It’s Been a Strange, Challenging Year - Here’s What B2B Firms Should Take Away

From massive wildfires to a global pandemic to a raucous election cycle, 2020 has been a strange and challenging year. Back in January, who would have guessed 2020 would turn out to be filled with so much uncertainty? Even when the pandemic started, few people would have expected it to last into 2021.

And while we all anticipated an economic downturn after the entire world basically shut down last spring, who would have predicted the recovery would be so uneven? Oil and gas, automotive, hospitality, and travel firms are all struggling to keep their heads above water, while other industries, such as those supporting home offices, have grown exponentially. Many businesses are facing an existential threat, while others are thriving.

Why is this? Well, the trends I highlighted in my "Predictions" post in January not only continued though 2020, but they accelerated. Consider:

• Ecommerce sales exploded this year, with sales up more than 30 percent over 2019.
• We now see up to 80% of B2B decision makers preferring “remote human interactions or digital self-service instead of in-person interactions,” according to a McKinsey survey.
• Many people are working from home, with 30% of the workforce still expected to be working remotely at the end of 2021 (Global CFO Council). Scores of traditional physical locations that B2B companies' sales teams 'called on' prior to the pandemic are going to remain closed and locked. Some executives I've recently spoken with have decided to entirely close their physical offices, and allow the majority of their employees to work remotely permanently, completely eliminating the overhead expense of physical offices.
• Loyalty has been challenged in all new ways in 2020. According to a study from Forrester Research and Bloomreach, 50% of customers are buying from sellers they have never purchased from before - and doing so online.

These are not preferences and behaviors that suddenly arrived because of COVID-19, but they have undoubtedly been intensified by it.

As Scott Galloway, the noted NYU Professor and author puts it, "We registered a decade of Ecommerce growth in less than 8 weeks" at the start of the pandemic. And these new behaviors are here to stay.

There are a handful of B2B firms that seem to have navigated 2020 like a champ. Most of them, however, were paying close attention to changes in buyer behavior and preferences long before the pandemic hit. And if you think only large firms were able to sustain the hit, think again. B2B sellers across the size spectrum have thrived despite this year’s challenges. Here are a few examples.

• Hanes Supply, a leading industrial products distributor, has seen sales volumes lift across all channels—in-store (where they schedule pickups), their own Ecommerce operations, and via Amazon Business.
• Tractor Supply, the large rural lifestyle retailer and distributor, has seen sales grow during the pandemic, mainly attributed to previous investments in their Ecommerce platform, mobile-enabled shopping, expanded delivery options, and curbside pickup, among other efforts.
• Bay Supply, a mid-market industrial fastener distributor, started investing in Ecommerce since 2014 and have seen a 125 percent growth since. Management invested in content, which yields approximately 25-35 new customers each week from buyers finding the company through Google searches. Bay has also reduced overhead in terms of time spent entering and processing orders, which has given them the capacity to grow sales by an additional 20 percent without adding expense.
• illumina, a $3 BN biotechnology manufacturer, reports significant increases in use of the Company's Ecommerce capabilities, including its personalized Myillumina customer dashboard, during the pandemic. The company expects close to 50% of its total revenue to come from electronic channels in the near future.

As we turn the page on this crazy year and venture into 2021, this is a good moment for B2B firms to reflect on what we've learned, and the necessary steps to position your business in this highly digitized environment. Uncertainty is not going to suddenly disappear, but taking action on these trends is necessary for businesses to emerge stronger. Leadership has been called to action like never before.

Here are a few of the key lessons I believe B2B should be taking away from 2020 as they head into 2021.

Double down on understanding and serving your ultimate customer

B2B leaders at distributors, manufacturers, and brands who were paying attention to trends prior to the pandemic were in a better position to take advantage of crisis-riddled 2020. Those 'doing it right' were looking at the end user of their products, observing and taking action on the changing mix of channels and buyer behaviors, and critically evaluating the value they were delivering to their direct and indirect customers across each part of the supply chain. The ultimate customer - the person or company using your products in the field - is, well, ultimately in control. This is who you need to serve.

This is probably the most important take away from 2020, and it’s something I discuss in detail in my book, Billion Dollar B2B Ecommerce (yes, that was a shameless plug). It is not enough to know what your distributors and resellers do with your products. You have to know how your end user buys and uses your products, what they look for, what information they need, etc. Listening to them and getting to know them should be at the heart of your Ecommerce operation. For the distributors that are reading this, you need to make sure you are truly delivering something that is differentiated to your customer. The days of using price and broad selection as the only competitive advantage are over.

Understanding your ultimate customer is not a 'set it and forget it' approach. As has been demonstrated by COVID, situations can change rapidly, so regularly keeping your finger on the pulse of the end user will put you in a better position to react to sudden changes in the marketplace that drive behavior changes. This means firms may need to improve data collection, as well as hire business analysts to make sense of that data. The good news is that digital approaches put your closer to this data and make this understanding possible in all new ways. For example, you should be using Google Analytics and other analytics tools on a regular (e.g. daily or weekly) basis to understand how your ultimate customer is interacting with your web site.

Become a Nimble Leader

When a crisis hits, employees, business partners, and customers all look to your leadership for help, support, understanding, and guidance. And to be successful here, it’s important for leaders to be able to take action in the face of uncertainty, often with imperfect information. The COVID pandemic put an all new urgency to Chapter 2 of my book, "The Leadership Imperative". Leaders need to be bold and decisive in acting, accept that not all efforts will be successful, and learn from failures. Nimble leadership is called for in these times.

Leaders must look beyond traditional ways of doing things in order to solve problems. Case in point: As I mentioned above, remote work is now the new norm, and will likely continue far beyond the pandemic. This has forced a lot of salespeople to learn how to do their jobs without in-person meetings. But after about nine months of living with this new selling model, it is clear that it’s working, with about 75 percent of B2B decision makers finding this new model effective.

Find New Ways to Connect

As I mentioned above, one big shift that’s been accelerated by the pandemic is the deterioration of brand loyalty. This is true in both B2C and B2B.

One of my favorite (and disturbing) exercises to conduct with new clients of my Amazon B2B firm Enceiba is to run a search for their product category name on Amazon. Nearly every time, the results are astonishing, with executives completely befuddled by the number of similar products being sold from companies they’ve never heard of. “Who are all these brands?!” is a phrase I hear all too frequently. The competitive landscape is changing, and many B2B companies don't realize it. Try this exercise for your own products.

Amazon has become a search engine for products. We are trending towards 70% of product search beginning on the marketplace, and this includes B2B buyers. If you are not represented there, you risk your relevancy. I said this at the beginning of 2020, and COVID has only accelerated this trend.

The best way to turn this into an opportunity? Find new ways to connect with and engage your customers, particularly through digital channels. Recognize that your ultimate customer is finding new ways to research and buy products. For example, according to a recent Digital Commerce 360 article, the pandemic has considerably accelerated the use of marketplaces by B2B firms, with gross sales on marketplaces projected to grow by 38% in 2020. Staying top-of-mind and in front of your customer is more essential than ever. This is particularly true during COVID, when sending salespeople out in the field has become a less viable option. Digital channels have become the main locus where brands and customers interact. If this isn’t a core competency in your organization now, it needs to be in 2021.

Reprioritize Your Budget

If you’re going to make any of the above actions possible, it’s highly likely you’re going to need to reprioritize your budget. Let’s face it: No Ecommerce initiative is going to succeed if it isn’t properly funded. That may mean reducing funds on channels or other business units, and those cuts may be difficult. Finding the right level of investment in digital channels has traditionally been a challenge for B2B firms. Lack of funding for Ecommerce initiatives has been ranked the #1 or #2 reason for failing to meet the digital expectations of customers for several years running in surveys by Digital Commerce 360 and others. This needs to change, and right now.

At the the start of 2020, in reference to what was happening with B2B Ecommerce, I said "none of these trends really matter". Then I clarified: they don’t matter if you don’t have leadership that is willing to take the steps necessary to take action and embrace digital as a key component of the future of your company. I still believe this is the case, more than ever. 2021 will be the true separation point for those companies that have the leadership that is acting, and those that don't. We will see a culling of the herd. Don’t be the company that doesn't act and falls from relevance. Seize your digital opportunity in 2021!

If you need more help in figuring out your path forward in 2021, get in touch with me! I can be reached by email at [email protected].