A recent McKinsey study, How B2B Digital Leaders Drive Five Times More Revenue Growth than their Peers, sheds light on the obstacles that face B2B sales enterprises today. Digitalization has affected all companies, however, B2B companies face added challenges.
Unique Challenges of B2B Companies
The McKinsey study summarized these challenges claiming, “B2B players must contend with shrinking product shelf lives, greater price transparency, and a changing cost basis on the one hand, while simultaneously growing the capabilities needed to create consumer-like experiences on the other, with personalized service and hassle-free purchasing across platforms and devices.”
The overall landscape is more complex with more decision makers and stakeholders involved, longer deal cycles, higher price points, and many competing channels.
A similar study published by Bain and Company found that these challenges are placing downward pressure on revenue. They surveyed nearly 200 large enterprises in the healthcare, technology and financial services industries. Over the past decade, over 50 percent of these 200 companies had increasing sales expenses as percentages of revenue. In the past, B2B companies ran like clockwork and consistently saw revenue growth. However, this trend has disappeared and in some cases, reversed.
The Bain article, “Is complexity killing your sales model?” concluded that the increasing complexity of sales models for large B2B enterprises has put pressure on profit margins.
Customer Needs Have Become More Sophisticated
B2B companies are facing an added challenge as the power has shifted from the seller to the buyer. Customer needs have become more sophisticated, and enterprise sales teams must align their products and services to their specific needs.
According to Mark Kopcha, CEO of Revegy, “Buyers today are much more careful with where they invest their money, and as a result the buyer is becoming increasingly sophisticated. The cornerstone of sales success in 2017 and beyond is leveraging customer intelligence to align your products or services to the buyers’ business needs.”
However, aligning to the customer’s needs within highly matrixed sales enterprises is an obstacle than many organizations have yet to overcome.
Digital Shortcomings of B2B Companies
While many B2B companies have embraced the digital revolution, the majority of their efforts have focused on internal processes. These companies are in dire need of digital solutions that promote customer-centricity throughout the enterprise.
Overall, B2B companies are lagging behind consumer companies on customer-centric digital innovations. The study found that most companies have not yet “embraced the digital capabilities needed to operationalize customer-centricity”.
While customer intelligence is the cornerstone to sales success, in many enterprises, there is little awareness of what it takes to determine a customer’s unique definition of value and how to proliferate this throughout the company. McKinsey revealed that “only 15 percent of B2B companies feel that they have a complete view of their customers, and only 19 percent say that they understand the customer’s journeys that matter most to core segments.”
Most of a company’s revenue potential lies within in its current accounts. Yet without the right digital capabilities, many sales teams lack the customer-centric analytics and insights necessary to gain a full understanding of the customers within these key accounts.