Capturing the B2B Commerce Opportunity
B2B Commerce provides a great opportunity for businesses to digitize previously manual or disjointed selling experiences. Companies have been laggards to adopt but now because of COVID, lack of resources, and retirements they need these tools to keep up with their competition. Further, some companies that have adopted B2B commerce are looking for more growth opportunities like Pricing strategies that can help drive higher profitability. Join Paul do Forno, Managing Director for Deloitte Digital, and Ulrich von Beck, VP, Global Strategic Consulting for PROS, in this session as they discuss great places to start on your B2B commerce journey and outline where B2B Commerce and digital selling can take your organization in the future.
About the Speakers
Paul do Forno, Managing Director at Deloitte Digital, is a commerce and digital transformation leader with more than 25 years of experience in strategy, digital experience, and technology. He leads the Commerce Practice Eminence initiative as well as the go-to-market strategy for B2B Commerce. do Forno has also led some of the world’s largest digital platform programs with some of the biggest brands. He has served such companies as General Electric, Siemens, Target, Foot Locker, Hyatt, and many more driving commerce and digital transformations. He is a frequent speaker at digital and e-commerce events and has been featured as an e-commerce subject matter expert in many publications. He has worked closely with research analysts and holds several executive advisory board positions with top digital platform vendors.
Ulrich von Beck serves as VP of Global Strategic Consulting at PROS. He helps to build, scale and manage SaaS technology sales, pre-sales, and delivery teams. von Beck has experience in sales leadership, go-to-market strategies, and customer success for technology solutions in the pricing, supply chain, sales enablement, mobile, and publishing spaces, with a focus on AI and algorithms based technologies.
Full Transcript
Ulrich von Beck: Welcome back, everybody, to a session on capturing the B2B commerce opportunity. It's certainly a space that's garnered a lot of attention, and it is a space that is beyond software itself. It's a whole change in the ecosystem itself. PROS as being a provider that plugs into that B2B commerce ecosystem. But today, I'm very excited to welcome Paul to the session. He's a B2B leader in B2B commerce at Deloitte Digital. And let me hand it over to Paul for an introduction of himself....
Paul do Forno: Hi, thanks so much. Very excited to be here as well. I'm one of the leaders at Deloitte Digital and our commerce practice, and we're the largest global commerce provider in the world, working with some of the top brands both from a, B2C and a B2B. But today we're going to focus on B2B and B2B is really about how we help sell digitally from business to business, and we're going to really dig into one where the opportunity is and then to how you can really drive new revenues and profitability in that space.
Ulrich von Beck: Well, thank thank you, Paul, that's certainly something that I think the audience is very, very interested in. Just a quick introduction on myself. I'm Ulrich von Beck, I run our global strategic consulting practice. We see a lot of nuggets of that B2B commerce transition that companies are going through. But we really would love to find out a little more of that complete picture because it looks like a really daunting task to go after the B2B commerce opportunity. So let's, let's see what one can do as an organization to get started. Maybe you have some ideas on that or what that opportunity is in fact.
Paul do Forno: Let's get started, let's dig in. Let's look at the opportunity for B2B commerce and to look at that opportunity. Let's step back and take a macro view. And if you think about the macro view, the opportunity is look at all of the different payments that are done between businesses. And in the US it's estimated that 17 and 1/2 trillion of payments are done between companies, and about half of those are still done manual. And when we talk about manual, that means a check’s being sent, a wire is being sent. All of these things are just manually done and not done through a system or the data is brought together. And so the opportunity is massive. Those 8 and 1/2 trillion of opportunity to help companies, you know, sell, direct and learn about their customers. And so if we've looked in the past where those opportunities are, in the past, you know, some of that has been solved by EDI and that's been around for like 30 years. But it's a very structured, hard, very bad user experience. And so what the opportunity for those that are selling that people want to be able to sell direct to businesses and to be closer to selling similar to what customers are experience in the B2C life. But Oh oh, by the way, you also want to make your salesperson's life easier. So let's look about when we talk about B2B commerce, what does that actually mean? So when we talk about B2B commerce, it's really it's not just about the order, it's about the overall, the discovery, the buying process. After you buy it, how do you use it and leverage it and an ongoing subscriptions and renewals? It's only not just about one channel, it's also about all things customers. So how do you how does the support interact with the ordering and support people through the process through up front, learning about the product supporting people along? Is the product information up to speed? Do you have the best visuals on your product? Does it have the product information, especially like in manufacturing or in chemicals? You need very detailed documents to support and whether their work for them. Do you have that available? And then as you're going through the buying process, is it meeting your contractual obligations and buying and making it easier to buy it? And so all of these things, what you see is commerce happens to be in the middle and touches a lot of things on the front interaction. And so what's also important to understand is B2B commerce isn't meant to replace the salesperson. It's to make their life easier. And really, when a lot of the research that we've primarily done with a lot of customers, we actually a lot of the stuff around making your customers life easier is actually that one of the most important factors on how successful you're going to be and how much growth in sales are actually driven. This is actually a word cloud that we've done, that we've taken from a number of different clients and what we've heard as we've started the process of trying to understand better some of their challenges in selling from business to business. And if you look like right, dead in the middle. Hard to do business with is the number one thing that we hear, right? And what's interesting, if you look at many of these, they're all to do with many of the things are to do with just customer service and making some of the information easily, you know, predictable and seeing. Like in the past, one of the challenges that you might have had is, hey, if I needed an order or I needed to follow up details, what you do is just call you up your sales, guy said. Yeah, I'll fax something to you, right? Or, hey, I'll call you with the details. Well, people are so busy. And in fact, many of the people that are non tech literate are retiring, especially in the manufacturing chemical and some of those spaces. And so millennials make up more than half of some of the new workforce that are out there and the largest part of the workforce. And so what's important is that you enable them to leverage the tools that they're expecting. Those are just table stakes. So if you don't have them, they're going to place orders to other companies that are easier to do business with. And so when, when you look at how to drive and what the business case of getting value out of B2B commerce and commerce. It's not only about the ordering. It's about all the things that you make it your client's life easier. And so when I'm asked, how do you get started? I bring out this word cloud because this is a roadmap. You, in the same way that B2C, you are focused on the customer in this instance, you want to be focused on and B2B it's a little bit more complex. You have lot of different personas that you deal with, whether it's the front salesperson or procurement or business owner or the technical staff that's deploying some of the tools and the products. Or it needs a part, right? And so you have lots of different personas, and what you have to do is focus on all those pain points across those different personas and start small. So many of the times when we start, especially for companies that have been laggards, we don't even start with ordering on a first release. We provide one, maybe a customer portal that you now can see your orders not only on a website, in a great user experience, but also on mobile. Taking those baby steps, our ways to, you know, focus on these pain points, whether it's, hey, where's the status of my order, right? Like those are the pain points that you hear over and over. And I think the other important takeaway as you start to build this out is, in many ways, this is a way to start, but this is something that's going to ever continually to evolve. And so there's never a stop point you'll continually want to keep updating and how you best can work with your clients to meet their requirements. And what this does is one it can reduce your cost because now you can support many more types of sales where you don't need as many salespeople per say, but your salespeople can focus on bigger deals or more customers that they can focus on, and as you continue to build forward, you're also going to be able to leverage some of this data of how some of these customers leverage this data and how they actually look at their decisioning. So lots of great opportunities in here. But really the B2B commerce opportunity like we talked about in the macro, it's a massive opportunity and it's a laggard and it's an opportunity for companies as they're moving forward to empower and grow not only their current capabilities, but look for other opportunities down the road. So I covered a little bit about what getting started and the overarching what would be. What's really interesting is there's an opportunity to really drive profitability and margin when you focus on pricing. So Ulrich, can you maybe touch upon your perspective on how pricing and configuration can really help drive new revenue streams?
Ulrich von Beck: Absolutely I mean, I'm still looking at the slide here with the big unable to track orders on it. I mean that looks like a low bar, but it certainly has a high return. I mean, I like getting my updates on my orders as a consumer. It's good to know when your actual industrial parts are coming in too. Seems like an easy start.
Paul do Forno: I mean, especially right now, like think about the supply chain challenges you're getting into situations that people have never even heard of and being able to demand plan and having that access to that data is not just like a nice to have. It's like, is my business going to survive, right? And connecting all those dots. And that's why, you know, a lot of what we're doing, especially on the front office, is making sure to connect the dots on a lot of this information. And B2B commerce seems to be right in the center of it all.
Ulrich von Beck: Yeah, yeah, this is it. Certainly, you know, you've got poor data unable to track orders in a time like this, so they're definitely great points to get started. But that evolution definitely is a continuous one, like you said and PROS as a provider is right there to help you evolve this as you gather that data and you get that rich data in there. I we definitely have a way to extract as much value out of that. And that's what sort of pricing and AI plugs into this B2B commerce ecosystem that we spoke about. So I'll jump into a couple of pages here because now you got me all excited about people being able to get started. The more people and organizations that can get started, the more they will evolve and the more the products and the AI that we provide becomes relevant in this ecosystem. And I'm just going to cover a two slides on like the size of this, what is, we call it, sort of price point proliferation. And as you embark on this B2B commerce endeavor, you're moving from salespeople to perhaps a website to perhaps a channel with your partners. And so maybe you've got 35,000 products, maybe you got a customer price list that you're selling through your sales reps and you've got 35,000 price points. Still a decent amount of price points, but very easy to manage in Excel. But now let's ratchet that up a little bit and you've got your full eCommerce system going in multiple channels. You've still got 35,000 products, but now you've got customizable prices for every customer and then you've got three channels on top of that. So maybe you've got different prices, even for the same customer in those channels, because it's a partner channel or an eCommerce direct channel that you're trying to drive traffic to. Now you have 3 billion price points. Now that's a pretty large number. We would say humanly impossible to deal with, but it's a really rich data set that you have now, and it gives you a lot of ways to really tweak your B2B commerce experience to have that personalized experience for every single customer, for every product they're buying. And so what does that look like? You know, our PROS Platform, we definitely have to talk about PROS it's PROS Outperform. So our platform really manages that from just managing the prices, those three buckets billion price points that you could have. That's what we can manage in our system. But you're going well, that's a lot of data. There must be some really, really rich insights in that data. Yes, there is. That's what we can actually do, that customer specific price optimization, so every customer, depending on depending on the segment, they're in, the buying scenario, the way they buy, how often they buy. We will develop a specific price to them that we believe is they're willing to pay. And that sort of tweaks a little bit of extra margin out of the laggards. Of course, we're not going to touch the top performers. They're already paying a good amount, so we can be very discrete in our, you know, our pricing for individual customers. And then on the actual interaction side for the sales reps, so for an eCommerce site that you have up and running. You want to make that customer experiences as good as possible as Paul was talking about. It's all about that experience of making it seamless and easy. And that's where you've got product and service configurations that become easy. There are guided workflows. They're not selecting a part number and you've got to remember the other part that's compatible with that. That's what the software takes care of. And so when you're configuring a HVAC systems or something like that, like a great customer of ours Goodman is doing, you're able to do that from a consumer perspective and actually be able to configure a complex system. Just putting in the needs and being guided through a workflow. And finally, for sales reps and for your eCommerce site, we really offer some sales opportunity Insights. Is this customer buying more from you? Did they used to buy this product? And are they not buying it anymore? Why aren't they buying it anymore? And then you can do something about it. You can recommend things on the eCommerce website, or you can recommend things to the sales rep saying, look, they've been buying paint all the time, but they've never bought paintbrushes. It seems like most customers in their category should be buying paint brushes, too. So give it a go. Maybe you can break into that market, and that's a great way to really get some incremental increases in your basket size with each B2B customer. So that's the Platform, you're probably seeing some of this stuff out there in the market. Paul, I don't know if you've got any questions on these, this area.
Paul do Forno: Yeah, I think one of the things that would be interesting from your perspective when you're talking about multichannel is can you talk about maybe some of the pressures between the different channels and how do you manage that? You know, especially maybe in the B2C, like dealing with retail and dealing with, you know, different sales channel ways.
Ulrich von Beck: Yeah, this is a really, really interesting space because it depends on the strategy of the organization and how where are you trying to drive your traffic? So we'll take an easy example. You've got a B2C site that's out there and your prices are out there. And then you've got to a B2B site where you're doing business with your enterprise customers. You need to know what the prices are on your B2B sites and make sure that they're in line with what you're sharing with your B2B customer. Because the last thing you need is your customer calling up and saying, look, I buy 100,000 of these from you every year and the price is more than on your B2C website. Why is that? Now it could be because they've got special next day delivery terms and things like that. But you've got to be ready for that, that question from your customer. So it's all about synchronizing the prices in all these different channels. So that it makes sense to the customer. And if the customer has a question about it, your sales reps or your associates, they can explain why that is in a explainable way. You know, then you just add that partner channel on top of it, and it gets quite tricky. So you've got to have that price rationalization across your different channels and at scale. You need a platform to do that. That scale means you need performance. So that's where you have a real time dynamic pricing engine, and that's where you really get that high performance. You've got to be able to do these calculations and milliseconds for your communist website, for example, or even when you've got 10,000 lines on a quote that you're sending out to a B2B customer, you can't be waiting 15 minutes for all the prices to come back. So you need high performance. Of course, you need high scalability. You've got millions of people hitting your website. You've got thousands of sales reps creating quotes in your CPQ system. And so you need to be able to deliver those prices very, very, very quickly. And then, of course, it has to be available all the time. Imagine running a business without your prices. It is a mission critical thing to have prices available at all times. And those are real time calculated prices. So that's the type of ecosystem, you need. And technology stack, you need to drive that pricing.
Paul do Forno: So, you know, when you think about dynamic pricing, one of the things people sometimes think is, oh, that's just they're just a magic tool there that it magically comes up with dynamic pricing. Can you talk a little bit about what data that you grab or how do you grab the data so that it makes it a useful pricing engine, right? Yeah, that seems to be like a big challenge.
Ulrich von Beck: It is. I'm going to stop sharing because we're sort of at the end and we'll do a bit of discussion and that's a great lay up. Dynamic pricing is when people think about pricing and like, oh, you're just getting a price, but that price and B2B could be on a contract. So that's already the first decision you got to make when a price request comes in. Is this customer for this product? Do they have a contract? Now, if they do have a contract, then what is that contract price and maybe that contract price actually depends on an index. So now that price depends on the copper index. And so you're bringing in the copper index of that day and you're dynamically calculating that contractual copper index linked price for this widget on the fly and giving that back to the customer. So that's an example of, you know, bringing in information from third parties, whether it's index information, whether it's your inventory situation where you don't want to be giving something away at a cheap price when you don't have any inventory of it. So those are the real time dynamic calculations that are taking place in the background. Now for you, Paul, the B2B commerce we started off, you know, we started off with sending out an update to your order. Now, let's fast forward to the future, where is this all going? Where can we find ourselves in a couple of years time? Once we started this journey, where will we go?
Paul do Forno: Now this is going to continue to evolve, but like some of the things that are super interesting that are happening, right, like there's marketplaces out there. So not only will you sell marketplace, so for example, we work with a lot of different customers that might work with third parties that provide adjacent products, right? But they may send it directly to them. And so that's a good way to do it or just other marketplaces on their vertical niche that they also need to sell to. So what you then have is you're selling on your own site. You might be selling on a partner site, you might be coordinating sales. And so all the different permutations of that, including selling on Amazon or selling on other marketplaces right now, like in the U.S., there is somewhere in the neighborhood of about 100 major marketplaces out there that you potentially could interact with. And so that complexity of being able to coordinate products and that and I would assume also coordinating pricing becomes all the more complicated as you get to that. So that's one area. Another area and you touched a little bit about it, about some of the AI so we're actually working with a client now, and it's a really interesting opportunity. So one, there's a whole class of clients that are just challenged. I don't even have a website or an ordering are a very good interaction, so please just make it good. But what if you could go to your client and say, hey, you know what? Not only am I going to make it easier for you to order and we got great products, but what if I said, I could make your profitability better by me suggesting an order? Oh wow, that's that completely changes the game, right? And instead of and in many ways, what they're doing and this is a CPG player, they're coming to their clients and saying, hey, you're a little smaller player. I'm going to use my big data in my understanding of the industry. You should be ordering x amount of stuff and that'll optimize your revenue. So you're changing the game from like, hey, I just got this product in order, to here's more revenue we're going to make and to get along that journey to get that data, they have some loyalty carrots to help bring them along that path. So again, a really interesting thing that is you're going to see much more in the future, but we're seeing it already today.
Ulrich von Beck: Yeah, yeah, that's a phenomenal way to look at the future of increasing that margin and that usage of your product, not just for your own organization, but for everybody down the line in that supply chain, raising all their margins and all their baskets to a higher level. So it actually benefits all players in your ecosystem rather than just yourself.
Paul do Forno: Right? Exactly. Yeah and one thing I'd be interesting for you to maybe talk a little bit more about is, you know, in that realm of how do you make it better for others? So can you give some examples on how pricing actually drives margin at clients?
Ulrich von Beck: Yeah, it's something we're very passionate about that, as you know, and it's something that's an industry accepted. Gartner has released a couple of reports on the power of pricing, and you're looking at about 1 to 5% increase in revenue and 2 to 10% increase in margin. And that's something that we see in our own studies of PROS as we look at the benefits and the value that customers are getting. They're very much in line with that. And the amazing thing for me, one of the stories that one of our team members talks about is, you know, their son came in and said, how tall do you need to be to walk across a three-foot river that's three feet deep on average? And that's kind of how we do pricing where we're like, oh, well, maybe you've got to be 4 feet tall or something like that, you know, you just average it all out and we're going to give everybody a 3% price increase. Well, that's not how that river works. That's three feet deep on average. There could be a 6 foot hole down there and you don't know, and that's the way that we can we can use AI to do our pricing. We look at those customers that are already paying a good premium. We're not going to touch them, and we look for those big opportunities, people that are paying 10% less than everybody else and we can nudge those ones up to an area that they're willing to pay and still gets extracted a little bit of extra margin out of those laggards. And that's where that 1 to 5% comes from. It doesn't come from a 3% average price increase across all your products.
Paul do Forno: Right that makes sense, so if somebody was just getting started right on looking at the pricing, do they, you know, is it they have to do a huge strategy to get going or is there, how do they just get started looking at this? And what type of products is a good candidate? Oh, for pricing.
Ulrich von Beck: The bar is fairly low. You know, like you're saying, you know, tracking orders. That's a good place to start even having a pricing in one place. Getting out of Excel is a good place to start to get an overview of what you got. A lot of companies are out there that do annual price increases. Or their price increase process takes three to four months. So forget about the AI part for a while, just putting it into a system where we can put up the price or analyze the pricing in a certain region within a matter of minutes. The value is huge there because, as we know, making $10 more on the top line full straight to your bottom line, which is really the power. So we have ways to get started easily everywhere. And, you know, coupling that user experience that you provide, updates, visibility to orders and your history with a customer with very fair pricing, I think is a great combination to grow that customer loyalty and that relationship with your customer that you're after. Yeah, absolutely.
Ulrich von Beck: So it's been a wonderful time, Paul, think I've really enjoyed the conversation you've given, given me hope that way more companies can get started and we're there, you know, Deloitte is there to carry that B2B commerce vision into the future and evolve it. And we love to be part of those initiatives and help our customers get the most value out of it and to satisfy their customers in the best possible way.
Paul do Forno: All right. Thanks so much. Great, great conversation, and I do think it's a massive opportunity and, you know, you know, be to be commerce. If I can leave you with one thing, it's not just about one channel. Tt's about enabling digitally making everybody's life easier along that journey of a sale. And if you focus on all the things in the same way that B2C focuses on the customer. Sales, B2B commerce is making it easier for everybody in that sales channel and making their life easier. You will drive new revenue and optimize your revenue.
Ulrich von Beck: Perfect well, thank you, Paul, for your time, I'm going to pop up our contact details. And if anybody wants to get a hold of you or myself, feel free to reach out to us as you embark on this journey or evolve your journey in the future.