2010: B2B eCommerce (Finally) Realizes Its Potential

By Godard Abel, Co-Founder & CEO, Big Machines

Over the past decade, BtoC eCommerce has changed the landscape for selling products as leaders like Amazon.com have brought eCommerce to the mainstream — and the numbers are growing.
A 2009 survey of online consumer behavior conducted by Harris Interactive found that 48% of US online adults say that they are now conducting more online transactions than they did in the past. In the UK, the number is even higher as 53% of online adults say they are making more purchases online, with the ability to compare products and prices cited by 74% of these as the main reason.

• Fact: Consumers now expect products and services to be instantly available, comparable, and configurable to meet their needs online.
• Fact: Consumers expect fast, intuitive shopping fulfillment.
• Fact: The web provides consumers instant search results for any products or services along with real-time pricing information across eCommerce sites. Increased product choices and purchasing options are easily available from an expanding global market.
• Fact: The business world has lagged behind in leveraging the internet for streamlining sales with BtoB eCommerce.

Businesses still rely primarily on inefficient direct and channel sales strategies supported by legacy selling tools and cumbersome enterprise software tools rather than providing their business customers the same intuitive online experience available to consumers.  We expect that over the next decade businesses will bridge this gap and deliver increasingly intuitive eCommerce tools to their business customers.
The History
BtoB eCommerce, by definition, is not a new concept in the business world. Back in 2000, sources like Gartner Research and Forrester Research were predicting explosive growth numbers in the BtoB eCommerce world, upwards of $3.95 trillion by the end of 2003. And the sales industry has been moving more toward this kind of multi-channel selling model, which integrates the Web with more traditional methods.
But, to date, BtoB eCommerce has not seen the adoption across industries that was initially predicted back in 2000. In fact, over the last decade, while many companies have expressed interest in incorporating web technology into their existing sales platforms, very few have actually implemented it. Based on experience with over 250 companies, BigMachines has found that over 90% of companies still rely on clunky spreadsheets and rigid enterprise software systems to price, quote, and sell products. And while we’ve seen great success with the BtoC eCommerce world – everyone from Amazon.com to Dell have become masters in the retail world because of it – BtoB eCommerce requires online systems that can support the complex products, contract, and pricing logic often needed to satisfy BtoB relationships.
CRM vendors have led the pack in delivering sales force automation technology but while they excel at building customer databases and sales management and reporting tools, they have not focused on delivering multi-channel selling tools that support BtoB eCommerce. ERP vendors have continued to focus on providing back-end systems that serve finance and operations, but ERP systems are not intuitive and typically not accessible by sales people, channels, and customers.  Since neither CRM nor ERP have delivered intuitive online selling tools, it has been a struggle for businesses to deploy intuitive online BtoB selling solutions.
Why BtoB in 2010?
It’s clear that the technology industry has been talking about eCommerce for a while but the question is: Why is 2010 going to be the year that it takes off in the BtoB space? The answer is simple. The need is still there, better SaaS technology is now available, and business customers are demanding it. Consider a survey we recently conducted of our customer base where we asked executives if they plan to incorporate BtoB eCommerce into their selling process over the next year. Every single respondent answered Yes. Furthermore, BigMachines has conducted its Breakthrough Opportunity Analysis (BOA) ® with hundreds of companies and has shown that companies can save 50-80% of their quoting and ordering costs and eliminate 100% of order errors by moving to BtoB eCommerce.
New technology is now available that enables businesses to provide their sales people, channel partners, and BtoB customers intuitive online tools that make it just as easy to buy business products and services as consumers shopping online. The BtoB eCommerce platforms also support the complex product filtering, bundling, contract management, and pricing rules that businesses need to conduct online commerce.  By leveraging Web 2.0 technology, BtoB eCommerce platforms now offer a much richer, more real-time business shopping experience.
In addition there has been a generational shift in businesses. As Generation X and Y take over from Baby Boomers, they simply expect to be able to conduct business online in the same way they can in their personal lives. New Gen Y workers entering the workforce have grown up digital and want to do all their product research and purchasing online. They are not inclined to talk to sales people (or anyone for that matter).  As these new generations take over the workforce they will demand online tools from their suppliers and refuse to do business with suppliers relying on antiquated paper, phone and fax driven processes.
Building on an Opportunity
BtoB eCommerce can accelerate sales through a partner channel as well. Think about how business to business transactions are typically conducted. In many cases, businesses utilize partner channels to help sell products and/or fulfill orders. Those partner channels sell from various host companies creating the need for multiple quote and order transactions across the channels. But by utilizing BtoB eCommerce, businesses can automate the channel transactions, share real-time information to collaborate to better serve the end customers, and quickly provide one integrated quote to offer to the end customer.
For example, a niche vendor in the HVAC space is constantly in competition with the large enterprises like Honeywell and Siemens but that company only makes one piece of the product. By using BtoB eCommerce, that company can partner with other companies to provide the whole solution by putting both partner and its own products in one instance within their sales software and create one integrated solution quote for a customer. That company has now grown its business over 20% by offering a competitive bid to the turnkey solution offered by these big time players.
Making it Work
Knowing that BtoB eCommerce will start realizing its potential this year, what can you do as an organization to take advantage?
Do your research and find a platform that suits your needs. Make sure the rules engine is complex enough to handle your products and services and pricing. Understand online self-service and its importance to your customers. In essence, BtoB eCommerce helps you predict what your customers may want to purchase and when you can predict correctly, you have a better chance of winning that sale.
Since its inception in 2000, Godard has led BigMachines on its mission to deliver innovative web software solutions to its customers and to build an enduring company with a great team. Godard earned an MBA from Stanford University and both a BS and MS in engineering from the Massachusetts Institute of Technology (MIT).

Sizing Up Social Reach: To Advertise or Contribute

I moderated a webinar earlier this week titled Broad Reach + Intelligent Lead Nurturing = Increased Revenue. Part of the American Marketing Association series, the webinar featured a great panel including Scott Mersy of Genius.com, Brian Carroll of InTouch and Ardath Albee of Marketing Interactions, and also generated a lot of great follow up questions from the attendees.

As part of the presentation we referenced the finding of our recent “BtoB Buyer Transformation Study,” which found prospects are extending their research outside the traditional funnel by interacting with others online in a social manner. A few of specific survey findings we shared:

·       40% of buyers read/search on blogs/Twitter
·       37% post questions on social sites
·       60% shared research with others.

Considering the impact social channels are now having on reach, one attendee posted the question:  “Do you recommend advertising more on community focused sites? Or becoming a contributor?”

We have tried some small targeted ad campaigns on social sites and have frankly have not seen great results. Social sites such as Facebook and LinkedIn do allow marketers to send messages to very narrow audiences—beyond job title and industry to specific companies and geographies in many cases. However, I still don’t think social users are in the mode of engaging with sponsored messaging at this point.

Where we are seeing real success stories is when a solution provider engages and builds a relationship with new customers by being active participants in social groups and forums. We’ve seen real several examples where a BtoB buyer has selected their solution provider based on feedback and content that they accessed via sites such as LinkedIn and Twitter.

As we discussed in the webinar, in order to extend your reach you need to be part of the conversation, and a lot of the discussions are shifting to social sites and peer groups so the more active you are on blogs and groups will likely increase your engagements with prospects.

Why The “Same Old” Is New Again: Applying Tried & True Lead Gen

By Dan McDade, President, PointClear

Never before have marketers had so many tools in their arsenal. Social media and marketing automation provide huge opportunities to touch — and compel — our markets.

While these tools offer new capabilities to interact with prospects more personally, more cost effectively and with more precise timing, it’s critical in this new economy to apply tried and true marketing principles to make sure lead gen programs work.

Our experience as a prospect development partner for BtoB technology, healthcare and services companies repeatedly proves the point: While new tools make our job different than 10, five, or even two years ago, they require adherence to the same best practices as more traditional tactics.

For example: You’re the marketing executive for an IT outsourcing company, targeting CFOs of mid-size companies. This morning, you post a thought-provoking blog on an important enterprise-level security issue. Then you send a compelling tweet about the blog entry to those following you, summarize your posts’ points for your LinkedIn Group and provide a link to your blog. Next you’re alerted to a discussion on a Facebook fan page about corporate hacking and you promptly put in your two cents, with a reference to a podcast on this very subject that resides on your Web site.

Even before lunch, on a real-time basis you’re gaining intelligence about Web site activity resulting from your a.m. efforts — what pages were visited, how long visitors lingered and what they did. And you’re monitoring the score generated for each visitor, using it to drive your lead-generation activities: determining who’s a qualified lead, who gets a sales call no later than 1 p.m. and who’s added to the nurture marketing program.

This scenario demonstrates how new tactics and technologies are fast becoming a daily part of marketing programs, offering more ways to engage your market, generate leads and nurture prospects. That’s why it’s more important than ever to adhere to foundational marketing principals, specifically: Making sure your message is consistent, relevant to your audience and aligned with business goals; and you determine what action should be taken when you get a lead.

Clear, concise messaging that speaks to buyers’ pain points is critical to success. Careful documentation of your offer, including problems solved, features/benefits, and competitive differentiators, as well as market testing, are tried and true ways to make sure all your communications work together—from this morning’s tweet, to this afternoon’s phone call—and generate results.

Also as important, especially with so many ways to touch prospects, is a focus on the definition of a lead, and agreement on how to handle one when it comes your way. We’ve found companies often define their market too broadly and their leads too narrowly. If your CEO perceives your target market to be the Fortune 500 (when it’s really a smaller segment within that group) and if your sales reps only follow up on leads that help them make this month’s quota (leaving longer-term leads on the table), you’re missing significant opportunity.

While there’s plenty new in lead generation, it’s important to remember that the same old is as fresh as ever. Today’s “new” strategy is to leverage everything available—blogs, tweets, other social media and prospect scoring. Yet, the success of this strategy relies heavily on the proven marketing principals that have served lead-generation executives for years.

Dan McDade is Founder and President of PointClear, the prospect development company. Before McDade founded PointClear, he served as Vice President of Marketing for the direct mail firm, Jackson & Perkins, and as President of UST: The Business Marketing Group. To learn more about PointClear, go to www.pointclear.com.

Demanding Views

May Release From Harvard
Frames Demand-First
Innovation & Growth (DIG) Model
Challenges Companies To DIG Deeper For Customer Insights

Somewhere in the center of the white board, between the latest and greatest product introductions from R&D and the new competitive growth plan from sales and marketing, there sits a significant growth opportunity. Most companies will unfortunately miss it.
To help locate that key intersection of innovation, changing customer behaviors and competitive success, author Erich Joachimsthaler has built a new framework for customer advantage called Demand-First Innovation and Growth, or the DIG model. It is the cornerstone of a new book called Hidden In Plain Sight: How to Find and Execute Your Company’s Next Big Growth Strategy, scheduled for release in May from Harvard Business School Press.
Joachimsthaler, who has spent more than 25 years studying companies’ connections and disconnections with customers in his role as founder and CEO of consulting firm Vivaldi Partners, argues that companies need to understand the changing ecosystem of demand and identify the biggest opportunities for innovation and growth.
The book draws upon some great behind-the-curtain case studies illustrating the successful growth strategies from such consumer brands as Unilever’s Axe and Procter & Gamble’s Crest White Strips to such B2B leaders as GE Healthcare and State Street Bank. DemandGen Report discussed the DIG model as well as other insights in the book in a conversation with Mr. Joachimsthaler prior to the book’s official release. The following are some of the highlights of that conversation:

DGR: There was an article in a recent edition of Business Week that talked about the “Innovation Backlash.” Do you think all of the hype around innovation has come at the expense of focusing on the needs of the customer?
Joachimsthaler: Marketers who spend all of their time on understanding customer needs are not any better at innovation. Let’s not fall into the simplistic, it’s-all-about-the-customer trap. Those days of better understanding customers are over just like the Reagan Presidency. The problem is far more deeply rooted for American businesses. We have come from a product perspective that began during the industrial revolution. Today we also have many companies that have adopted a customer perspective to business, and there is nobody who should argue against it.
The real problem that stares in our face is that the tough challenges for companies in innovation and growth today is neither solved by following the customer needs perspective nor the product perspective. The key point is: none of these perspectives really help you to achieve dramatic growth through innovation because both perspectives are insufficient, obsolete and have run their course. They don’t really help companies to see the biggest opportunities for innovation and growth in plain sight, right under their nose. Even the so-called customer perspective has lost its usefulness in today’s business environment. The customer perspective is rooted in what we call the need-fulfillment paradigm. Find a need and fill it and they will come. This approach is practiced everywhere, it is generic and worse, it is geriatric, time to retire it and to send it to Florida.

"Even the so-called customer perspective has lost its usefulness in today’s business environment. The customer perspective is rooted in what we call the need-fulfillment paradigm. Find a need and fill it and they will come. This approach is practiced everywhere, it is generic and worse, it is geriatric, time to retire it and to send it to Florida."

DGR: Then if it isn’t about a product focus or a customer focus, where do companies get started to drive real innovation?
Joachimsthaler: My thesis is: if you really want to see the biggest opportunities for growth and identify and deliver breakthrough innovations, you have to start at an altogether different starting point. You have to start with the behaviors of people, not just customers or consumers on their stated psychological needs and preferences. You have to zoom in to a very different aspect of life – not consumer needs, although you may find new untapped or unarticulated consumer needs as you go on.
You have to understand the behaviors and actions of people in their everyday life or work life first and map what I call the ecosystem of consumer demand. Understanding the complexity of this ecosystem of consumer demand is the starting point for identifying opportunities for dramatic growth and breakthrough innovation. The basic unit of analysis of the ecosystem of demand is the behavior of people – how people learn about music, evaluate music, buy music, listen to music, store music and discard music, for example. From this basic analysis should follow a deepened understanding of the social-situational contexts in which these behaviors take place and this necessarily leads to understand the new and unarticulated needs, wants but more importantly, passions, desires, urges and fantasies that people have in their daily contexts.
In a way, Steve Jobs has envisioned this ecosystem of consumer demand, while Sony missed it – even though the opportunity in the MP3 business where right in front of Sony’ executives noses.

DGR: How does that study of behaviors and actions alter the traditional approach of building demand?
Joachimsthaler: We all know that today’s consumer is very different from the naïve consumer of yester-year that considered the 30-second commercial as informative. That still was a consumer in the sense that he or she looked for new products or services to buy and satisfy his or her needs. It is time that companies stop thinking of this consumer and adopt the necessary sophistication about the ephemeral and changing nature of their opportunities – and truly understand the ecosystem of consumer demand they are facing.

DGR: There are several examples mentioned in your book about the impact of online tools as a way to get closer to consumers, either through research or marketing. Do you see "new media" as a key enabler to collaborating with customers and successfully building a demand-first strategy?
Joachimsthaler: Absolutely. The power of the new media is that there are many existing communities that can be tapped into, thanks to what some call Web 2.0 and technologies that enable these communities. However, most companies today still don’t know how to mine these communities for insight, how to fit into these communities, how to connect with them. The new media opportunities are just now beginning to emerge. And we don’t necessarily have the right answers either. We work on various models very intensively right now.

DGR: One of the case studies you cite in the book is Allianz, a global insurance company that had success by marrying marketing and product development. Are the traditional silos that often exist in a big company a hurdle to new models like DIG?
Joachimsthaler: Yes, I believe the silos that naturally develop, as part of growing a business is a big part of the problem. It creates a blind spot for executives and as a result so many opportunities remain for them hidden in plain sight. As you look through the Allianz example, you can learn how to establish a systematic and repeatable process to overcome this blind spot and find opportunities for dramatic growth through innovation, again and again. It is not simply about creating an innovation culture. It is making sure that marketing and product development sit in the same car when taking it on the autobahn of innovation. That’s not easy especially in traditional industries like insurance, but it can be done.

DGR: Another interesting concept from the book challenges companies to find where they fit into customers’ 1,440 minutes each day. Do you see “Day In the Life Diaries” and other similar models being more applicable to consumer products or do they have a place for all businesses?
Joachimsthaler: Reframing the challenge of innovation and growth in terms of how to fit into the 1,440 minutes of people’s every day life is indeed a powerful exercise. It changes the objective function away from the better, faster, cheaper arms race that underpins much of the innovation mindset of today. It works well in the context of consumer products, where our company has worked with numerous clients.
However, in the book, I describe applications in B2B sectors such as financial services with State Street and medical technologies at GE Healthcare. The most prolific applications of the DIG model can be found in the industrial services and other application areas. At the end of the line, there are always people and whether they are people who buy a razor and a blade or apply sophisticated technologies in their jobs, is not really the issue.

Exploring The Impact of Declining Trust
On Brands In A Show Me Marketplace

Evidence Marketing, Word of Mouth Emerge As Alternatives

I recently had the chance to sit in on a dinner with about 20 heads of marketing at a gathering of the CMO Club. Framing some very interesting conversation was a presentation from Jarvis Cromwell titled “Managing Brand Reputation and Building Trust in a Show Me Marketplace.”
Cromwell, a 25-year marketing veteran who has served as CMO for several large global companies, kicked off the discussion by telling Club attendees that organizations are currently operating in the least-trusting world in more than a century. Citing a Roper study from 2002, Cromwell pointed out that only 13% of Americans found large corporations to be trustworthy. He also cited a Gallup survey, which showed that 62% of people do not trust large companies.
Cromwell provided DemandGen Report with a metric demonstrating that companies can equally lose as much as $2 billion equity valuation due to reputation and trust breakdowns:

1. A majority around the world - 62% - don't trust large companies to act in their interest -- a fact that is changing the game significantly for marketers
2. Your marketing message effectiveness? Forget-about-it. Only 3% trust the company itself as a credible source of information.
3. $2 billion is the average loss in equity valuation that a Fortune 1000 company experiences based on a major “trust event”. Which is especially scary when you consider that 10% of companies experienced that kind of trust event over the last decade. Several more than one. That’s why CEO rank reputational risk among their top 10 concerns.
--Jarvis Cromwell, principal, J-2 Consultancy

The result of this declining trust among consumers, according to Cromwell, is a “show me marketplace where a company’s actions speak louder than words.” Because of this overall cynicism, he pointed out that customer loyalty is harder to achieve and many leading companies are turning to evidence marketing and word-of-mouth marketing as alternatives to traditional media.
In addition to the customer consequences companies are facing due to waning trust, Cromwell added that employee engagement is also getting harder to drive. He demonstrated the positive impact employee engagement and satisfaction has on overall performance by showing that the company’s featured in Fortune’s 100 Best Places To Work grew by 176% from 1998 through 2004, while the S&P 500 increased only 39% during the same period.
As principal of J-2 Consultancy, Cromwell works with several companies on mitigating the negative impacts of the low trust environment as well as building their ability to attract, retain and grow customers. He has been active member of the CMO Club since its inception.
For those folks unfamiliar with The CMO Club, it was founded last year by Pete Krainik, the head of marketing and sales with a tech start-up called QD Technology. Krainik, who in the past had served as CMO for Avaya and Doubleclick, learned through conversations that many heads of marketing had similar challenges and were looking for a venue to share ideas with peers.
After starting with an intimate dinner gathering of eight executives in New York, the group has quickly grown to over 100 members and has now had six meetings in NY, CT and San Francisco, CA, with plans to expand to Boston and Chicago in the coming months.