The newly released report “These eight charts show how COVID-19 has changed B2B sales forever”¹ by US-based managing consulting firm McKinsey and Company illustrates a vital shift in B2B seller’s business model towards digitization. In this article, we’ll delve deeper into the implications of this report, and see how it’s reflected in real-world B2B businesses.
By now, it’s old news that the COVID-19 pandemic has fundamentally altered every aspect of our lives. Since April 2020, we’ve had to learn to adapt to a new reality where social distancing is the norm, and the safest way to interact with other people is digitally. Of course, B2B businesses had to get on board too.
And in doing so, B2B companies were exposed to something radical – using digital business models were working better than traditional ones! Clients actually preferred the more convenient, easier and faster ways of doing business that digitization provided. And for B2B businesses, they saw benefits in terms of reducing travel costs, broadening reach and improving sales effectiveness.
From necessity to preference
B2B businesses were forced to digitise their operations to keep them running successfully and ensure customer safety. This means that they turned to digital and remote self-serve models, and engaged with their customers purely online.
In a world where fax machines and orders via forms are still a reality, companies had to look for different ways to continue doing business without human interaction due to COVID-19. Over the past six months, we have seen a significant and increasing number of inquiries from B2B companies to discuss how commercetools can help to convert their operations from face-to-face to online businesses.
Often thought of as rooted in tradition, what’s most interesting is how readily B2B businesses embraced this digital revolution. According to McKinsey and Company research, more than three quarters of buyers and sellers prefer digital interactions. What’s more, these changes may be here to stay: up to 80% of B2B buyers prefer not to return to in-person sales and 89% of B2B companies are expecting their new digital models to remain long term.
These numbers illustrate a huge conceptual shift in the B2B world, from digitization struggling to find a foothold in B2B business to it now being preferred over traditional models.
Video chat has emerged as the lockdown king
During these handshake-avoiding times, B2B sellers being able to meet in-person with their clients has quickly become a thing of the past. This has resulted in digital interactions, with the main channels for sales reps being video conferencing (Google Video Chat, Zoom, WebEx, Microsoft Teams, etc.) and online live chat.
As reported by McKinsey and Company, conducting sales in person has gone down by 52% and the revenue generated from in-person sales has gone down by 55%.
But the real winner? Video. Video chat interactions have gone up by 41%, driving 69% of revenue since April 2020 and accounting for 43% of all B2B income – more than any other channel. Sadly, the humble phone is the loser, with 76% to 79% preferring video to phone when meeting with others in the company, existing customers, prospects and vendors/suppliers.
The next most successful channel is online chat, with its use going up 23% and revenue production going up by 31%. And it’s easy to see why customers like to chat online. commercetools’ own chatbot allows website visitors to find the information they’re looking for in a more comprehensive way, suited to their own unique customer journey – without a physical touchpoint. And both sides benefit; customers get the right knowledge quickly and accurately, and commercetools can jump in ready to assist with all the background information they need already gathered from the customer.
Trust in this new digitised model
B2B buyers’ purchasing processes are undergoing a big change. With no more of their sales people on the road, B2B sellers have had to streamline their ordering system to operate online. And it worked exceedingly well. Customers quickly placed their trust in this new digital process, and now comfortably negotiate and place orders with B2B sellers digitally; McKinsey and Company specifies that, on average, 75% of global customers believe in the efficacy of online orders.
This also means that many B2B buyers are comfortable making high-cost large purchases and reorders remotely and via online self-service. In fact, nearly 70% would do so in excess of $50,000USD. This is especially significant as, in comparison to B2C, a hallmark of the B2B world is mass ordering. Now that many customers feel comfortable doing so remotely, the very foundationation of how B2B deals used to be undertaken has completely shifted.
Some benefits of moving sales interactions and purchasing processes online include customers being able to take advantage of personalization, as well as having a digital paper trail right away. That’s why many customers would actually rather go for a digital touchpoint as their first point of contact rather than manufacturer or distributor sales teams.
What the future holds
The fact that customers have such faith in the digitization of B2B businesses begs the question: are in-person interactions between B2B sellers and their customers even necessary anymore? Will B2B sellers and buyers go back to traditional methods in our post-COVID-19 world? Surprisingly, the answer to both of these questions seems to be a resounding “No.”
For now, let’s try to keep a positive mindset and assume that COVID-19 will one day be a distant memory. And when that day comes, nine out of 10 decision makers say that these new digital practices will become permanent, as reported by McKinsey and Company.
We are moving much more toward a click-and-collect and click-and-deliver model that has provided nice tailwinds, and we expect that to accelerate. And if you think about the traditional trade partner, that was not their method of doing business prior to the pandemic. We anticipate [this new model is] going to continue.
Chairman & Chief Executive Officer, PPG Industries, Inc.
¹ McKinsey & Company: These eight charts show how COVID-19 has changed B2B sales forever (Source)