are not business strategies. Just because your business has been designed to operate and scale with direct or indirect sellers, doesn't mean that your strategies are directly translatable or transferrable to a self-service dynamic. That means you might encounter things like incomplete product information, incomplete inventory information, or incorrect pricing information. If any of those variables fall short because of a rushed approach, then your customers are losing confidence in you.
They're losing confidence in their ability to make an educated purchasing decision. They're losing confidence in whether or not they're getting the right offer, the right package that they need. And as their confidence wanes, their stickiness wanes. And with so many alternatives available, they can go elsewhere. Secondly, a rushed approach to e-commerce can result in one of the biggest fatal flaws, and that is channel conflict. It could be channel conflict with your distribution. It could be channel conflict with your direct sellers. And when you rush to e-commerce, you have the potential of standing it up in a silo. And if all of your business operations and strategies aren't in sync, that initiative, that project, that program, can be undermined very quickly.
And lastly, you're dealing with customers that have a long standing relationship with you. If you're not able to adequately and accurately reflect that relationship through a digital medium, they're going to go elsewhere. They don't want to start over with you. So when we think about this, when we think about reactions, now is actually the appropriate time to sit back and actually develop a strategy, develop a program to steer away from reactions, to make sure that as Andres said earlier, that digital becomes the first thing that you think about and everything else harmonizes around it.
So, what makes a strategy different than a reaction? Well, for me, it really boils down to three key elements. One is, really understanding that it takes a village to raise any sort of digital initiative or digital program. You will ultimately not succeed if any sort of e-commerce or digital initiative is stood up in a silo. I can warn you right now, do not tap a singular person, any singular function and say, "You are ultimately responsible with this." This is something that needs to permeate through the entire organization. Every faction, every function, every department, every geography of your organization needs to operate in lockstep. And what that means, there are a lot of operational changes that need to be considered when thinking about digital.
Of course, there's the technology, the platform selections, the data management, the information architecture, but along with that comes, how do you change the way people behave? How do you change the way people think about customer experience? So in yesterday's world of direct and indirect sellers, one of the biggest levers at our disposal was the ability to compensate and issue commissions for sales. Now, if you're introducing a new channel, that can often be seen as a threat. And without looking at and re-evaluating your compensation structures, you actually might turn that threat into something that causes your direct or indirect sellers to directly sabotage any sort of digital initiative. They'll look at it as a threat and they will undercut pricing.
So when you think about your processes, when you think about operations, how do you drive people to act the right way? How do you drive the right behaviors that are not only best for you, but are best for your customers in the long haul? So, when you think about that sales person who might feel threatened by a digital initiative, when are they brought into the process? When are they consulted in the process of rolling out any new digital technology to support this new way of buying and selling? It should be early on, and it should address any concerns they have, and it should incent them properly to drive and experience that your customers so greatly desire. And then lastly, technology. We live in a world in which everyone is staring at a screen for almost every hour of the day.
And so, we think about technology, there isn't going to be a silver bullet. There isn't going to be a singular solution. You can't just buy an e-commerce platform and expect everything else to follow suit and support it. Instead, you have to think about technology and technology platforms as key enablers. You want to think about technology's role, not only supporting a particular channel, but technology supporting a broad way of doing business, of doing business that tends to be more asynchronous. A way of doing business that tends to be more on-demand. A way of doing business that tends to create greater visibility, greater transparency, and greater confidence in a self-service buying process.
So when I think about some of the key elements that make omnichannel commerce so successful, I think we can distill it down into a couple of key items. The first is knowing that great experiences happen at the intersection of product, price, and place. Now, as B2B businesses, you probably know a lot about your products already. But handling pricing and handling where all that information is delivered can become quite a daunting task. So, when you think about the intersection of product, price, and place, you've got to ask yourself the questions, is my product information in a state where somebody outside of my four walls, somebody outside of my organization can make sense of it?
Are they able to understand the products? Are they able to connect the dots between what my products do and what outcomes they're trying to drive? Are they able to determine where they can get value? Secondly, it's about price. Is that product or service priced appropriately for that customer? Is it market-driven? Is it based on any of their past purchasing patterns? Is that price something that a customer is going to feel comfortable with at first glance and make the purchase on their own? Yes. There are benefits of digital platforms, and increasing transparency and visibility into what it is that you do all for the end goal of working through a salesperson. But have you done enough across your products and your prices to make your buyer ultimately comfortable enough to make that purchase on their own?
And the last one is the most critical one for omnichannel commerce. Are you able to deliver that product information and that pricing into whatever channel your customer's looking to do business with you? Meaning, are you delivering that to a salesperson? Are you delivering that to an indirect channel? Are you delivering that to an e-commerce experience or marketplace? And I think we can all agree that the world of tomorrow is going to feature more touchpoints, not less. So maybe you expand into a mobile application, a voice assistant, an internet-connected device that orders on behalf of the customer. Are you able to connect all of those experiences with product and pricing information that allows a transaction to happen at that point in time?
Secondly, it's about delivering personalization. Many of the reasons why B2B buyers still choose to interact with the sellers they work with, is because of a relationship that's been longstanding. It's about an innate understanding of a business that can be deeply personalized on a humanly human level. We talked earlier about scale, scaling personalization is one of the hardest things any organization can do. Enter technology. One of the really profound advancements that we've made over the years is advancements in artificial intelligence and machine learning. We think about artificial intelligence and machine learning largely in the context of making a singular decision better. But really where the value comes into play, is making those same decisions of making them at scale.
And injecting more personalization into an omni-channel experience allows your customer to feel more nurtured, more welcomed, more catered to, and ultimately, helps them make the best decisions for their business. And thirdly, I mentioned we're going to see more channels in the future than we saw yesterday. And it's great being able to deliver the right information, the right price, in the right place. And it's great that that's personalized. But the moment that there is a disconnect, the moment where that is not consistent across channels, is the moment where you start to lose your customers.
If a customer sees a particular offer in one channel and then chooses to interact in another, or phone up a sales rep, or a contact center agent, and they're getting a different offer, their confidence in your business starts to waiver. Are they getting the right price? Are they getting the right offer? Should they hold out and reconsider in hopes for something better? It's about making sure that as your customers choose to engage through more channels, or better yet, choose to shift from one channel to another, that the experience they get feels consistent. That they feel just as cared for in a self-service channel as they did in a traditional channel.
So we can see that, as we go back to that world of omni-channel commerce, it can very easily become very fragmented. As we see the proliferation of new experiences, of new ways of doing business, of new channels in which to engage our customers, if we take a reactionary approach, each and every single one of these new experiences that we look to support will become a silo in and of themselves. And when we're thinking about supporting increasingly omni-channel customers, those experiences, all they need to be cohesive. They need to be relevant, they need to be personalized, and they need to be consistent.
And that's why we're so glad that you joined us here at Outperform 2020. We're going to hear a lot more about our solutions, and specifically how the PROS platform is able to unify and harmonize those experiences across each and every touch point that you sell through today, in each and every touchpoint that you'll sell to tomorrow. So at the end of the day, it's all about making sure that each and every buying and selling experience is better than the previous one. So with that, I thank you for your time. Enjoy the rest of the show.