12 Jul 2018

How the digital customer is dictating the pace of businesses change

As customers take charge, what does that mean for business strategy?

Chapter one of our ‘Leadership, Disrupted’ report revealed how technologically-fuelled disruption is dominating the discussion within the APAC leadership teams of multinationals. In this second chapter, we reveal how their customers have changed beyond recognition and are challenging existing business strategies.

Many of the 70 APAC leaders of multinationals we interviewed for this Odgers Berndtson report say that their customers are demanding a new way of engaging with their suppliers. They have become more sophisticated in how and what they buy. This is causing real turmoil for many leaders as they work to respond quickly enough.

Here are typical comments from the leaders of five B2B companies. Clearly, many are struggling to keep up.

“The customer is no longer willing to pay the way we want them to. Our revenue is no longer predictable. Customer intimacy is the need now rather than product. There is not enough debate within our company about the demands of the changing market.”

“Our Board picked up that our clients in Asia are moving faster at becoming digital. I told them that these are the slow ones, because they are the big companies!”

“The way our customers think about things keeps shifting and we need to stay aligned with a moving target.”

“The world of our customer keeps accelerating, because they are part of a wave of technology that is changing everything for their customers.”

“Customers are now more sophisticated in their buying processes and this impacts margin, forcing a focus on operating efficiency that has moved the dial on our positioning from a technology sale to an efficiency solution.”

Where have our customers gone?

Some companies are seeing their traditional customers disappear, or become less relevant, while new ones come onto the scene at a much faster pace.

“Long-term, key customers have gone out of business and new ones are coming in. Our customer base is changing faster than we can see.”

“The percentage of our revenue from the top 10 customers is shrinking, while our business is growing. This comes from the disruptive SMEs.”

Predicting customer behaviour just got tougher

Several leaders explained that the data from their internal and external analysts is of less use to them. They are forced to use new ways to get closer to the market.

“Being at the moments of truth with consumers and our people at the front line, is more important than ever. There is no market analysis that is timely enough now. Right now my kids are giving me better market intelligence than the analysts.”

Others have worked this into an advantage.

“Technology has fundamentally changed consumer research. This is a positive disruption and we can now do this ourselves – real time. Statistically designed repertoires of consumption – observed consumer behaviour – this was impossible in the past.”

In B2B companies though, many of the biggest global brands, by their own admission, are not very sophisticated in understanding the customer.

“We have huge analysis of sales, but not the customer.”

There is a significant trend where B2B companies are now working much harder to understand the “customer of their customer”.

“We call it B2B2C – our customers are companies like Coca Cola and Unilever. We need to understand their customers ourselves. There’s this big change in consumer behaviour because of technology and those changes are accelerating, so our challenge is to adapt quickly. ”

This trend came through from many sectors. B2B companies see that timely innovation means that they need to be ahead of their customers’ thinking. This is not new, but today, their customer is moving faster than yesterday.

Less friction, more business

The ease of doing business with suppliers is more important than ever. We have all come to expect sales, services and other interactions to be simple and fast. Customers are voting with their feet when a competitor makes it easier to buy from them.

“The disruption in our industry is not directly from technology, but from customer behaviour. The consumer attitudes and beliefs create an immediate need for prices and information.”

Social media is yet another leadership challenge

Consumer companies have become very serious about monitoring social media and responding quickly when negative comments appear about their brand. Sometimes, it takes a real crisis before the lesson is learned.

“Today we are in dialogue with the consumer through social media. Social listening is vital, so we know what is being said about our brand. What we do about this is reactive. As an example, our brand was displayed at a sports event in Asia that had some negative press. We had not even sponsored this event. The branding was still there from a prior event. Through social media this caused a crisis that even affected our business in the US. It was a local crisis that overnight became a global crisis …..and it keeps coming back.”

“In the consumer food industry, one miss-step today requires an immediate response, as just about every consumer hears about the issue immediately through social media. This could mean a huge cost product recall, but we have seen that the speed of response is just as important as the response itself. There is no time for delay. We need to show commitment to the consumer.”

Social media is also a great friend. If you know what to do with it, that is. B2C companies are well advanced. B2B companies are mostly still scratching the surface.

“Technology is changing what our customers respond to and this is changing our business. Communication with consumers is now much more of a dialogue. The brand has to stand for something and the communication is not one-way. The peer group that social media has brought has changed the way people decide what to buy. Decisions have become independent of brand and its advertising – they look for other research.”

More and more B2B companies are starting to use social media to interact with the consumer who is two or more steps away in the supply chain. At this stage, much of this is innovative play, but they know it is important.

Disruptive expectations

The smartphone has brought great convenience to everyone. You only need to consider the way Uber has changed things to understand this. We have all come to expect more, and to get it faster. Now this runs through every business environment, because our staff and customers are all expecting more.

“The true disruptor is consumer expectations.”

B2B company leaders recognise the changing customer expectations, but re-training their people to deliver in a different way is a struggle. Previously successful business models are being challenged, as these comments illustrate.

“We are a disruptor of our market and try to see the world through the lens of our customer, but the biggest disruptor of our business is the needs of account management, as the needs of our customers change.”

“Our customers are now much less focused on our salespeople. They are much more tuned into the new channels. We are not yet prepared to address the digital behaviours of our clients.”

“What used to take three years to design and develop is now being demanded by customers in three months.”

Finally, as companies build a greater level of social and environmental responsibility into their identity, they are looking up through the supply chain at their suppliers, because their customers are doing the same.

“In the past, environmental commitment from companies was window dressing. Today, the consumer looks for value beyond style and function.”

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In the third chapter of ‘Leadership Disrupted’, we tackle competition and why it’s tougher, faster and smarter than ever before, and sometimes doesn’t play by the rules.

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