Ventana Research Analyst Perspectives

B2B Digital Commerce: The Good, Bad and Needed

Posted by Stephen Hurrell on Sep 8, 2022 9:15:00 AM

You would be forgiven for thinking that no one buys anything in person any more given the pages of digital ink spilled over the rise of digital commerce led by the rise and rise of Amazon. However, one quick errand run on a Saturday morning would easily give lie to this, as parking lots are full, not just at grocery stores but for everyday retail as well as big box stores. Likewise, in business-to-business (B2B) commerce, despite the advertised demise, person-to-person sales are still a major part of B2B purchases.

This perception of digital commerce as all-encompassing is compounded by the many pronouncements of certain groups who prefer to interact with selling organizations remotely and asynchronously, avoiding, if possible, interactions with selling teams.

The reality is that digital commerce is not a singular way to purchase, but part of a broader, omnichannel engagement and selling model, with buyers choosing to engage across multiple channels. A buyer’s journey may encompass a voice call, a text chat via a website, a remote demo and a resources page from a website before finally using a digital commerce portal to place the order.

VR_2022_Digital_Commerce_Assertion_4_Square-1Especially for B2B sales, a willingness to purchase via a self-service digital commerce portal may also be linked to whether this is an initial order or follow-on expansion buy or depend upon the size of the deal. Although an initial order may be the result of an in-person engagement and a quote and contract negotiation process, subsequent orders may be conducted online if the terms of the deal have not substantially changed, prices are transparent or predetermined and invoicing is automatically adjusted for amendments to the initial order. We believe that both customer demand and the economics of digital commerce means that by 2025, 1 in ten B2B organizations will experiment with digital commerce and digital delivery of products and services to reduce the cost of sales and streamline revenue operations.

Digital commerce or self-service ordering has undoubted benefits in terms of a reduced cost of sale as compared with a transaction that involves a person. But for this cost saving to be realized without impacting the ability to sell, several other parts of the selling and buying process also need to be enhanced. The key to having more sales conducted via self-service channels is standardization and automation: The more the sales process is based on exceptions and unique terms and conditions, the less can be automated, as there will be an overwhelming need to insert a human into the equation. But even in these cases, internal guardrails, threshold-based approvals and as much standardization as possible will enable more of the purchase to be conducted remotely, digitally and with little need for human intervention.

The more vendors can standardize product information and expand on the information available beyond basic photos and descriptions, the more the configure-price-quote (CPQ) process can be streamlined and automated as well as being linked to a more standardized contract life cycle management (CLM) process. Likewise, standardized pricing, with predetermined discounts for volume and bundling, can again reduce the need for human intervention, thus facilitating a more automated ordering and purchasing process. The final step is integration with provisioning and fulfillment as well as direct integration with billing, invoice and payment systems.

My colleague Mark Smith has written about the importance of a comprehensive product information management (PIM) approach, and research finds that over half (51%) of participants indicate it is very important to integrate PIM with digital commerce. In parallel for digital commerce to become truly effective in initial, higher-value B2B sales as well as renewals and expansions, a PIM system needs to be integrated into a more automated configure-price-quote system that has rules-based, built-in guardrails that allow for a customer to correctly price products and services. As differing revenue models are impacted by revenue recognition policies, inclusion at the point of sale will ensure compliance prior to the sale. Likewise, contractual terms can be automated based on the quote selections, customer type and desired duration with an automated approval process where necessary. New initiatives from technology vendors – such as digital deal rooms – also advance the ability to conduct arm’s length buying, leading to lower latency and more efficient sales engagement and negotiation processes.

Organizations attracted by the potential savings in cost of goods sold achieved via self-service digital commerce need to recognize that, especially for higher-value B2B transactions, there need to be several prerequisites in place to enable the final step of the buying process to be conducted via a self-service digital commerce portal. These will include PIM systems, integrated with CPQ systems with direct links to CLM applications, provisioning, subscription management and billing to ensure the process works for both buyer and seller. Organizations will further have to adjust how due credit is given and compensation is calculated to those involved with the sale process for deals that are finally completed by a self-service digital commerce portal.

Only in this way will digital and self-service commerce be on par for business-to-business as it is with business-to-consumer.

Regards,

Stephen Hurrell

Topics: Digital Commerce, subscription management, Revenue Management, Office of Revenue

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Stephen Hurrell

Written by Stephen Hurrell

Stephen is responsible for the overall research direction for the Office of Revenue at Ventana Research, including the areas of digital commerce, price and revenue management, product information management, sales enablement, sales performance management and subscription management. He brings 20+ years of experience in product and CS leadership, developing data-driven applications in sales enablement, financial reporting and planning, and billing and monetization platforms, helping to scale product teams and support customers such as Workday, NCR, Thomson Reuters, Broadridge Financials, JP Morgan Chase, Unilever and AAA (NCNU), before moving into an analyst role. Prior to joining Ventana Research in 2020, Stephen was General Manager at InsideSales.com where he was responsible for the acquisition of C9 Analytics, VP of Product and AI strategy at RecVue and held roles at Oracle, Exigen and Aviso. Stephen earned his BS in Economics from the London School of Economics.