1. 1
The Direct Continuum: Defining The B2B2C Spectrum
July 21, 2015
Kevin Cherry, Strategic Marketing President, Luminose Company
When we refer to the customer direct effect, what do we mean by it, what does it
look like, and what is it good for? First, it’s helpful to consider a few emerging
trends for context.
Customer Trends
Customers are increasingly empowered. Today, 79% of customers spend at least
50% of their total shopping time researching products online. 53% of customers
will abandon an in-store purchase due to online sentiment. And 59% are willing to
try a new brand to get better customer service. 85% would be willing to pay more
for a superior customer experience. And companies that lead in the customer
experience are rewarded in 5-year stock averages that outperform the laggards
+26% to -54%.1
1 Forrester Research
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B2B Trends
A recent Forrester study2 found that 52% of B2B buyers expect to make more than
½ of their purchases on-line within 3 years. 67% expect omni-channel capability.
Over 80% of the B2B companies surveyed are investing in their ecommerce
platform to support omni-channel initiatives - which they indicated were crucial to
their long-term success. They also indicated that these initiatives were primarily to
meet customer expectations and satisfaction. Significantly, Forrester found that
B2B buyers’ expectations for online commerce mirror consumer preferences3 - or
what we like to call “the consumerization of B2B”.
2 Base 930 B2B buyers and 526 B2B organizations in Canada, US, UK, France and
Germany. A commissioned study conducted by Forrester Consulting on behalf of
Accenture and hubris, August 2014.
3 *Base: 930 B2B buyers in Canada, US, UK, France and Germany. Source: Forrester
Consulting August 2014 **Base: 1,503 multichannel shoppers with purchase in last
3 months. Source: Forrester Consulting November 2013
72%
77%
78%
Convenient services
Inventory visibility
Fulfillment capabilities
B2B Buyers*
Who answered important or very
important
64%
71%
83%
Convenient services
Inventory visibility
Fulfillment capabilities
Consumers**
Who answered important or very
important
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When you think about it, this is probably not too surprising. Buyers are also
consumers in other areas of their lives. It’s reasonable for them to expect the same
search and navigation, merchandising, recommendations, click to call, ratings and
reviews, build and quote and mobile app features that they encounter in other
aspects of ecommerce.
The Direct Effect Continuum
Given these trends of increasingly digitally empowered customers and the
consumerization of B2B, we have begun to see a blurring of the lines between B2B
and B2C. Upstream participants are now able to reach across stages of the value
chain to end customers and vice-versa. This connectivity however can take a variety
of forms – from branding only, all the way to direct commerce, with a variety of
forms in between, as shown in the continuum below.
Branding
At the branding only end of the continuum, up stream participants in the value chain
endeavor to create awareness and preference for their brand in the downstream
segments. Examples of this would include the “Powered By _____” monikers, digital
videos, ad words, banners, pop-up ads, etc. Typically these are one-way
communication flows, at least initially.
DIRECT
MARKETING
DIRECT
SALES
B
randing
Insights
Experience
Testing
H
ybrid
D
edicated
C
hannel
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Insights
At this point of the continuum, suppliers attempt to collect information from a
variety of sources and participants in the eco-system. This could include structured
and unstructured data from retailers, end-customer buying patters, social media
sites, associations, syndicated data providers, real time traffic or weather data, etc.
The objective is to identify new occasions or to discover new potential end customer
segments that if fully leveraged could grow sales for all of the partners in the eco-
system.
Experience
At this stage in the continuum, we see the emergence of two-way communications
and signaling. This could take the form of interactive blogs, interactive applications
and workshops to improve performance, loyalty programs, etc. The objective here
is to increase brand loyalty, repeat purchases, and referrals. For example, both
Coca-Cola and Kroger offer me loyalty programs, Coca-Cola with its under-the-cap
product codes, and Kroger with its fuel points.
Product Development and Testing
Some companies are leveraging the Internet now to give customers an opportunity
to design and configure new offerings. For example, Pepsi has created numerous
extensions of its Mountain Dew brand based on direct customer input. Other
companies are leveraging ecommerce to test new brands before they roll them out
more broadly. The Coca-Cola Company, for example, tested the viability of energy
drinks before rolling them out more broadly to supermarkets.
Severe
Weather
Bundle
NASCAR™
Promotion
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Hybrid Models
Hybrid models offer a specific experience with dedicated product expertise and
assistance with a category of branded products inside an existing physical or on-line
shopping environment. Examples would include brand specific micro-sites
accessible from an existing distributor or retailer portal or the store within a store
concept that Samsung deployed in conjunction with Best Buy.
Dedicated Channel
At the furthest end of the Direct Continuum, dedicated channels offer an
opportunity for customers to purchase product directly and have it delivered to an
end destination, to a local store for pickup, or to a preferred distributor for final
delivery. Examples would include the often-cited Nespresso, Apple.com and the
Apple Store.
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What Is It Good For?
Moving more direct to the customer is not for the faint of heart – it will likely
require a change in mind set, processes and technologies and could feel threatening
to existing business partners. However, it will also likely provide an improvement
in the control over your brand, additional opportunities to increase conversions and
an improved ability to grow and retain existing customers. Companies are pursuing
more direct paths to customers for two reasons: 1) Because they can – trends in
technology and digital commerce now permit and enable them to, 2) Other players
in the value chain upstream and down stream are or will be doing it. They realize
that those who move first will likely enjoy greater long-term competitive advantage
and an improved ability to shape their destiny.
Kevin Cherry is President of Strategic Marketing at Luminose Company. He has held
leadership roles at General Electric, The Coca-Cola Company, Zyman Marketing Group,
and Deloitte Consulting.