Fred Geyer, Joerg Niessing: The Definitive Guide to B2B Digital Transformation

We believe that leaders must take a step-by-step approach tailored to their organization and to their market to become more customer centric, agile and digital.

“Where do I start?” The answer is “Where it makes the most sense from a customer point of view.”

According to a 2017 study by the IBM Institute for Business Value, there is an alarming disconnect between executive investment in digital experiences and what customers actually care most about.

Success in B2B relies on navigating complex value chains and addressing the disparate needs of multiple commercial decision makers and decision influencers. Our interest is in arming B2B leaders with the principles they need to take a technology-agnostic approach to tackling digital transformation.

Every transformation project must begin by understanding customers’ needs and no transformation project can be completed until the challenges of employee learning, development and motivation as well as talent management, governance and measurement are addressed.

The four essential questions growth leaders must address to undertake the transformation:

Where to Play,
How to Win,
What to Do and
Who Is Needed.

Where to Play.

The Digital Selling Shift relies on building customer use cases;
the Digital Experience Makeover, on mapping the customer experience;
and the Proposition Pivot, on building a demand landscape.

How to Win.

The Digital Selling Shift depends on the 4C approach to digital customer strategy: clarify, capture, cultivate and convert.
The Digital Experience Makeover relies on a design approach for touchpoint, service, product and end-to-end experience design.
And the Proposition Pivot outlines a proposition-based approach to defining the growth strategy.

What to Do.

The Digital Selling Shift deploys the “implementation sprint” to mobilize implementation,
the Digital Experience Makeover relies on “experience pilots” to turn strategy into action,
and the Proposition Pivot utilizes the “new solution launch” to trigger execution.

Who Is Needed.

In the Digital Selling Shift section, we review the role of the analytics team.
In the Digital Experience Makeover, we introduce the key elements of a digital experience development organization.
In the Digital Proposition Pivot, we discuss the importance of a transformation management office.

Introduction

The main drivers of disruption — access to customer data and business-accessible digital channels and touchpoints — have arrived in B2B.

Increased access has produced three types of disruption:

Data-driven commoditization. With more and greater information and data available to compare relevant alternatives, buyers can examine a broader set of viable competitors, including low-cost insurgents.
Data-driven disintermediation. Greater access to data and information about companies’ offers, along with the enhanced ability to use digital tools to request or exchange information directly from and with providers, means that buyers’ need for intermediaries is reduced or even eliminated.
Data-driven innovation. With more data available, suppliers have more ammunition to combat commoditization, by moving from product-based to data-driven solutions.

Prioritizing customers over technology is the key to driving uncommon growth through digital transformation.

Our examination of digital transformation cases has revealed three customer-first transformational shifts that address the disruptive forces of data-driven commoditization, disintermediation and innovation:

the digital selling shift,
the digital experience makeover and
the digital proposition pivot.

The digital selling shift is about moving away from the classic but inefficient B2B sales and marketing model to a more integrated model that combines selling and digital marketing in powerful new ways. Selling is becoming too big a job to leave to the sales force alone. Digital marketing takes over the role of the sales force for certain activities such as prospecting and lead generation. During the past few years, this integrated digital marketing and sales model has begun to take hold in traditional sales-force-intensive industries. Pharmaceutical companies selling to physicians is one example. The new integrated digital model has permeated three crucial phases of drug sales: premarket conditioning, launch sell-in, and post-launch market development.

B2B companies should begin the digital experience makeover by fixing broken steps in the customer journey — investing in listening to customers and addressing customers’ pain points.

Leverage digital technologies to pivot to data-powered solutions The third transformation addresses the shift from providing products and services to providing data-powered solutions. In this pivot to data-powered solutions, every aspect of the value proposition that companies have relied on, such as training, premium pricing, value-added services, feature upgrades, call center help and distribution access, is a candidate for fundamental change.

Consider how digitizing a value proposition could generate revenue as well as save costs. Digital as a revenue generator. Innovation needn’t be limited to R & D for new products. Digital as a cost saver. Companies can automate costly, in-person, on-site-delivered support services (such as technical support) or employee training.

Adobe’s transition from packaged product to SaaS was an arduous three-year process that required extensive planning as well as a significant investment in educating Wall Street analysts and customers to see the value of the new subscription model.

Customer-first digital transformation is a tool for uncommon growth. It differs from the current technology-first transformation paradigm because customer needs are the basis for transformation.

Seizing the customer-centric digital initiative opens the door to innovation in three areas: how a company sells, the proposition it offers and the customer experience it delivers.

The Digital Selling Shift

The Digital Selling Shift Challenge

The Digital Selling Shift involves moving to a selling approach that relies extensively on digital marketing and data-driven selling.

The digital selling shift results in an effort that can best be described as “Smarketing”.

B2B companies consistently lag their B2C counterparts in taking advantage of digital transformation and investing in customer websites, digital marketing, and digital sales enablement tools that alter the sales team’s dominant role or drive measurable impact.

The digital selling shift is occurring in B2B for several reasons:

Growing buyer demand for 24/7 digital access.
Advances in digital B2B sales and marketing platforms.
The proliferation of online customer data.
The advent of artificial intelligence (AI).
For any B2B company, finding the right balance between “tech” and “touch” is critical.
The lower cost of digital sales and marketing.

Moreover, it takes time to train and develop successful salespeople, and they are vulnerable to poaching from competitors. Meanwhile, the cost of finding, targeting, servicing and supporting customers through digital means is plummeting, as the cost of data, computational power and access to AI tools continues to decline.

Complex, highly regulated industries with few buyers, such as infrastructure design and engineering, will be slow to adopt digital marketing, and its role will be fairly limited. Industries such as commercial insurance, with the large number of end customers, moderate regulation, extensive customer data, and AI suitability, are ripe for disruption in their selling and marketing approaches to end customers and intermediaries.

Where to Play in the Digital Selling Shift

Before undertaking the digital selling shift, a company must be absolutely clear about its customer objectives.

Growth leaders can take an important initial step by clarifying who they need to acquire as customers and which customers have the best potential to grow into loyal, high-value partners. Usually this requires analyzing customer data to find patterns and gaps. Often, comparisons to industry or market trends can reveal additional gaps.

To accomplish any activity in marketing and selling, it’s essential to understand the customer barriers that must be overcome to achieve the desired objective.

Established companies commonly face three key barriers:

Lack of understanding. Certain segments of customer may not know about or understand the company’s offering.
Attractiveness gap. Some customers know about the product but don’t realize it contains valuable benefits for their business.
Purchase behavior. For some companies, closing the deal is a problem. Is the company not addressing affordability?

Digital technologies are often used to enrich, rather than replace, traditional approaches. These use cases generally fall into one of five categories:

Demand generation to accelerate customer acquisition. Beyond generating leads, engaging in demand generation gives companies an added benefit: it creates a direct relationship with the customer. As a result, the B2B company can learn from its customers, test alternatives and more effectively probe for new opportunities. In fact, learning may well be one of the most valuable outcomes of demand generation.
Digital sales enablement to accelerate cross-selling and boost value.
Digital relationship-building with customer decision makers. ABM is more personalized and tailored to the needs of individual decision makers than traditional push email and digital advertising campaigns.
Outsourcing routine tasks to improve efficiency. Companies are also using digital technologies to shift more of the routine chores of selling away from the sales team, and it’s little wonder: studies of sales-time utilization indicate that two-thirds of the typical salesperson’s day is spent on non-selling tasks.
Direct digital commerce to accelerate acquisition and cross-selling. One of the biggest opportunities digital has created for customers is allowing them to purchase services directly from companies and bypass intermediaries.

Most companies can identify a portfolio of use cases to consider pursuing. Each use case must include a clear customer target (i.e., segment), objective (e.g., acquisition or upsell/cross-sell) and barrier to overcome (e.g., lack of understanding), as well as a selling approach that will help the company surmount the barrier.

What makes a use case attractive? Several factors:

Financial impact.
Strategic fit.
Long – term customer value. The rationale for pursuing a use case is strong whenever the ratio of LTV to customer acquisition costs (CAC) is high.
Synergy across use cases. Adopting a set of use cases that rely on the same digital selling shift and utilize similar capabilities can drive economies of scale in deployment.

Evaluating use cases also means assessing the organization’s readiness to carry out any of the five digital selling shifts. Readiness reflects capabilities in place as well as the ability to build new capabilities and data.

It’s important to assess both the functional and the channel deployment capabilities for each use case. The functional capabilities include team empowerment (such as process, skills and governance), strategy (e.g., audience segmentation, the customer journey, designing the next), creative customization (e.g., content and visual identity), and platform enablement. Channel deployment capabilities include the ability to harness owned, earned and paid channels. Owned channels are in the company’s control (e.g., the corporate website or email campaigns); earned channels are those in which companies must compete to earn prospects’ attention (e.g., social sites or organic searches); and paid channels call for purchasing media, key search terms, and ads to gain access to target prospects. Channel deployment capabilities also include channel extensions such as geolocation, IoT, augmented reality, voice recognition, and AI.

Prioritizing in numeric order doesn’t work very well in large organizations because it ignores the need for organizations to pursue a portfolio of use cases with different time horizons, risk profiles and impact potential.

What is helpful, however, is categorizing sets of use cases into several buckets:

Quick wins. These are typically use cases where readiness is high but the attractiveness of the case may be only moderate.
Key focus areas. Typically, these are use cases that are highly attractive and where readiness is moderate to high.
Shooting stars. These use cases are highly attractive, but the organization has little readiness for them.
Dogs. These use cases are unattractive, or the organization’s readiness is extremely low — or both.

How to Win in the Digital Selling Shift

How to Win: building a customer-driven strategy to activate the use cases. Decisions about technology selection, data acquisition and execution are crucial.

Leaders need a clear understanding of their strategy for addressing customer issues before committing to decisions about technology and data platforms.

A digital selling strategy in B2B is a four-step digital process that we call the 4Cs:

clarify (the target),
capture (attention),
cultivate (interest) and
convert (to action).

Clarify the target. In this step, the company builds customer data profiles and catalogs customers’ needs along their buying journey.

Capture attention. It includes search engine optimization (SEO) and search engine marketing (SEM), retargeting, guiding the customer’s choice of initial channel, and content.

Cultivate interest. It includes providing content that will motivate the customer, using techniques for personalizing and customizing content to make it more relevant, tracking the digital engagement path of the customer, and determining which channels and content represent the “next best move” for them.

Convert to action. The convert step applies the tools and techniques that will complete the action in as little time as possible with as little hassle as possible. There are two main sources of information about the dynamics of B2B decision-making. Primary customer research. Observational analysis.

Fortunately, with a consistent effort, you can accumulate buyer data quickly. Soon you will have amassed more nuanced information: signals about when a prospect is seeking a new solution; the touchpoints and channels they prefer; their decision-making criteria; and their preferences for when, where and how they engage with suppliers.

Most capture strategies consist of one or more of four approaches that combine these elements in different ways.

Always-on capture serves prospects who are already actively seeking a solution.
Thought leadership capture serves prospects who are seeking expertise but who don’t necessarily have a solution in mind.
Omnichannel campaigning captures members of the target audience who are not actively seeking information but who will respond if intercepted.
Account-based marketing is a rapidly growing B2B approach to capturing prospects that is ideal when it’s necessary to tailor in-depth content to different decision makers and influencers.

ABM automation platforms enable precise targeting, integration with sales management platforms (such as Salesforce.com), and profile-based content delivery across channels. New platforms such as RollWorks and Demandbase are emerging to manage the complexity of ABM.

All too often, well-organized, content-rich websites end up overwhelming visitors by giving them too many options to choose from — which can actually be a key barrier to purchasing.

The rule of thumb in upsell cultivation is to put the user no more than three clicks away from their destination. The rule of thumb in consideration cultivation is to provide the content and tools users need to be inspired, to match solutions to their challenges and circumstances and to overcome their objections.

“Next best move” and “skipping” are two of several key practices for effective cultivation.

In designing cultivation experiences, companies must make two key choices: What level of customization should we offer? And where should cultivation activities be located?

Creating customized content, keeping it fresh and up to date and delivering it is an expensive proposition.

As digital continues to shift power away from intermediaries and toward the supplier and the end customer, more B2B suppliers are choosing either to cultivate the prospect first and then hand over to the intermediary, or to take the prospect all the way to a completed sale.

Conversion in B2B is also a multistep process. It involves not only closing the initial contract but also onboarding the buyer and the users (who are often different people) and closing individual transactions within or in addition to the initial contract.

AI, blockchain, and virtual reality technologies can assist buyers in making complicated procurement decisions.

Companies must be sure to align their channel strategies for pricing, incentives and rewards within and across regions.

Companies need to integrate their tracking of human conversion interactions with their broader measurement regime, which includes online data for targeting, capturing attention and cultivating interest.

An omnichannel dashboard is a valuable tool. It can tie together the elements of the digital strategy (clarify the target, capture attention, cultivate interest, convert to action).

B2B companies can disintermediate part of their offerings in a variety of ways:

By purchase size
By customer size
By customer type
By product line

Leaders must recognize that the selling ground is shifting. In B2B, the race to control the customer relationship and gain access to their data is well underway and few companies can afford to be left behind.

What to Do in the Digital Selling Shift

What’s a sprint? Sprints are a superior mechanism for quickly and effectively bringing the digital selling strategy to life. They come from scrum agile methodology.

Scrum agile is a way of organizing work through multifunctional, fairly autonomous teams of seven to ten people who use such tools as backlogs, daily stand-up meetings, and retrospectives to produce tangible deliverables.

Incorporating customer feedback into sprints is another key element of scrum agile.

To make scrum agile methods effective, companies need to cultivate specific skills: designing rapid customer feedback mechanisms, learning to listen to customers and producing customer-ready test stimuli.

Scrum agile sprints are vital for any B2B digital transformation.

The sprints required to make the digital selling shift in B2B fall within three broad types: pilot sprints, scaling sprints, and foundational sprints.

Pilot sprints are used to deploy a new element in the 4Cs and advance a top-priority use case.
Scaling sprints are used to scale up and expand an element of the 4C strategy that has already been validated via pilot or that is already in use.
Foundational sprints introduce a new technology, platform or data source by putting in place the people, processes and technologies needed to deploy them.

Like pilot sprints, foundational sprints typically need scaling sprints before the new technology can be used widely in an organization.

Sprint plans tend to follow two waves: the first, a set of sprints for designing, creating and launching and the second, sprints for optimizing traffic, navigation and content.

Many companies neglect developing a business case and recommendations following a pilot that shows promise. In these cases, the scaling phase never gets fully funded because the pilot’s impact isn’t articulated in a way senior leaders can appreciate.

Effective sprint execution is built on four main building blocks:

Team goals and organizing processes.
Customer feedback.
Content and channels. Channels are either owned (such as corporate websites), earned (such as social sites where content must compete for users’ attention and engagement), or paid (such as banner ads).
Platforms and tools.

Consistently incorporating customer insight and feedback into a program of continuous improvement is essential to making sure that the outcomes of the sprints remain relevant and become even more effective over time.

Continuous improvement relies on a repeatable loop of planning – executing – measuring – analyzing – executing differently.

Continuous improvement is a proven idea. The plan – execute – measure – analyze – do differently continuous improvement loop concept harkens back to the continuous quality improvement thinking of the 1980s and the origins of scrum agile.

The pilot, scale and foundational sprints that are at the heart of determining what to do make up a continuous process; the learnings they generate support the next set of sprints and inform changes in the strategy (how to win) and in the opportunities identified (where to play).

Who Is Needed for the Digital Selling Shift

Assembling a customer data team with a robust mix of talents is crucial for undertaking the test-and-learn routines central to the digital selling shift.

There are six basic roles on a customer data team:

The data strategist, who contributes client and domain expertise.
The data architect, who understands all forms of data that affect the customer journey.
The test-and-learn lead, who establishes the testing approaches.
The data engineer, who oversees data gathering, cleansing, movement and storage.
The data scientist, who heads statistical analysis and the modeling of structured and unstructured data.
The data visualization engineer, who uses visualization tools.

Customer data professionals are in such high demand that changing jobs presents little risk for them.

Key Digital Selling Shift Takeaways

Successful digital selling shifts in B2B rely on these key principles:

Choose where to play by identifying the key use cases most relevant to your business, based on two issues: attracting new customers (or generating more sales from existing customers) and understanding the barriers customers face in achieving their goals.
Determine how to win by building a compelling digital strategy based on the 4Cs: clarifying the target, capturing the target’s attention, cultivating their interest and converting them to buy.
Accelerate what to do by using scrum agile methods.
Ensure you have who is needed.

The Digital Experience Makeover

The Digital Experience Makeover Challenge

Instead of harnessing the potential that digital technologies offer to reinvent the experience for the customer’s benefit, B2B companies waste money transposing mediocre analog interactions into equally lame digital experiences.

Function-by-function approach, rooted in the organizational structure, impedes leaders from seeing what’s missing from the customers’ viewpoint.

B2B leaders often turn experience investment into sales conversion programs. They focus on immediate transactional outcomes, instead of considering a broader set of experiences that could promote customer loyalty and value and brand recommendation.

Shifting the B2B supplier’s viewpoint from push to pull, from tell to listen, and from sell to help is a key starting point for effective digital experience design.

How can companies overcome the narrow mindset:

By mapping the customer journeys
By developing customer-driven experience strategies
By pursuing inspired experience design that excites employees

In 2016, A.P. Møller-Maersk announced a new strategy. Building on its strong position in container shipping, port logistics and container-based land-side logistics, the company embarked on a multidimensional transformation from being a conglomerate with a diversified business to a focused, integrated container logistics company that delivers digital end-to-end solutions to customers.

Improving the customer experience was one of the key pillars of the company’s strategy, along with cost leadership and competitive pricing.

Based on customers’ different needs, the company mapped journeys for seven segments. By rigorously analyzing customer insights and codifying segment requirements, Maersk was able to focus on quick wins.

Maersk.com is now one of the biggest B2B e-commerce sites in the world. Maersk’s digital experience transformation has resulted in TradeLens, the open digital platform jointly developed with IBM and which CMA, MSC, Hapag-Lloyd and Ocean Express joined in 2019. Maersk’s paperless trade tool digitizes trade documentation using blockchain technology to securely submit, stamp and approve documents for clearance and cargo movement.

A remote container management (RCM) system enables customers to monitor the condition of their cargo in transit.

In recent years, the warehouse software market has been changing and, in the process, threatening the role of the systems integrator. Comprehensive solutions that manage the entire warehouse with built-in integration to major peripheral devices and major supply chain players are gaining ground.

Where to Play in the Digital Experience Makeover

Recent research by INSEAD and IBM confirms that thorough and detailed journey mapping sets successful digital experience providers apart from their competitors.

To make journey mapping useful (and actionable), it is vital to think of a journey map as a customer-driven model of how decision-making occurs and not a chart of individual touchpoints.

Journey maps are organized as a sequence of moments, the points where a customer receives an input or makes a choice about how to proceed.

Given this customer complexity, it’s important to choose the right type of map to help meet customers’ various objectives.

End-to-end journey maps depict the entire customer experience.
Sub-journey maps depict any given subset of the end-to-end journey.
Touchpoint maps examine a touchpoint that may be part of any number of moments in a single journey.
Future-state maps envision what could be.
Backstage maps chart all of the activity, infrastructure, data and platforms required to deliver the customer experience.
Segment maps are variants of any journey map that focus on a single segment.

To map the journey, you’ll must answer several important questions:

Who do you want to target?
What are your business goals?
Where should you focus?
What are your customers trying to accomplish?
How do your customers currently behave?
Where are the pain points?
What’s working?
How do customers vary by segment?

No company can complete a customer journey map in one go. Generally, it takes three drafts.

The hypothesis draft or the first draft.
The insight draft, the second draft, is a working draft designed for strategic problem-solving.
Deep-dive drafts are subsequent drafts that dig deeper to understand in more detail particular subsets of experiences.

Through customer experience mapping, you identify a set of opportunities to serve as the basis for the digital experience makeover.

Opportunities generally fall into three categories: fixing what’s broken, enhancing experiences that are working and launching new experiences.

The key to building ideal customer journeys is to invest in meeting expectations in all the important parts of the journey.

Preserving resources to invest in moments that matter requires companies to be disciplined about not squandering them to pursue experience opportunities that are unimportant to customers. The trouble is, organizational silos often muddy allocation decisions.

How to Win in the Digital Experience Makeover

We believe every customer experience strategy must address five important challenges:

Where should you seek competitive advantage?
Which design approach is best for creating and delivering the advantage drivers versus the essentials?
What design and delivery principles should you adopt?
What level of customization and personalization should you offer?
How should the experience connect to the company’s supply chain ecosystem?

A key aspect of any experience strategy is deciding where in the experience a company will seek to set itself apart, build competitive advantage and promote growth.

Generally, providing differentiating value — the kind that truly sets a company apart (or even causes disruption) — calls for launching new experiences or significantly redesigning an existing one.

The most successful companies don’t try to be great at everything; they excel at a few critical things and are good enough at the rest.

Providing an experience that is both differentiating for the company and valuable to customers is always a challenge. To transform any important improvement opportunity into a tangible customer experience, you need to choose a design approach.

There are four basic design approaches to experience makeover opportunities: touchpoint design, service design, product design, and end-to-end experience design.

Touchpoints vary considerably by industry; among them are the following:

Digital tools that help B2B users configure complex equipment
Technical support navigators that direct customers to important online resources
Direct e-commerce touchpoints

To improve a set or a sequence of customer touchpoints (for instance, all customer onboarding touchpoints) or to launch a new service (such as consulting help), service design is in order. Often, service redesign encompasses all the steps in a particular customer journey, such as the claims process in insurance or loan writing in banking. Service design is blossoming because data driven analytics are a powerful engine of service creation for services directed at improving and optimizing customers’ operations.

Products and solutions are, of course, the biggest component of the customer experience. The design of a product or solution can also affect other aspects of the experience, such as delivery, set-up assistance, support for changeovers, training, spare-parts ordering, and technical support. IoT, AI, robotics, augmented reality, voice interfaces and data sensing and collection are changing the face of product design, turning many products into solutions. The challenge of product design is ensuring that it is experientially as well as benefit driven.

Few company leaders are willing to undertake a complete end-to-end overhaul of the customer experience. End-to-end design is usually pursued by new entrants in a category — small players intent on disruption, or large companies bold enough to embark in a new direction. Disintermediation is one of the most common catalysts of end-to-end experience redesign.

The level of customization to offer customers is an important decision in any digital customer experience strategy, not the least because customization is a moving target: it keeps advancing as data accumulates and as the technologies to deliver it keep evolving.

The basic customization criteria are fairly similar across most B2B industries:

Company profile
Need
Trigger or application
Journey moment
Decision makers’ profile

Increasing customization over time is not a strategic choice; in a digital world, it’s a given. Customers expect it.

A customer experience strategy is incomplete unless it resolves how other entities in the supply chain — whether suppliers, the customers’ customers, intermediaries, regulators, experts, industry associations and at times, competitors — will link to the customer experience.

One key ecosystem consideration is how open or proprietary the platforms for data sharing should be. The data that IoT sensors collect has to go somewhere to be useful. Sharing protocols, standardized data formats, data security technologies and blockchain have made safe data sharing easier.

In B2B, many interactions in the customer journey occur through intermediaries.

What to Do in the Digital Experience Makeover

Experiences are created. Designers conceive them, engineers build them, user experience and user interface experts construct their interfaces, coders make them operate, data experts feed them and platform experts deliver them.

Building a minimum viable experience (MVE) helps touchpoint and service design teams mobilize and focus on the essentials.

To build a successful touchpoint or service MVE, the company must crystallize the initial design concept:

prototype rapidly
pilot the experience in-market

Speed, feedback and iteration are crucial.

It’s important to dispense with a few prevailing myths.

Customer insights reign supreme.
Most people cannot imagine what doesn’t yet exist, so it’s unreliable to base innovation on their notion of what they think they might want or like.
Only creative gurus can create experience concepts.
Brainstorming is all you need.

To develop innovative touchpoint and service design concepts, companies must properly equip multidisciplinary development teams.

Six sources of inspiration can put touchpoint and service experience development teams on the right path to innovative ideation and concepting:

Customer needs and trends are always the most important source of innovation ideas.
Ideas percolating within the company are a go-to source of ideas.
Technology and data trends are a valuable source.
Hidden assets are company capabilities that can be applied in new ways.
Analogous company innovations from direct competitors and similar companies.
Businesses you can’t ignore, specifically their disruptive business models and experiences, are great at forcing development teams to look outside their comfort zone.

The goal of all the touchpoint and service ideation and concepting exercises is to devise an innovative, customer-relevant concept that can be the basis for prototyping and further development.

Beware of attempting perfection or completion with early prototypes. Creating a prototype blueprint can speed development of the initial prototype. The elements of a blueprint include a clearly articulated customer insight, along with a description of the service, how the touchpoints would work together, a user “flow” (or pathway), and the platforms needed to support the service.

A demo is often the ideal first form of a prototype. Generally, the next step consists of creating a module prototype. From here, the prototypes advance in completeness, functionality and the design and look of the user interface.

To speed prototype building, experience developers can also hold a hackathon — a tool borrowed from the software development world.

Piloting is all about understanding what is happening and why — and what can be done, through design and content changes, to improve the experience.

Who Is Needed in the Digital Experience Makeover

Prophet Partner Tony Fross developed the DERPA maturity model. The model, which stands for Design, Engineering, Research, CX Product Management and Analytics, pinpoints the elements essential for successfully developing and managing digital experiences. The DERPA model is based on two key insights:

Development teams require extensive support and the right mix of talent. Experience maturity should determine how digital experience development teams are organized.

They all need design, engineering, research, experience management and data science and analytics capabilities.

The DERPA model depicts five phases of experience maturity:

start-up,
market fit,
validated,
scaled and
mature.

Start-up phase. Start-ups are new ideas or pilots that haven’t yet been validated by the market. At this incubation stage, the DERPA team is typically small, made up primarily of “makers” — designers, programmers and engineers experienced at building prototypes from scratch.

Market-fit phase. In this phase, there’s evidence of early traction. The CEO focuses on adding new customers or further engaging existing ones. Adaptation and refinement skills are highly prized in this phase.

Validation phase. Here, the emphasis is on accelerating growth. Team members’ roles become more specialized as the experience manager hands off research and engineering supervision work to dedicated teams. Coordination and operational skills are critical in this phase.

Scaled-experience phase. By this point, many customers have demonstrated that they trust the new experience and it is already having an effect on customer satisfaction and market share. The team’s role shifts to continuous optimization, personalization and configuring the experience to the needs of different segments. Unlike the start-up phase, the scaled-experience phase calls for considerable specialization.

Mature phase. In this phase, the team has two roles: managing the experience and forging the longer-term road map. Most of the team focuses on optimization and the rollout of the next feature.

Key Digital Experience Makeover Takeaways

The Digital Experience Makeover is the most flexible of the three transformations that B2B leaders can undertake because it can be applied to a single aspect of the customer journey or to the entire end-to-end journey.

Successful digital customer experience makeovers in B2B rely on these core guidelines:

Choose where to play. Map the part of the customer journey that will enable your company to make a meaningful impact on customers.
Determine how to win. Build a digital customer experience strategy to bring the portfolio of improvements to life.
Accelerate what to do.
Ensure you have the talent you need.
The time to undertake a customer experience makeover is when emerging digital trends reveal an opportunity to serve customers better in some area of the experience.

Because of its flexibility, a digital experience makeover can precede the digital selling shift or a digital proposition pivot.

The Digital Proposition Pivot

The Digital Proposition Pivot Challenge

At the foundation of every B2B buyer-seller interaction is the value proposition.

For the supplier, the value proposition answers the question “Why buy from us?” At the individual offer level, it answers the question “Why buy this particular service, product or solution from us?”

Buying enterprise resource planning (ERP) software is an example of the future-oriented nature of a value proposition. ERP software is used to manage all the internal processes of a company, such as keeping track of orders, scheduling work, billing customers and paying employees.

What separates one ERP from another is the “future” part of its value proposition: what’s next, and what’s next after that.

As the famed Harvard Business School professor Theodore Levitt wrote in 1960, when technology was just beginning to disrupt modern business, “Customers don’t want to buy a quarter-inch drill; they want a quarter- inch hole.”

By failing to shift to higher-value solutions and moving to a low-cost model where appropriate, incumbents are seeing margins shrink.

Michelin’s proposition pivot from a product-driven business to one that includes solutions with performance guarantees or fuel commitment has helped the company achieve higher customer satisfaction, increased loyalty, and greater EBITDA margins. It is a striking example of how important it is to focus on a key growth opportunity by figuring out where to play (for Michelin, by understanding the needs of fleet operators), by determining how to win (through a strategy built on a data-driven solution), by addressing what to do (by launching new services, such as Effifuel), and by taking action to address who is needed (through the Engage employee learning program and the formation of a digital board).

Where to Play in the Digital Proposition Pivot

To determine Where to Play in a Digital Proposition Pivot, you need to look ahead to predict the sources of future demand and identify the most promising territories.

Customer segmentation identifies the main groups who will drive demand, along with their needs, motivations and aspirations.

One complicating factor in B2B segmentation is that in any given supply chain, there are potentially multiple types of customers to segment:

Direct customer segments consist of segments of current customers and potential prospects for the existing value proposition.
Adjacent customer segments are segments of prospective customers who are not currently direct customers but who may be interested in one or more aspect of the current value proposition.
End customer segments are segments of the customers’ customers.

The underlying criteria for B2B customer segmentation can vary. The most commonly used are firmographics (the company’s industry vertical, size, location, number of employees), customer motivations (needs, perceptions, attitudes, intent) and behaviors (buying behavior, online behavior, degree of loyalty).

In segmenting their customers, B2B companies should follow a few helpful guidelines:

Build hybrid segmentations.
Whenever possible, combine customer motivations, behavior and firmographics.
Talk to members of each key segment.
Segmentations built from existing data or from new quantitative research need conversations to bring them to life.
Pay attention to decision makers and influencers.
Understand the “what” and the “why”. Understanding current customer behavior is important, but without an understanding of the motivations underlying it, it has little predictive value.
Gauge the use of intermediaries.
Consider their technology orientation.
Learn what gives leaders heartburn. What are the challenges in their business?

Emerging demand drivers are the trends, new technologies and changing expectations that shift the decision-making criteria of customer segments.

We’ve identified ten sources of emerging demand drivers:

Company innovation.
Users. Are you seeing important changes in how users evaluate and deploy your products and potential solutions?
Competitive dynamics. Bust paradigms.
Industry ecosystem. Is the ecosystem itself changing?
Outside the category. Forces that have taken hold in other categories but have not yet reached your own.
Regulation. Try to discriminate between regulatory changes that will have a marginal effect on cost or delivery and those that will have more profound impact.
Technology trends.
Data access. In B2B, the rise of data as an asset has been dramatic in scope and speed.
Monetization. Follow the money.
Leaders’ heartburn. Most senior leaders have a set of things they worry about and a set of things they dream about.

The purpose of mapping the landscape for demand is to develop a list of high-priority growth territories — those reflecting the opportunities to deliver the growth and profitability that shareholders demand.

Useful demand landscapes are developed by identifying territories at the intersection of the customer segments and emerging demand drivers.

Mapping a landscape entail imagining scenarios that result from the impacts of the demand drivers on segment needs and behaviors.

In determining where to play, growth leaders should assess the potential growth territory from several perspectives:

Its attractiveness. How big are the customer segments that fall within the territory?
The ability to win. The key criterion in determining a company’s ability to win is how unique its capabilities are relative to the competition.
Current market position, brand reputation, sales support, management’s skill in executing change and an adaptable workforce are all important factors to include in the assessment.
The level of uncertainty. All predictions about future opportunities are likely to be wrong to some degree. Among the most common uncertainties in digital transformations are the degree of data access, new technological developments, and organizational change.

How to Win in the Digital Proposition Pivot

The value proposition keeps communication focused and sharp by laying out the essential choices, the ones that remain at the heart of a winning strategy even as individual tactics evolve and change.

A digital value proposition is different from an analog-era product value proposition. That’s because of the unique feature that data adds: the ability to learn and improve. Digital propositions don’t just describe benefits a customer will receive; they also show how the solution’s design will improve over time through data collection.

We’ve found that the best way to craft a digital value proposition is to work through a distillation process that converts the value proposition building blocks into a unique and motivating value proposition for the chosen growth territory.

The first step in this distillation process is to assemble the building blocks common to most B2B businesses.

The B2B value proposition building blocks represent an updated, digitized version of McCarthy’s 4Ps: product, promotion, price and place. For a digital world, “product” translates into “innovation” and “value-added services”. “Promotion” becomes “brand and reputation”. “Price” converts to “monetization”. “Place” translates to “access”. Data and customer experience are new domains with no equivalents in the 4Ps.

Next, the company must narrow and redefine the common building blocks so that they are relevant to a specific demand territory. Each building block must reflect the specific dynamics of the demand territory and the benefits that customers seek. It is important to surround the value proposition building blocks with context specific to the demand territory.

The ecosystem context is best explored by examining regulatory, economic, social and market-sector limitations and opportunities. Regulatory. Financial service companies operating in Europe must take into account EU-mandated open banking standards (PSD2) and data protection standards (GDPR) when they consider data, monetization, access, innovation and experience.

The proposition statement consists of a promise, differentiators, enablers and foundational elements.

The promise and the differentiators in the proposition statement reflect the choice of building blocks the company will seek to turn into competitive advantage. The promise describes the unique nature of the solution and its most important benefits for customers. The differentiators represent the unique aspects of the solution — what makes it different from and superior to competitive alternatives.

Next, the company must define the enablers that will support its pursuit of competitive advantage. The enablers describe how the company will bring the differentiators to life. Enablers change and develop over time.

The foundational elements complete the proposition statement. Fulfilling these elements is essential for competing: for delivering on the proposition and for performing on a par with the competition. But foundational elements are not differentiating. With them, the company needn’t strive for competitive superiority; it just needs to roughly match its competitors.

The proposition statement forces two types of decisions:

Competitive advantage. What will we do to address the most important customer priorities in a unique and relevant way that will set our experience apart from the competitors?
Hierarchy of benefits. What is the relative importance of each proposition element?

Typically, we advise companies to have no more than three differentiators, three enablers, and three foundational elements. The proposition statement forces leaders to choose what they will do that will make a major impact on target customers.

The most important step in building a value proposition is enlisting the support of senior leaders by asking them to complete and endorse the proposition statement. The proposition statement certainly helps leaders define the value proposition, but it needs more to define how the proposition will be implemented.

No new B2B proposition is complete without proof of impact: it’s what buyers use in making their decision to purchase. Strong evidence of impact includes ascribing measurable value to the full range of benefits.

Guarantees, quality assurance programs, preinstallation verification, 24/7 support teams, on-demand call centers, and a host of other techniques can go a long way toward easing the fear of failure, no matter how unlikely the fear is.

What to Do in the Digital Proposition Pivot

A growth move is an in – market initiative that delivers part of the new value proposition. In other words, a growth move brings a new value proposition to life.

Companies that are most successful in making a Proposition Pivot launch a sequence of growth moves. Each growth move builds on the previous one, bringing more of the entire proposition to life. It’s important to not view the digital proposition pivot as a one-and-done event. It is a transformation that must be brought to the market through a steady flow of innovative moves.

Growth moves can be the launch of new solutions, new ancillary services, customer experience innovations, and new ways of monetizing customer benefits or other adjustments to the business model. Turning growth moves into action is hard work. It is also the point where most growth moves get bogged down.

A minimum viable product (MVP) mindset is extremely helpful for dealing with the size and complexity of launching growth moves.

The Lean Canvas blueprint defines a growth move, describes its context, and specifies the resources needed to undertake it. The context clarifies when the move will happen, the goals and outcomes of the move, its target buyers and users, key customer insights, and desired brand and business impact. The Canvas also includes KPIs and questions for testing and learning, and specifies the key execution and resourcing considerations, costs, and investment needs.

A customer conversion plan helps buyers forecast the costs of transitioning to a new solution and helps them minimize or avoid these costs when the time comes.

To create a customer conversion plan, the supplier helps the buyer lay out the current portfolio of supplied products and services as well as the processes, training, inventory, systems, data, and people used to deploy them.

Assets, such as inventory or equipment, that must be replaced.
People who must be retrained, hired or reassigned
Processes that must be redesigned or invented Systems that must be installed, retired or integrated
Data that must be gathered, reconfigured, made secure, and repurposed.

Who Is Needed in the Digital Proposition Pivot

Digital Proposition Pivots depend on a cross-functional effort. A transformation management office (TMO) is a necessity.

A TMO plays five key roles:

Coordinating pilots and integrating capabilities. The TMO serves as a coordinator for all pilots taking place throughout the organization.
Instituting management routines. The TMO establishes the key routines for leaders and teams — daily, weekly, monthly, quarterly and annually.
Promoting knowledge sharing and development. The TMO identifies useful methods and best practices from inside and outside the company.
Talent development. For the TMO, this role is a delicate one.
Project management. Above all, the TMO keeps the entire effort on track by monitoring, planning, coordinating and properly resourcing all of the activities of its team.

The roles of the TMO should never wind down. Proposition pivots don’t end; either they continue and expand or the market changes and the company must make its next pivot. However, the TMO should transition over time into a more permanent resource for the company.

Key Digital Proposition Pivot Takeaways

Starting a pivot in a small unit of the business, then expanding it to an entire division and finally throughout the entire enterprise can be an effective way to manage the risks that disruption brings. But pivoting in waves works only if the company has time.

A digital value proposition pivot to a solution will inevitably change the customer experience and will usually change how sales teams work — enough to warrant a shift to digital selling.

Enable Digital Transformation

The Challenges of Enabling Digital Transformation

the lack of customer focus,
insufficient employee enablement (which would include structural and cultural impediments as well as the usual shortfalls in skills and capabilities) and
ineffective use of customer data.

The three greatest barriers to successful digital engagement are:

Use Customer Data More Effectively

In any digital transformation, the roles that data and employees play vary from business to business.

Customer data is the foundation for digital customer engagement. As such, it fuels the Digital Selling Shift, the Digital Experience Makeover and the Digital Proposition Pivot.

Constructing a complete 360-degree data view of customers’ needs, behaviors and motivations is an ongoing process, not an end state that can be achieved in a matter of months.

The most common misstep companies make is decoupling data collection from data use.

Companies must connect market-facing functions (sales, customer service, call centers and marketing) to those functions responsible for managing customer data (internal IT, data teams and systems support) so that the two can collaborate.

B2B companies seeking to utilize customer data more effectively (which ought to be nearly every B2B company) will benefit by implementing a data strategy.

Building a data strategy is a step-by-step process that calls for the following:

Taking inventory and connecting existing data
Identifying customer data requirements
Filling crucial customer data gaps
Assembling the customer engagement stack
Charting a data road map

To make better use of the data already on hand, companies must first inventory it, wherever possible connecting it and making it accessible to current users for their current applications (and even more quick wins). A thorough inventory accounts for three data types: profiling data, behavioral data and perceptual data.

Profiling data describes the firmographics of the customer company and the characteristics of decision makers.
Behavioral data describes what customers do.
Perceptual data describes customers’ goals, needs and attitudes; it explains why they behave as they do.

Together, these three types of data paint a 360-degree view of the customer.

Every type of customer interaction that can be improved is actually a use case for data. Data acquisition is all about building cost-effective and practical routes to filling in the most important data gaps.

There are three ways to fill data gaps: by gathering data during customer interactions, by observing customers’ online behavior or by outright purchase.

Building robust customer data is only half the data challenge executives say they face. The other half is putting that data to use assembling and integrating the systems and software platforms through what is known as the customer engagement stack.

The customer engagement stack consists of at least two layers of software that sit on top of a separate systems layer:

A user interface layer.
A foundational layer.
A systems layer. This is the software that runs the computers, networks, servers and underlying systems that make it all work.

The user interface layer, which is organized around four rings, one for each of the major steps in a digital selling strategy: capture the customer’s attention, cultivate their interest, convert their interest into buying and recommending to others and support their needs after purchase.

The foundational layer includes two main groupings: the Data Foundation for managing customer data and the Smart Content for managing content and delivering the right content to the right customer at the right moment in the experience.

The specific platforms and tools for a given company to deploy should be looked at from three considerations that nontechnical leaders must be sure to address: functionality, data security and privacy protection and metrics and dashboards.

Functionality. That is, what types of content, tools, choices, prompts and requests for input will the stack make at each interaction and how will it respond to the customer? The “whats” of the customer interaction are the responsibility of business and functional leaders and their teams.
Data security. Clear governance and procedures, established from the top, are essential.
Metrics and dashboards. These work in different ways depending on the needs of the leader or manager. Here, two best practices apply: Differentiate outcomes from inputs. Distinguish between targeted impacts and secondary impacts.

The data road map sequences the initiatives required to fill the data gaps, securely provision data about customer interactions, build the customer engagement stack, enhance data analytics capabilities and expand the application of data to new use cases over time.

The data road map represents the final step in building the customer data strategy. It combines data requirements with a current-state inventory and capability assessment to reveal gaps to fill as well as areas of strength to build upon.

Mobilize for Employee Enablement

Job one in mobilizing employee enablement is convincing transformation leaders to dedicate time and attention to this important task.

At this stage of technological evolution, the most advanced technologies (AI included) may be able to observe and even predict certain types of customer behavior. But technology alone cannot explain why customers behave as they do. Employees who listen, watch and pay attention to customers can.

Only people can design experiences, sales initiatives or new propositions that synthesize different customer interactions into a comprehensible whole for serving the customer in the best way possible.

AI may be able to predict the future in limited circumstances, but it cannot envision new possibilities for the customer. Employees can.

A digitally savvy employee ambassador can enhance customer value. An employee who is a digital laggard can damage customer value pretty quickly.

Three primary employee enablement goals for leaders of a digital selling shift, an experience makeover or a proposition pivot:

To build employee ability to use the digital tools and data necessary for the given transformation.
To help employees learn how to listen to customers and address their needs.
To cultivate a digital mindset, so employees think and act digitally in their work.

Enabling employees to develop their digital skills, listening abilities and mindset is the responsibility of transformation leaders.

Senior transformation leaders must take several steps to mobilize the organization and build momentum that will boost enablement:

Establish a common language for transformation.
Assess employees’ starting points.
Build an employee value proposition.
Chart an enablement road map.

Employees get confused and suspicious when leaders don’t speak a common language ; it’s a sign that leaders may not be on the same page .

The Human-Centered Transformation model. Developed by Tyler Durham, Tony Fross and Helen Rosethorn, the model uses a Body, Mind, Soul and DNA analogy to highlight the different facets of organization and culture that must be tended to in a digital transformation.

Think of the Body as the structure, the operating model for how employee resources are deployed. The Soul represents the mindsets, values and rituals that bind an organization together and the Mind depicts the talent, capabilities and skills by which the company achieves results. At the center, anchoring all three elements, is the DNA of the company — its vision and strategy, the essential driving forces of the transformation.

In established B2B companies, digital transformation for its own sake seems to come with more baggage than benefit in the eyes of many employees.

Leaders must put digital transformation into context. When companies link digital transformation to higher goals by demonstrating its importance to the strategy, when they show that it is crucial to achieving the company’s purpose, they can reposition digital transformation from a force to be feared to a cause worth enlisting in.

Leaders of customer-centric digital transformations must renovate their operating model — the Body — in three main ways:

By redesigning business processes
By forming agile teams
By shaping metrics and management forums

Metrics and governance can work only if senior leaders do the following: Replace the old business performance metrics with new ones relevant to the transformation. Reconfigure the agendas of key monthly meetings, the annual planning process, strategic planning activities, talent planning and board meetings.

Blue line management advocates that leaders base their decisions on the factors that reflect value creation: customer satisfaction, the time it takes to go from patent to production, employee productivity and so forth.

Few companies, primarily in high tech, have cultures that openly embrace change, because change has traditionally been viewed as the enemy of the efficiency, consistency and reliability that are so prized in large enterprises.

Leaders have multiple levers at their disposal for driving culture change that supports digital transformation. Leaders tend to avoid addressing the more mechanical levers, such as changes to governance, decision rights, incentives and talent gaps, because the results create winners and losers in the organization. While it’s important to communicate the more conceptual levers, it takes concrete levers that spur the desired behaviors to get people on board.

Every current employee has a baseline proposition that forms the reason they come to work and try to do their best. Because transformations demand more of employees, employees want more from the value proposition they receive.

An employee value proposition has seven key characteristics:

It is purposeful.
It’s stimulating.
It’s career building.
It’s developmental.
It promotes work/life balance.
It offers a cultural fit.
It’s rewarding.

The road map is a high-level depiction of the major initiatives for employee enablement. By plotting the road map, leaders can get a better idea of the issues they need to tackle and why they must avoid cramming too much into the first wave of the effort.

To be useful and actionable, every enablement road map should feature the following: A system for measuring progress, built into every initiative and wave. Explicit links to desired transformation outcomes.

Seize Uncommon Growth

Only thirty-seven of the five hundred largest publicly traded US companies with substantial B2B sales grew their revenues and profits for three consecutive years for the period 2016 to 2019.

Leaders must navigate the organization through the steps of Where to Play, How to Win, What to Do and Who Is Needed for a Digital Selling Shift, an Experience Makeover, a Proposition Pivot or some combination of the three.

Transformations take hold through a combination of declaration and implementation. Declarations are meaningless unless they are backed up with concrete implementation plans. Insufficient declaration leads to a lack of strategic clarity that spawns disjointed initiatives and investments. Declaration without sufficient implementation raises customer, employee and investor hopes that later are dashed and can turn stakeholders against the transformation before it has a chance to gain momentum.