If you work in B2B marketing and sales, you are probably being bombarded with messages on how data and analytics is going to revolutionize your function. Chances are that some of you may have even experimented with it first-hand.

This increasing interest in using data and analytics in B2B marketing and sales, is no doubt, driven by what is happening in the B2C world today. One of the major trends in the B2C world is personalization at scale, i.e., the ability to identify and serve a prospect, by analyzing all the available internal and external data on the prospect. Given the very large consumer base of B2C businesses, to do this well is quite a feat. A B2C business needs to be able to 1. gather, clean-up and transform voluminous structured and unstructured data from multiple sources, on tens of thousands of consumers in an automated way, 2. integrate the data at scale using cost-effective modern IT tools, 3. run some mathematical models to calculate probabilities, and then make a tailored offer to a specific prospect at the right time. And by the way, if the B2C business is into e-commerce, speed is of essence too. The reason why the case for using data and analytics is so compelling for B2C businesses is that it imparts the ability to understand each of the tens of thousands of prospective consumers individually in a much better way, than is possible by any other means. All the internal and external data that is collected on the consumer is essentially a proxy for consumer likes, dislikes, and needs, which is then used to create a targeted offer. Could this B2C approach be useful in B2B too? The answer is “it depends”.

Not all B2B businesses are the same. A B2B business that sells office supplies to thousands of offices may benefit from such an approach, because it is quite hard to know the preferences and needs of each of the many offices it serves – analogous to the B2C situation. In contrast, there are many B2B businesses, that serve just a few tens of customers. Take the example of a plastics company that supplies parts to car companies. There are just a handful of car manufacturers in the world so the customer base of this company by default cannot be large. In this situation, the marketing and sales personnel of this plastics company already know their customers reasonably well, and are already able to “personalize” their offering without necessarily tapping into the B2C approach.

For such B2B businesses, that have a handful of customers, the most immediate and impactful opportunity to improve commercial performance is by using their internal data on their prospect-to-order, order-to-cash, operations, and customer-service processes in a much better way. The data pertaining to these processes, for example, data on prospects, pipeline, sales, manufacturing costs, logistics costs, and customer complaints, is easily available but used only in their individual functional siloes. Further, it is often difficult to integrate. If B2B companies, can more effectively tap into these different data sets, they can generate new insights to make big improvements across all their commercial activities. For example, sharper lead qualification, proactive pipeline management, predictive forecasting, targeted price increases for margin management, or increasing customer lifetime value.

Any respectable B2B sales organization, is for sure working on some of the above-mentioned opportunities already, and is tapping into at least some of their data sources. So, what is new here? To understand what is the new opportunity here for B2B, you need to delve into the core elements of how B2C businesses are using data and analytics: 

1.      Cleaning-up and transformation of data is all automated: If a B2B business is using its own business analysts to laboriously clean up and transform data in excel files or perhaps has used management consultants to do this effort one-time, it is wasting its precious resources and is too slow to leverage data as often as it may want to.

2.      The magic is in integrating data from different sources: If a B2B business is unable to rapidly integrate different kinds of data due to legacy software issues or is using an off-the-shelf sales data visualization tool that works off its CRM, it is probably utilizing only one or a couple of its data sources and falling short on insight, i.e., not really getting down to the whys.

3.      The objective is to get very granular actionable insights: If drilling down effortlessly to a country, product, or an order level is not possible for a B2B business today, and it is not using modeling to understand the outcomes, it is not tapping deep enough into its data and as a result the insight generated is perhaps not as actionable as it can be.

To illustrate this let us look at an example application. Using the data and analytics elements mentioned above, a B2B industrial equipment manufacturer successfully implemented a ‘targeted’ instead of an ‘across-the-board’ price increase, and achieved a 25% higher uplift versus plan. The ability to clean, transform, integrate and visualize data were critical in enabling the targeted price increase. Specifically, the company took the following steps:          

  • Modelled all variable cost data from manufacturing e.g., direct material and labour, variable overhead, to create a granular perspective of variable unit costs at finished product level.
  • Cleaned-up and integrated invoice data (price, volume, freight) with off-invoice adjustments and with cost data from step 1 to calculate profit margin at an individual order level.
  • Gave the sales, marketing as well as product teams, access to simple interface to visualize the margin performance at any level of granularity down to a transaction. This enabled the front-line to compare margins within a customer peer group and identify targeted price improvement opportunities for specific customer-product-volume combinations.
  • Automated the data clean-up and integration at scale to enable easy access to the latest and most accurate granular data to the front-line all through the year.

Hopefully this pricing example illustrates the power of data-centric approaches to significantly improve B2B commercial performance. If you are a B2B sales professional, you may want to go through the three core elements of the new approach mentioned earlier, and ask yourself how your company works with data and analytics today. Our experience suggests that, on this topic, most B2B sales organization have quite some headroom to grow. To be sure, the capabilities needed cannot be achieved overnight but it is a journey. To get started on it, all you need is a burning marketing and sales issue to work on (who doesn’t have one?), and the right blend of business and analytics skills to take you through. One thing is certain, you have most of the data in your own backyard already.

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About the authors:

Kedar is the founder of B2B Growth Consulting Ltd., that serves PE owned as well as large listed B2B companies to achieve organic sales growth. Previously he was a consultant at McKinsey & Co. He has a MBA from London Business School.

Vidyais the founder of Decodexis, a company, that specializes in providing bespoke advanced analytics solutions to clients. Prior to starting Decodexis, he was a consultant at McKinsey & Co. He has a Ph.D. in Technical Chemistry from ETH Zurich.

 

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