This week on the Master B2B Friday 15 podcast, Andy & Brian talk about how to accelerate your digital maturity in 2024.
The discussion centers around a new report Master B2B published in association with commercetools called, “Accelerating Your Digital Vision” that digs into how organizations can quickly speed up their digital maturity.
You can download the report here.
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Brian Beck: Andy Hoar, welcome to the Friday 15. We’re with Master B2B, my name is Brian Beck. I’m here with Andy Hoarg. Thanks for watching this exciting session about accelerating digital. This is a really good one. We just did some research or prior to our research and we’re going to share some high level findings. So, Andy, did you see this week? MDM, right? Actually, this wasn’t this week. This is a report from the sort of the whole first quarter. MDM released a story about softening, trudging through a soft cycle. Now, MDM follows the wholesale sector in distribution management or modern distribution management. And, here’s a quote from this, from MDM, their article says, “Nearly, every major distributor in Q1 financial releases mentioned that softening market demand has led to modest sales growth or declines and the vast majority of the sector expects current conditions to persist.” There’s so many confusing signals in this market, Andy. I don’t know what to believe here. The stock market keeps going up and you get this stuff. What do you think?
Andy Hoar: Yeah, will inflation go up, go down, we’ll interest rates go up, go down? I don’t think anybody knows, but I do think the uncertainty has kind of caught up with things. And I do think these companies are now starting to see a softening. We just saw yesterday, or recently, that Salesforce announced that their numbers have gone down pretty dramatically. They didn’t hit their growth numbers and their stock’s down like 20%. They’re at the tip of the spear. And I think they’re starting to indicate that there is softening demand. But I’ll say this, I’ll say the same thing I always say, which is – This could change next month. Well, the other thing I’ll tell you is, I don’t know necessarily, MDM is focused on distribution. As we revealed last week some of our research, some of that demand is going to other channels like Amazon Business. So it may not just be the economy we’re talking about here. It may be shifts in where people are buying products and the demand, really demand shifting more towards e-commerce, which is, hey, why we exist, folks, here at Master B2B.
Brian: And our topic today is the keys to accelerating digital in 2024. How do you take on this opportunity and confront it head-on. We did a bunch of research here and asked some questions. We’re going to get into what that said. We have a whole report out on this now. We’ll have a link in the show notes. It’s called “Taking Your Strategy to the Next Level.” It’s presented by Master B2B. We did all the research. It was in partnership with commercetools. And this stat alone says a lot, Andy. 83% of B2B organizations plan to spend more money on digital in 2024, 83%. I mean, yeah, you can say the economy is softening, but my goodness, companies are paying attention. This is really a reversal from what we’ve seen in 2023 and 2022, right?
Andy: Yeah. One thing is to reconcile this with the Salesforce news. Salesforce news is backward looking. It’s in hindsight. It’s retrospective. This is prospective. And what people are telling us is that they’re doubling down on digital. This is a pretty big jump. I think what happened was during the pandemic, there was a ton of spending on digital. Then, immediately following the pandemic, we had a bit of a hangover because people spent a lot of money and the companies were saying, hey, tell us where the ROI is on this. And there was a bit of a hiccup there. And now what’s happening is that it’s coming back because companies are realizing that some stopped spending money on digital and guess what happened? It didn’t go very well. So, you realize that spending on digital is not a project but rather a program. So, I think we’re starting to hit that stride where companies now realize we spent money on digital, we stopped, it hurt us. Now we’re going to spend money again.
Brian: It’s actually fascinating because the number one driver of this, and I know when I was in Denver two weeks ago, Andy, or several weeks back, doing a roundtable, we talked about storytelling, getting C-suite alignment. Historically, the C-suite, the leadership, hasn’t been fully aligned. And that materializes in budget. But when we did our survey, we found – and this was shocking to me – Leadership is finally on board. Check this out. 94% of respondents to our survey, it’s just very recent, reported that support for digital initiatives from the CEOs, B2B businesses now have the executive buy-in needed to make technology investments. So, the tide seems to be turning here, right, Andy? Is that what you’re taking away?
Andy: I think the debate is now over. The why question – why are we doing digital? I think it’s over. I mean, we had the pre-pandemic, then we had the pandemic, then we had the post-pandemic, and now we’re in the post-post pandemic. And I think people now realize this digital thing is real. So the real question now is about budget. So it’s not whether you should spend money on digital, but how much. And that’s where it gets kind of interesting.
Brian: Look at this data we found. We asked the question, has your company provided you with sufficient financial resources to achieve your technology investment goals for 2024? Look at this. Almost 90% said, yes. Wow. If we asked that question last year, I think we’d get a very different answer, even in ’22, right? So, the money’s available. So with power, with dollars comes responsibility and greater demands. To me, Andy, this harkens back to my B2C days when I was running e-commerce at Harbor Freight Tools and Pac Sun and all these consumer brands and retailers. you were expected to drive all kinds of ROI. You were getting a lot of dollars in those days. I’m talking about 10 years ago. you’re getting a lot of dollars invested, multi-million dollar capital budgets, et cetera. But you were expected to deliver, it’s so funny. I talk about this in my book, right? The whole B2C, all this is very familiar to me anyway because it’s where we were, 10, 15 years ago in B2C. Because with power comes pressure compared to three years ago, the time frame in which I need to show an ROI in B2B commerce these days has, guess what? Sped up versus just a couple of years ago, more pressure, more pressure is here, right?
Andy: So, good news and bad news. If you’re running e-commerce in a company, your C suite is bought into digital, check. You have the resources largely to make it happen, check. But now, they’re like, hey, you better deliver. And that’s where some people have a big X in their mark. And so some of them are like, hey, how do I measure that? And there’s also, there’s a problem in both directions. There’s, how do you actually produce the result for that amount of money that’s been out there because it’s a bit unprecedented for a lot of digital. Digital is no longer a side business. It is the business. And so it’s subjected to a lot of the same metrics and scrutiny that the rest of the businesses have been subjected to. The funny thing and the ironic part about that is, now I’m hearing from digital folks that they’re having problems convincing the C suite about what metrics matter because the CFO is used to depreciating assets and, and kind of standard, margin growth, et cetera. But how do you measure things like the fact that online you can change prices more quickly? And because you can change prices more quickly, you can be more adaptable to the circumstances. I guess at the end of the day, you’ll have better margins from that. But there’s a clear value associated with what online offers and what digital offers that I don’t think a lot of CFOs fully appreciate because they haven’t lived in this digital world long enough.
Brian: Well, that’s right. it’s funny because when you think about B2B companies, Andy, and how traditionally conservative they are in terms of how they make decisions, getting full buy-in from every business unit. And you rarely hear the word “aggressive” with regard to the way people are investing in B2B. But we ask the question in our survey, how aggressively are you investing on improving and improving your customer experience and the vast majority said either aggressively or very aggressively. So I think this is a reflection of this pressure that’s come, right?
Andy: So in parallel with all this internal pressure around results and ROI, there’s also this ongoing pressure from the market around customer experience. Every time Amazon launches a new feature, AI delivers a whole new experience. I think there’s a lot of AI in this, probably because companies are realizing that if you don’t keep up with the Joneses, you’re done?
Brian: I was recently at Amazon up in Seattle for several days, and meeting with a number of folks, and it’s incredible, the things that they’re continuing to do with Amazon Business. I spent a lot of time with Amazon Business and understanding what they’re investing in. And that bar is continuing to go up because they really are customer focused in a way that I, unfortunately, I don’t see with a lot of distributors. Some of the ones who are succeeding obviously are, but it’s, I mean, anyway, to your point about the bar, it continues to go up. So the question is, where is investment going? Where is, what are people investing in? This is really the crux of our report. Obviously on a Friday 15, we don’t have the time to get into every one of these things. You’ll have to download the report. But where’s the investment going? It’s going into four areas and we cover these in our report: digital tools, so streamlining operations, improving customer experience, culture. This isn’t all about technology, although it is largely, but it’s not entirely. Team culture, how is your organization embracing digital? Are you hiring the right people? And then customer experience. So this isn’t just about digital tools. It’s also about what’s happening offline. What is your whole customer experience like? Are you creating the things, the functionalities that you need? Data and insights, putting data into the hands of business users to use data to make decisions. So it really crosses multiple areas. And we cover these in detail in our report, so we encourage you to take a look at that. And we have this framework of stages that you can put yourself into different stages. This is a companion report to a report we did last year where you can evaluate your business, your maturity as a business. Anything in here you want to highlight in terms of stage one through four and how mature you are?
Andy: Well, you can be in stage one for data and insights in a stage three for customer experience. So it’s not like you’re one stage completely. You can be in different stages. Now, you’re not going to be in a stage one and a stage four. I haven’t seen a single company that is in a stage one for digital tools and stage four for customer experience. That doesn’t happen. That said, I think what’s helpful about this is you can figure out where you stand. So maybe you’ve got a real deficiency on the data side, but you’re doing pretty well around tools. You’ve got some really good tools. You’ve got a good infrastructure in place. You just are pumping bad data through it, which is funny because in the last slide you talked about that. It’s like, I think about how daunting this must be for a lot of companies. So you get through the culture, the tools, the experience, oh, and by the way, now you’ve got to deal with all these data problems. I still say data is the lifeblood of these organizations. If you don’t get that right, nothing else works.
Brian: We’ve provided some tools here to the market where you can look at our first report, which is “Establishing a Baseline,” which is available on our website. And you can download that and assess where you are from a digital maturity standpoint. Then you can use this report, which we just released, again, in partnership with commercetools to show you what you can do about it. How do you advance your digital maturity? How do you get from a stage one or stage two in these different areas?
