How accelerated digital transformation is reshaping business buyers’ expectations
This article was originally published on Channel Futures here.
To be sure, much of enterprise IT investment saw substantial cuts amid the coronavirus. What’s equally apparent, however, is that spending on strategic digital transformation solutions is the glaring exception. As circumstances compelled companies to focus on new approaches for adapting and optimizing their operating models, global expenditure on technologies and services enabling businesses to move digital is estimated to have grown 10% in 2020. Direct investment in digital transformation, meanwhile, is expected to grow at a compound annual growth rate of 17.5% to reach $7 trillion within three years.
Just like almost every other aspect of the economy, the B2B sector was transformed in the wake of COVID-19, with traditional face-to-face meetings disrupted and the use of e-commerce and online marketplaces vastly accelerated. McKinsey reports that 90% of B2B decision makers expect the digital and remote model to persist, and more than half find it equally or more effective than sales models used before the pandemic.
In light of these prospects, software vendors and technology service providers need to constantly keep tabs on the ever-changing expectations of their end customers and apply best practices to succeed in the fiercely competitive business environment of the 2020s. Here are three of the most critical ways in which B2B buyers’ expectations are changing how channel partners need to operate.
#1) B2B Customers Want A Simplified Purchasing Journey
Lockdowns meant more people than ever were reliant on e-commerce and online purchases for their every-day consumer needs. This greatly accelerated a growing trend that analysts had already recognized in recent years: B2B buyers are increasingly in search of a buying experience that mirrors that of B2C sales.
Now that 70% of B2B decision makers are open to making new, fully self-serve or remote purchases in excess of $50,000, vendors and service providers are best advised to shift their sales approach and mimic B2C in its simplicity to keep current customers and win new ones. Studies show brands that highly simplify the purchase-decision journey are 86% more likely than those with very low decision-simplicity scores to be purchased by the consumers considering them. What’s more, they are 9% more likely to be re-purchased and 115% more likely to be recommended to others.
To this end, software vendors and service providers who wish to stay ahead of the curve should invest in technology tools that offer functions such as omni-channel experiences on the customer side.
Marketplaces are another area where software vendors and service providers should look to invest to improve the customer purchasing journey. No matter if it’s larger ISVs or MSPs launching their own digital marketplaces, or smaller vendors and providers incorporating their products and services within bigger marketplaces, B2B buyers are increasingly expecting the same convenience and expediency they get when buying their consumer goods on Amazon or Alibaba.
Whether it be live chat or chatbots, automated subscription or billing management, or digital marketplaces, tech is redefining the customer journey. Likewise, it should be considered whether these tools allow for unification of ecosystem operations—where channel partners can manage all their vendors, partners, resellers, and products from one place.
#2) B2B Customers Want Holistic Solutions
Gone are the days of break/fix service models where IT services were provided and billed on an as-needed basis. Customers no longer ask their MSPs for one-off software, but prefer holistic solutions that shape the overall business experience. For instance, a recent challenge for service providers has been to make the remote work experience mirror that of the office, which requires supporting different customers across different platforms. The demand for holistic solutions will only intensify as the role of IT service providers is shifting from trusted technology adviser to major strategic business partner and advisor.
MSPs are now required to support customers in different steps of the process, such as using the cloud vs. on-premises data centers to allow SaaS apps to function fast, installing software such as Microsoft Teams and Zoom to enable communication, implementing cyber security measures to protect home offices, or using edge computing to allow home networks to function as fast as those at headquarters.
It is understandable that sometimes an MSP may not have the knowledge or experience necessary to solve all problems. For this reason, it becomes essential for MSPs to create a network or ecosystem of other providers – e.g., software vendors and cloud providers – that can help bundle disparate apps, products, and infrastructure into an all-inclusive solution. On the vendor side, it will be imperative to identify ecosystem partners that are helping customers find solutions that your product solves, and establish relationships with them.
In order to build the strategic partner relationship, the vendor and MSP are best advised to devise “in-depth development and growth plans” with an agreement to hold each other accountable. Going forward, this will strengthen both sides of the vendor-provider relationship.
#3) B2B Customers Want Subscription Payment Models
Thirdly, it should come as no surprise that subscription commerce continues to show rapid growth. Research indicates that B2B companies are increasingly leveraging recurring-revenue models to create a better experience for customers who routinely prefer making small, regular payments instead of large, infrequent ones. The subscription commerce is being billed as the “key to long-lasting customer relationships”, especially as the consistency and reliability it brings could result in greater peace of mind and trust on the part of the buyers.
Therefore, forward-looking vendors and services providers should adopt subscription billing models for their bundled SaaS, hardware and professional services solutions, to not only please customers, but also make more accurate revenue forecasts based on recurring revenue of current clients. At the same time, subscription models can help boost annual recurring revenue (ARR) and reduce time to market. Combining automation with a comprehensive, integrated, and scalable platform, according to expert advice, is essential for modern billing. Instead of simply being an invoice generator, an efficient billing system should act as a partner that can “track and monitor every facet of MSP operations and client usage”.
Finally: Don’t Forget The Human Touch!
With all this talk of automation it is easy to overlook the human touch. While solutions are increasingly digital, the human element remains irreplaceable in any digital experience. After all, it is humans who use these tools.
So, MSPs should bear in mind that customers are looking for “personalized” and “customized” solutions that are not “out of the box”, but make them feel connected and valued by the service or product provider. And vendors should choose to work with channel partners that will represent their products with integrity and pride. Making strides in these areas will ensure that vendors and service providers are well adjusted to the fastly evolving nature of the business buyer.