Join Andy, Brian and expert practitioners including Zoro.com’s CTO Andy Goodfellow, Theresa Kuske from medical device marketplace Chamfr, and Steve Baruch, formerly of MSC, on this special Webcast as they walk through how they overcame obstacles to speed up digital transformation in their organizations.
Master B2B has just released a research report titled Accelerating Your Digital Vision to offer companies a roadmap for how to accelerate their digital maturity. This webcast will bring the findings from that report to life, as we hear stories from the eCommerce trenches.
TRANSCRIPT:
Brian Beck: Welcome to Master B2B, the world’s first and only community of B2B eCommerce executives. I’m excited to be here today. My name is Brian Beck. I’m here with Andy Hoar. Those who don’t know, Andy is a longtime veteran of the eCommerce field in B2B. He ran Forrester Research’s B2B eCommerce practice for seven years. He’s a founder of Paradigm B2B. A long time industry researcher, veteran practitioner Andy, welcome to our webcast.
Andy Hoar: It’s great to be here, Brian. It was very kind of you to go through the full introduction again. It feels like it’s been ages since we’ve introduced each other. But for those of you who don’t know Brian Brian has been a consultant. He’s been a practitioner on both the B2B side, at Harbor Freight tools, on the B2C side, at Pacsun. He also wrote a book called Billion Dollar B2B eCommerce. He is my partner here at the Master B2B Thought Leadership Series. Brian, great to be here. This is going to be a really fascinating topic.
Brian Beck: We’re going to talk about accelerating your digital vision and that music leading up to it. Boy, I felt like I was traveling through hyperspace, Robert. On the intro there, that was awesome.
Andy: My ears wept.
Brian: I feel like I was on the Millennium Falcon or something. Anyway, folks, we got a great session today but before we dive into it, a few housekeeping items. If you have questions, please submit them through the Q&A. We have a lot of people joining our Webcast today. It’s going to be an exciting topic, a popular one. We’ll get into that a little bit later. This is being recorded, so you will have a copy of this at the end. And those of you who registered and attended. Andy, we’ve got a lot to talk about. We even have a co-host today from our collaborator, our support of this webcast and this research, commercetools. We’ll introduce Julia in just a few minutes. So, Andy, we’re talking about accelerating your digital vision. We did some work on this last year around a maturity model. And this is really the next stage of it. You want to take us through framing up what we’re going to be talking about today?
Andy Hoar: Three years, three part series. Last year we laid the foundation. We created the framework, which we’ll kind of review here in a moment. This year, we’re introducing this document, which is now available called Taking Your Strategy to the Next Level, which is really about how you accelerate yourself through the stages of maturity, which we’ll talk about in a moment. And next year, there’ll be the third part in this series where you will actually, we’ll kill off all the characters and we’ll come to a conclusion. I kid you, but just so you know, there’s a third part coming up. So like I said, this year, we’re focused on the Taking Your Strategy to the Next Level. For those of you who can see this on screen there are four dimensions to digital maturity: digital tools, team culture, customer experience and data and insights. Not to be confused or confusing, but we also have four stages of maturity that exist within this. So I’ll explain this in a moment. What do we mean by digital tools? So digital tools is really the technology infrastructure you use to advance your digital maturity. The culture is really a catch-all category. How much is the organization embracing digital? This is about, are you hiring for these roles? Is the sales team on board with this? What about your partners, et cetera? This is kind of the zeitgeist within the organization. Customer experience. This one really is probably the most important of all of them. And then lastly, data and insights, which is, we’ve seen companies that are very digitally mature in the first three and very immature in the last one. But here are a couple of examples of what we mean by this. So we are stage one, which is early stage team culture. If your executives fear what they don’t know about digital more than they see the opportunity to embrace the possibility. So that’s an example of team culture. In the next slide, we would show an example of digital tools. So you’re a stage two company for example if you have a mix of legacy and modern systems. So you’re not fully out of the woods yet. You’re not 100% brand new. You’ve got a mixture of the two. And this one doesn’t ever really go away. But it’s representative of what a stage two company is for digital tools. Data and insights. At stage three, you kind of operate with clean data that you can distribute widely. And it’s a stage when you just start doing customer engagement on a one on one basis. And the last one is kind of an example of a stage four company around customer experience. Where you’ve got real time data. What you can do on customer engagement. If you’re really, really good, you can anticipate customer needs and buying preferences. So that’s kind of a quick run through what we did last year to give me a sense for the dimensions, the stages, et cetera. Now this year, in addition to last year, we did dozens of more in-depth interviews. We did our large scale customer survey. We talked to manufacturers and distributors in the US and Canada. And we really talked to them about how they think about their digital investments and what kind of support or not or what kind of support they are or aren’t getting from the C suite. So that’s what we did this year to advise companies about how to get to the next stages.
Brian: And Andy, one thing I want to mention about the state, the first report we did was all about people measuring where they stood. So all those dimensions you shared, the four stages, that report, which is still available on our website, people can go in and they can download it. And we had lots of people last year score themselves, share where they were. And this year, they would ask the question, gosh, well, how do I mature? How do I advance to stage two in these different areas? And that’s really what this next report is about that we’re sharing today.
Andy: It is. We interviewed all these people. We gathered all this advice. We distilled it down so we can advise companies about how to go from one to two, two to three and then lastly three to four. There’s no stage beyond stage four at this point. But last year it was “where am I?” As you pointed out, kind of, you know, score me in my present state. This year is about how do I move to the next level of digital maturity and become a more sophisticated, more mature organization?
Brian: So we’re going to do something a little fun here, Andy. We’re going to have a co-host join us for this fun interview. We have a series of interviews today to highlight and bring this all back to the practical as well. So our co-host today, let’s bring in Julia, “Power Puncher”, Rabki., Power Puncher says “You don’t get things done unless you shake things up.” That’s your quote, Julia. Welcome. She’s with commercetools, Senior Manager Product Marketing. Say hello.
Julia Rabkin: Happy to be here with you guys. And you know, from the commercetools standpoint, we continued our partnership with Master B2B on the sequel report because we see B2B organizations at all stages still struggling with accelerating their digital efforts, measuring and mapping their digital maturity efforts. And I think the assessment that we produced last year is a great framework. It’s helped tons of practitioners have that conversation within their organizations. And we wanted to showcase the voices of real practitioners who are in the trenches, who are doing it and share some of those experiences and learnings with the broader community. So happy to be here today.
Brian: So we have today a series of panelists that will be going to be joining us in sequence here. They are folks who are actually doing the work. They’re folks who have gone down the path and are going to be really the folks who we talk to about these concepts. And they’re going to give us some of the keys to how they achieve success. So we’ll introduce each of them as they come on. But these are some serious, serious power hitters in our industry. So excited to have them join us. Before we get started though, we wanted to actually ask the group here. We’re going to do a quick poll, our audience today, on customer experience. We want to hear from you. What do you think the most important dimension of digital maturity is? So we have a poll here up on the screen, digital tools, team culture, customer experience or data and insights. Go ahead and place your votes. And while we’re doing that, Andy is going to share a couple high level, kind of interesting and surprising facts we learned in our research.
Andy: This year we did lots of interviews. And we distilled some really interesting insights from it to that sort of jump off the page at us. And they’re both kind of surprising. One is that B2B companies are increasing digital investment in 2024. There’s been a lot of speculation that the market’s kind of in a slump and that people are kind of backing off on their spending. Well, we’re not seeing any evidence of that, at least when it comes to digital. So companies are spending more money. And there’s one overarching reason why it’s that third bullet point, which is that 79% say they are aggressively investing in improving their customer experience. That’s what’s driving all this. If you don’t have a competitive customer experience, you’re going to lose. And so it’s not a blank check to spend whatever it takes. But if you’re using an old system and it can’t produce that kind of experience, as often people say to us, I want the Amazon-like customer experience and I laugh and then come back and say, okay, that in a couple trillion dollars will get you started. But it is possible to produce really high quality world-class customer experiences, but you can’t do it with rickety old technologies and processes, et cetera. So that was one key point. The other key point was that, and this, I think, is a holdover or hangover from the pandemic is that companies poured a lot of money into digital in the last couple of years in reaction to the pandemic. Everybody was buying from home, et cetera. Now, there’s a bit of a reckoning that’s happening here where people are being forced to justify what that money went to. But what they are being asked to do is to allocate and account for what they spent the money on. I’ve had plenty of conversations with people who were saying, hey, I got CFOs, beating up my back saying we spent two million dollars on this, where’s the result? In some cases, the results are going to take time, which is why it’s going to return an investment over time. But what we saw very specifically was that 64% of digital executives said that they’re being forced to demonstrate and are going more quickly than they were three years ago. This is sort of inevitable, but it can’t be ignored.
Brian: Yeah, well, with power comes pressure, right? And this reminds me of my days in B2C commerce, Andy, where, hey, show me the money? You were giving you money to invest in these digital tools. So the return is inevitable. Before we move off, I’m looking at the people who are joining here, Andy, we’ve got just an incredible group of people joining this list, our webcast today. We’ve got Samir from Zurn, Kirk is here from Fastenal Sean the destroyer Donovan is here from MSA Safety. It’s a great group. So clearly this is something people are interested in. How do they accelerate their digital vision? Hopefully, we have poll answers up. What did people say? Here we go. Team Culture, thank you. I agree completely with all of you. Andy’s wrong, because he usually is.
Andy: I like how you agree after the poll gets produced.
Brian: Andy doesn’t know what he’s talking about. Customer experience is important, but it results from everything else being in place.
Andy: Well, we just say one thing very quickly in defense of customer experience. The company doesn’t exist to produce the team culture. The company exists to produce a customer experience. The team culture is a means to the end of producing customer experience.
Brian: You never get to the end if you don’t have any means, Andy Hoar. So now it’s time to introduce our first panelist Teresa, “the Maverick” Kuske. Teresa comes from a long history of being a world champion in every one of our debates I think, right? Did you win every one of our debates?
Theresa Kuske: Yes. I’ll pretend that we did.
Brian: Pretend that we did. Well, you were in one with me and we lost because we always do. So Teresa is with Chamfr, which is a pure play vertical marketplace and you were at Ergodyne for quite a few years where you built the eCommerce business, right? First question we have for you is how do you build a digital first culture, particularly in a midsize company? And as a follow on to that, is it easier in a pure play like a vertical marketplace or a traditional company?
Theresa: I’ll talk about the Ergodyne side first because when this initial report came out over a year ago, it actually came up at the perfect time. Because I had been at Ergodyne for 12 years and grew a digital team of experts and ran the eCommerce and multiple other software systems and platforms and the digital marketing there. But it came at the perfect time because I was having these discussions with our C suite around digital transformation. And I was trying to quantify or figure out how to tell that story to the C suite so that they would understand. So first and foremost, I agree with the 41% of people that said that team culture is number one, sorry Andy, but it is the team culture and it does start with the CEO. And so I think that from that perspective, a lot of the work actually comes in with change management and really the training, education and continuous discussions around that because especially from a business that maybe didn’t grow up in a digital world and they kind of added it on as we kind of grew and knew that it became an important factor in doing business with our customers – that is a change in a mindset and that doesn’t happen overnight. So it does take time and it’s something that you have to work on. When I first started at Ergodyne coming from a very digital world, even talking about SEO and SEM – it took a while to get to the point where everyone understood what that meant.
Brian: Is it easier to create that culture at Chamfr because you’re brand new?
Theresa: I would say that the one of the biggest reasons I moved to Chamfr was because Julie Schulte, who is the CEO and founder of the company, we had many discussions about our digital vision and strategy as far as how to grow the company and how to expand our digital leaders and not even just saying like digital people in those specific roles, but really how do we get sales to be digitally have that digital mindset? How do we get marketing, traditional marketing to have that digital mindset? So we were talking about those kinds of things well before I initially joined, but that was one of the biggest factors – that the CEO and I really aligned on our digital strategy and vision and how we would incorporate that into the growth of the company.
Brian: And it’s fascinating because I think a lot of people underestimate that point when they move to a different job to really understand that the culture does need to start at the top right? Some of our other guests here and I’m sure Mr. Baruch, we’ll have some thoughts on this as well or could contribute on this because he’s been down the path. We’ll bring Steven a little bit later. So talk about cross-functional, particularly as it relates to your experience with Ergodyne, I think because you had a traditional sales team there. You had other functions, finance, you had operations, inventory allocation, all these different things that can kind of really create friction in an experience. How do you ensure that these teams are working cross-functionally to enable a digital digital-first organization?
Theresa: That’s a great question. I was the queen of creating cross-functional teams across the company. I think I probably ran in total seven or eight different ones. The last was creating our AI and digital transformation, a cross-functional AI team the year before I had left. And a lot of that was really driven from the changes with OpenAI launching chatGPT in late 2022 to then really understanding how that was going to impact our business in the long term and that everyone needed to get on board. But you’re right, it is challenging because I think a lot of people don’t see finance or operations or product development as necessarily needing to understand and truly gras those digital transformation initiatives and changes, but they do because almost everybody uses technology and software. And as we kind of evolve, it’s going to be integrated in more and more solutions. So understanding who are the right people and partners to work with and the software and how are they developing their product roadmaps and things of that nature were things that we needed to discuss and bring up. So we had a monthly meeting where we would sit around and discuss initiatives and changes and roadmaps.
Julia: Teresa is what we would consider a power user of the digital maturity assessment. So she’s used it in two organizations to drive strategy and change. And I guess my question to you Teresa, from both of your experiences, what can you share about the strategies for getting executive buy-in and how that’s been different from your “queen of cross functional teams,” getting that grassroots kind of general company adoption and buy-in, and how do you think about managing those two strategies kind of from the beginning?
Theresa: I actually approached them pretty similarly where I took the digital assessment and I immediately converted it to an Excel doc and then had it all calculated but I said, let’s all fill this out separately and then see where we all align or think differently and have a discussion around that. But I think what it did is it gave us a little bit of a roadmap and a place to get the conversation started. I would like to have added a few other things to that, but that was great because we could identify the gaps with how it related to our business and then see how we could build out our digital roadmap. Same thing I did for Chamfr -Julie and I and the other co-founders reviewed it and filled it out separately and then came together and had a discussion around it. I think it’s a great tool, and I think it can be adjusted to your own digital needs of your business as well.
Brian: Well, I love that it helps you point out gaps where you know where you could execute and continue development. Okay, we have to go to a poll. The Maverick, your answers have been awesome. Thank you. And thanks for your insight. So let’s go ahead and poll that poll. Now the question here is where would you place your own company’s digital maturity related to team culture: starter, intermediate or advanced? Go ahead and select your choice there. But Andy, what do you think of that discourse?
Andy: I’m going to say something unusual here: I’m going to defer to Julia on this. I’m going to save my powder for later in the interest of time. I’ll provide my comment at the end. So I know the interest of time. I’d like to get Julia’s comment here and do that. So go ahead.
Julia: Well, I think very quickly also in the interest of time, what we see at commercetools within our customer base and I think it gets confirmed every year, the two years that we’ve done this annual executive research with Master B2B is that there needs to be an internal champion or a small group of champions like Teresa or has started all of these cross functional champion teams that are pushing for and evangelizing these digital efforts. But the caveat here is that the champions need to be given the right wing span to actually make decisions and drive change. And I think this is where the C-suite is critical for getting that organization-wide adoption. And at the end of the day, as Teresa said, it all comes down to change management. Right? So it really depends how much buy in there is and support across the board.
Brian: Yeah, 100% agree with that. And that’s actually really why I think it’s the number one of all of them. But we’ll find out what the audience says at the end. We’ll reveal those poll results. Okay. We got to go to our next group here. And we have Mr. Andy “Sweet G.” Goodfellow, CTO at Zoro. Andy, welcome to the program. You’re coming to us from a skyscraper somewhere in some big city somewhere. Welcome to the show. Andy is going to talk to you and ask a few questions. So Andy, take it away.
Andy: I can’t wait to ask him how he spends all this time building digital tools to inspire a team culture. I’m sorry. Is that what you’re spending your life doing? Building team cultures, Andy, or you building a customer experience? All right, so Andy, you and I talked a bit last week about this very issue. And you brought up some interesting points. So we all agree that you have to be an agile customer first technology shop to be successful and you got to be wired in your DNA. But you brought up an interesting concept, which is distro tech. Can you explain a little bit what you mean by that and how that’s relevant to this conversation?
Andy Goodfellow: Yeah, for sure. Thanks for having me, guys. So it’s kind of a new way of thinking. We’re a distributor – an eCommerce distributor, but we’re a distributor. But we don’t behave like one. Zoro doesn’t. Zoro behaves more like a technology company. And that’s when I say it’s kind of wired into our DNA. That’s just the way Zoro is kind of built, right? Digital, native, cloud native, everything we do kind of has a focus around how we can leverage technology to enable an easier job for our customer. And so the more I thought about that, the more I thought, well, we’re a distribution company that behaves like a technology company. So maybe there’s this thing like distro tech that I can start talking about and thinking about that is a new term. I can’t take credit for it. It was a good friend of mine, Tom Parker, who actually came up with that. And he was like, so it’s like distro tech. And I was like, that’s mine. I’m taking that. So yeah, it’s how Zoro is wired. And I think culture, you know, culturally is a big part of that because that’s part of who our culture is too. So it’s kind of all of it, including the customer experience.
Andy Hoar: Can you give us an example of what you mean by that by how that manifests itself. I think you mentioned something about something you can do and that you guys do that a traditional distributor probably wouldn’t try and tackle simply because of your technology fluency. What is that?
Andy Goodfellow: I think actually something most B2B organizations can probably get to – especially distributors – because a lot of distributors and just B2B companies in general have really good data, right? They know their customers really well. They probably know their assortment really well or their manufacturing really well. And you can use that in combination with newer digital tools and newer technologies to really enable your experience for your customer and make their lives much easier. It would be on site, but whatever kind of, you know, channel you might be working in. So I would say Zoro has this unique position where we built a really solid data platform way back in 2018 that we’ve been leveraging more and more to the point now where we can start really, really leveraging the new technology tools like large language models and some of the ML that’s kind of on the cutting edge coming from Open AI coming from Google. And we can start doing things like predicting when a package will arrive, right? Out of our 13 million SKUs, that can be really, really challenging to make good customer promises. We start using the newer technologies to really understand, you know, what products are where and how carriers behave in different regions and where is the customer and that kind of stuff so I can start making better promises to our customer and vice versa. I can also show those customers better products. We want customers to see the right product at the right price and then get it to them right away. And I think that we can leverage the technologies to really help those business problems get solved.
Andy Hoar: So you’ve talked about this before too that Zoro has a mindset around the use of technology where it isn’t a cost center, it’s an enabler. Talk about how Zoro has that mindset.
Andy Goodfellow: I think it’s a challenge. Traditional IT is very much focused around risk mitigation, risk management, kind of being a cost center, but controlling expenses and those kinds of things. And so at Zoro, we’ve really pivoted our technology organization into something that’s more of a business. It’s more of being responsible for revenue, particularly on the website on Zoro.com. So it’s kind of how we serve our customer and how we leverage technology for our customer is really what’s wired into our mindsets. We think about the customer first and you can phrase that as a business problem too. But at the end of the day, the technology is a tool to solve a business problem or to solve a problem for the customer. And so that’s a mindset that – particularly in a technology organization – is in a lot of cases pretty new, right? Like how many IT shops think about the customer all the time? Zoro’s technology organization does. So that’s a total mindset starting with the customer, customer on down.
Andy Hoar: So, Julia, I’m going to come to you in a moment for a comment or question, but one last question for you. It’s pretty clear and we quoted this from you in the report about you guys see technology and digital tools as an investment and not as a cost center, but even as an investment there are roadblocks that you run into, right? There are things that you have to account for. And what are some examples of that?
Andy Goodfellow: As far as what roadblocks there would be, I would say we’ve largely eliminated a lot of roadblocks just in general by empowering our digital product teams and our technology teams. So, Zoro, our teams are highly empowered. So there isn’t a lot of getting business cases approved and running things up the flag pole to try to have a “mother may I” kind of approach, right? So there’s a little more of an ask forgiveness instead of permission, well that’s not really an accurate statement, but it’s more that’s kind of the angle that we would take. But if you have the data and you’re doing active experimentation with your customers, you know what the right decision is, now go build. And so we’ve empowered our technology teams to go, just go build those, right? Now, tell us what you’re doing, but there isn’t a lot of, hey, I’d like to seek approval to change the way returns work, the experience of returns or to change the way my, the my account pages work or recommendation carousels, right? They’re very empowered to go do that themselves.
Julia: If you saw one of the last webcasts we did, you know, Sweet G’s, digital tooling dimension got a stage four, which I think for being honest, it’s a bit of an ideal state or a goal for most other organizations. So hats off to Sweet G for leading that success, but what I think most folks don’t know about Zoro is that it’s not the technology itself that makes them stage four. It’s that they view technology as an enabler of their business strategy. And I think what’s really in place at Zoro is that business strategy. And so I think, you know, Andy already shared it a bit, but the way that folks who work as Zoro get started with new technologies, it all starts with solving for a real business problem and then scaling that out. And so that MVP proof of concept, that kind of incremental approach is really going to move fast and the tooling obviously enables that. But it’s just because you have the best tools, and all of a sudden you’re going to be stage four. It’s because the business strategy is really there beforehand. So I think that’s a really important thing to emphasize.
Andy Goodfellow: A big part of my job is creating clarity and business context to my team so that they understand what are the right things that we’re after a first strategy. And then they have access to the data to confirm those or to come back and say, eh, we think your context might be a little bit off. This is the data we see. We should go do this thing instead. And, you know, by and large, they’re pretty empowered to go make those calls and let me know.
Andy Hoar: So we know Sweet G is in the enviable position of being a stage four digital tools company for last year. Let’s find out where everybody else is on this call. So, Andy, thanks so much for joining us.. If you go to the poll, where would you place your own company’s digital maturity regarding digital tools? Are you a starter, intermediate, or advanced? This is for the audience, viewing this. So Brian, what do you think?
Brian: Well, great comments. I always love listening to Sweet G because he’s talking about this challenge where to get to a mature stage with digital tools, you have to give enough to the users to the business users. He was talking in terms of tech, but at Zoro, you know, IT and tech is the business user essentially. So being able to allow and empower the business user with a flexible platform to allow them to make changes based on what they’re seeing – He said, “almost ask for forgiveness.” Well, that’s almost an Amazon-like approach, right? Where you’re making a business case, you’re testing and you’re basing it on data. So, amen. I think that what he said – people should be listening to that and distributors who are on the call today should really pay attention to that because it’s an important element. Of course, I’ll argue that you have to have the right culture before you can get to that point. But I’ve lived it. I’ve been hamstrung by having to business case things to death by being hung up by non-responsive or difficult to work with technologies and sort of things. The one other comment I’ll make is just about resourcing because we can have all great, great tools. But we also have to think about – and I hear this time and time again from practitioners – I underestimated the effort it would take from a resource standpoint to actually use the tools. So just having a PIM in place, for example, is not enough to solve your data problem. You have to allocate team to it, things like that. Always be thinking about that, folks, when you’re investigating this, it’s not just the tool. It’s one piece of it. So anyway, Julia, any thoughts from you?
Julia: I didn’t want to say it so explicitly at the beginning, but I really think I’m on team Andy Hoar here when it really does come down to it. Customer experience is the North Star. And I think this comes up in the research that we do, but I think we also see it within our commercetools customer base. Those organizations that choose to point to customer-centricity or customer obsession, whatever your favorite term is as the North Star for everything they do, including their business strategy, they then find that composable technology actually enables them to serve their customers with unique and differentiated experience. And ultimately, that’s the end goal. So I think if you build your business strategy around customer experience, then ultimately that does become the North Star for everything else.
Brian: We are thrilled to introduce one of the leaders, one of the folks who has done this, one of the most respected executives in our industry – Steve “The Brander” Baruch former CMO at MSC industrial. Every time I talk to you, Steve, I learn so much. And really grateful that you’re here with us today to talk about this next topic, which is investing in customer experience, Andy Hoar’s favorite topic. But anyway, Steve, welcome. Glad you’re here.
Steve Baruch: Thank you for having me. And what a great lead in Julia. Thank you for switching teams or at least validating Andy’s position. I think it’s the right decision.
Brian: You are one of the most accomplished executives in our field. You built MSC industrial I think truly into a digital first company. You were there for, what is it, 15 years or so? A tremendous amount of revenue from digital channels. When you think about where you started, how did you build the business case for digital, including measuring the ROI from it? And I’m curious also how things changed over that time period. You were first doing this 16, 17 years ago with MSC. Give us a little bit of context on the ROI.
Steve: It sounds a bit self-serving, but I think it was actually harder before. Andy just mentioned at the top of the call that now 79% of folks are investing in customer experience, right? That certainly wasn’t the case 15 years ago. And there’s some research that I think Andy may have even penned way back when, and it’s been updated from Forrester that kind of keeps me up at night. And I wanted to share that because I think a lot of people on this call get it. But we’ve got to convince people behind us that customer experience isn’t this soft squishy, warm and fuzzy soft science that’s looking for hard dollar – It’s real. And that the research, Andy, that I was referring to, and this is the updated stats, right? Millennials now make up, or they influence, three out of four B2B buying decisions. And they’re making half, nearly half, of the actual final decisions. And maybe even scarier yet, Gen Z’s now are going to make up about 20% of our B2B buyers in 2024. So both of these demos are digital natives notorious for their expectations of their digital channels and even more known for how quickly they will divorce a company when they have a bad experience. So if this doesn’t keep you up at night, I don’t know what will, but it was reported that 60% of Millennials and 50% of their Gen Z counterparts have actually stopped doing business with a company after just one bad experience. And since these are Millennials and Gen Z’s, they don’t keep that to themselves, of course. All of their social channels, all of their IMs. Everybody in their network, one bad experience. Today I can’t imagine that it is as difficult to justify a case to really focus on and invest in CX and customer experience.
Brian: How do you define customer experience? Like you said, it can be this big kind of squishy thing. What is customer experience? How do you, how do you think about it and how did it evolve over the years at MSC?
Steve: Go down the litany of all of the interactions that you have with customers and they all form this amalgam of data. And so what we would always try to do is to look for multiple listening posts. We had a very aggressive net promoter score system. We had a very prolific customer experience engagement system, with some of the best technology that we could get. We would leverage focus groups. We would leverage our CRM system and every available voice of customer element that we could then pull together to get a true objective, kind of neutral third-party read into what are our customers actually experiencing? And then triangulate that and measure it over and over and over again and then democratize that data across the organization. So everybody got to feel what our customer’s experience was and what impact they were having on it.
Brian: You’re sitting in a CMO seat. You’re sitting in the C suite. Your peers, do they understand this? Could you get them to understand the value of this from an ROI standpoint?
Steve: They didn’t have to necessarily understand the complexities of a net promoter system or how CX was calculated or measured or managed or what have you. And here’s why – If you can create a correlation from NPS to EPS, then you’ve got their attention. And I use that a little bit glibly, but we were able to create clear correlations between customer experience, whether it’s that amalgam of, but improvements in customer experience that led to improvements in the business. And it shouldn’t come as a huge shocker, Brian, McKinsey talks about CX leading companies outperforming their peers in total shareholder return by 65%. The other stat that they use is that those leaders versus laggers tend to grow at about a two, two plus X growth rate. So you’ve got to take that data and then personalize it to your business by correlating it to the experience that your customers are receiving.
Brian: So let’s talk org structure briefly. You think about the digital side of customer experience. How do you make sure you have the right org structure? And ancillary to that, who actually owns the digital customer experience? That’s a big question we get in a lot of our round tables. So talk about the org structure generally and then talk specific.
Steve: I think it’s the TLA argument. The TLA is a three-letter acronym, so it’s a CXO or CIO or CDO or CTDO. And I would take that and say, look, the title itself is secondary. Is there someone who clearly has ownership and accountability for the customer experience. I think what it really boils down to is – in most organizations when you start to talk about customer experience, what I found as you hear people say, well, this person, this person, sales, marketing, operations kind of own or share the customer experience. And one of the memorable tropes that we used back in my last shop was that if you have more than one owner, you don’t have an owner. I think that’s easy to remember and it actually is very, very true. So the point is assigning the owner, title them whatever you want, but empower them, make it clear within the organization what their authority and expectations are and how important it is, and then let them do the thing.
Julia: My question for The Brander is – what advice would you give to other practitioners on what they could do to generate ROI or show some kind of positive results in the short term, while not taking their eyes off of the prize on kind of the long term strategic investments that need to be and whether you have any insights or advice into how those decisions could be made or how you would suggest slicing what’s the short term low hanging fruit versus the long term strategic investment.
Steve: I’m sure others on the webinar will feel the same kind of phenomenon. That immediate gratification that you’re talking about and that you’re looking for, that’s kind of last click gratification. And I think that ultimately as much as we as practitioners want to be more strategic first click, top of funnel minded and thinking about big investments and big opportunities to move, move mountains in terms of ROI short term and to build credibility, focus lower in the funnel. Focus closer to the last click than the first. And then this will be no surprise. Test, test, test. Using test, learn, show the result; Test, learn, show the result and then use that success to climb back up the funnel. If you try to start at the top of the funnel with something big and they are more difficult attribution level investments, it’s just a harder much harder road to hoe, starting with something closer to ground level and then earning your opportunity to move back up, I found that to be successful. Look for those quick wins.
Andy: Well, first of all, we need to alert our affiliates, we’re going to be running long. I’ve always wanted to say that. Now I think Steve captured it in one phrase and I never heard this before and I love it. I’m going to steal it, Steve. You branded it, but I’m going to steal it from NPS to EPS. I like that. Because it does draw that parallel between the two. It draws a line between the two of them and he’s right. So, finally, the closer you go down in the funnel to the conversion experience, the easier it is to measure this stuff. But of course, as you point out, you don’t get to the bottom of the funnel unless you do something right at the top of the funnel. What about you, Julia?
Julia: I’m a firm believer that the customer should be the North Star. So I think focusing on that experience is ultimately what generates business results. So, I think that Forrester study that The Brander was referencing mentioned organizations that put the customer first. They have two and a half X higher revenue, two and a half X better growth margins. So everything is super positive. But I think we’ve all been in organizations where it’s a lot easier to look at things from the inside out. And I think that what a customer-centric approach or customer as the North Star approach requires is that you really put yourself in the shoes of your customer. You really understand them. You understand their pains. You understand what their journey is because only then can you begin to make it better, to make it frictionless, to optimize it. But you know, that requires a deep knowledge of the customer, which I think most B2B organizations actually have, which is an advantage.
Andy: We’re going to post team culture. To me culture is a means to the end of the experience. It’s not the opposite. Too many companies get caught up in the culture being the ending of itself. And it’s not. You got a great culture and no business, and you’re gone. Yeah, but then the bad culture, the great business, you’re still going to lose.
Brian: it’s how you define the culture and what does that mean? The way we’ve defined it in our maturity model is it’s about digital first thinking. It’s about alignment of the organizations, about hiring the right people, bringing people in from outside the organization, some cases from B2C in some cases so they understand the best practices. And then forming consensus and we talked a lot with Theresa about that. My major takeaway from all of this, including the study including the paper we published, including the conversation we just had is that team culture is number one and you have to start there. The CEO needs to have that role. I think that ultimately is the most important thing. It’s more important than tools. We can’t buy it, sorry Julia. commercetools is a great tool. You can buy the tool. It’s there. The best practices are there. The customer experience we know, just look at Amazon.
Julia: On the team culture and customer experience debate, I think they go hand in hand. Customer experience needs to be your north star because that’s what you’re delivering internally. How you do it is your team culture, is your tools, is how much you’re using data and insights and all those other dimensions that are really funneling that. But I think one of the things that I’ve realized from our last two years of doing two rounds of this research, producing two reports, seeing people actually use the assessment is we sometimes don’t fully appreciate or acknowledge the complexity and volatility of changing market conditions and the impact that they have. And I think this is where you begin to see the real value of what technology you have and what your tools are? And what is your culture like? Can you weather the storm? And what is your business strategy? Is your business strategy even aligned with some of these changing market conditions? So obviously a commercetools, I mean, I have to plug it. We’re pioneers, we’re a market leader of the composable approach. But I think the real value of the composable approach is that it allows your business the flexibility and agility to be able to adapt. And so, regardless of whether it’s the next pandemic or if you know what’s the generation after Gen Z, I don’t know. But when they start entering the workforce and their buyer expectations are going to be completely crazy – I’m an elder millennial. But I think regardless of what new channels come out or what customer preferences there are, if your business is set up in such a way that you can weather the storm, you have that flexibility to be able to pivot. This is where I think the real value comes from. And then specific to the maturity model, I think the real chasm to cross in all four dimensions is between stage two and three because that’s really how you start differentiating when you’re kind of on the starter intermediate side to the intermediate advanced side. But I think, regardless of where you are in digital maturity and I’ve spoken to organizations at various stages, none of this happens overnight. That digital maturity, not digital transformation, digital acceleration, it all takes time. And so what our panelist recommended about building cross functional teams, about taking an incremental approach, really starting small and then scaling it up, I think this is the real way to continuously, over time, with investment, I think this is the real way to drive digital maturity, transformation and change. And, everyone out there is not alone because I think everyone is accelerating it, it doesn’t matter what point you’re starting from.
Brian: Let’s go ahead and reveal our poll results – we asked people at different stages here where they thought they stood from our audience. So Robert, if we’re ready, why don’t we go ahead and bring those up first? And we had team culture and most folks felt intermediate was where they were. 47% followed by starter and advanced only 20%. So I think that’s an honest assessment of where people stand based on who we’re seeing here. Let’s go ahead and go to the next one. Digital tools, wow, only 6% in advance starter and intermediate was a tie. Interesting. Fascinating. So work to do on digital tools, obviously, and well, in both areas and how about the third one? Customer experience intermediate, your own customer’s digital maturity related to customer experience, 50% said intermediate starter at 44%. You know, Andy, it’s nice to get honest answers. It’s good that folks are really considering where they are. You might not give yourself enough credit in some places. So we encourage you to take the digital assessment for yourself.
Andy: So, what’s interesting is that intermediate is a qualitative description. And as Julia just pointed out, there are four stages. And intermediate straddles between two and three. And it is kind of a chasm in the middle where you go from being a caterpillar to a butterfly. And so intermediate is still an amorphous area.
Brian: Thanks, everyone, for joining us today.