Evolving to become a B2B2C company doesn’t start with changing your products — it starts with changing the way you think.
For an industrial products (IP) company, the business-to-business (B2B) paradigm was the only way of looking at its business model. Then the internet happened. And the Internet of Things happened. And global manufacturing giants started touting services and software capabilities.
But, most important, B2B buyers are B2C (business-to-consumer) customers in their personal lives. They’ve become accustomed to seeing personalized marketing, multichannel shopping options and complete price transparency — and expect that treatment in their business lives. They expect a simple buying process. They expect to buy from companies whose savvy use of data helps them anticipate customer needs, tailor their offerings and be responsive — in real time.
Now, IP industry leaders are following suit. They’re adopting a B2B2C mindset and creating new business models. They’re reinventing what it means to be an IP company in the Transformative Age.
If you’re an IP company that isn’t already doing this, you need a plan to catch up. Here are some tips.
Don’t be a product company — be an ecosystem company
Start thinking beyond simply being a manufacturer. Consider what you could accomplish with a new set of associates and a new perspective on developing customer solutions. For instance, if you make aircraft engines, your customers are the plane manufacturers. But if you acquire an engine maintenance services vendor, you create a new revenue stream — and join a new ecosystem. And as an after-sale service provider to the airlines, you have access to new data — data that might lead to launching additional new services. You benefit from a bigger ripple effect at the center of an ecosystem.
Or let’s say you manufacture paint for automobile companies. If you acquire a paint shop, you can change your business model to charging for every car painted, instead of every paint container shipped — much higher up the value chain. What’s more, if you enhance the quality of both your product and the painting service, it adds value for your auto-company customers: a higher quality paint job, with innovative finishes, allows them to charge more for added value for their customers — which builds their loyalty to you.
Be part of the smart economy
You read about the “smart” phenomenon constantly. Smart cities. Smart airports. Smart factories. This is an entirely different frame of reference for thinking about and conducting business. You’re selling integrated systems instead of products, providing you a greater revenue share of a given solution and eliminating potential competitors. More important, as members of your ecosystem get smarter and more tightly integrate information-sharing, the entire ecosystem gets smarter and more competitive. But you can’t hesitate. If the ecosystem gets smarter and you lag, you get left behind.
So, be a leader in becoming a “smart” business. What’s more, seize the opportunity to create the platforms that bring the different ecosystem players, including customers, closer to your business. Consider 3-D printing, for instance. B2B companies adopt it as an additive-manufacturing process in their facilities. B2B2C-mindset companies will allow customers to 3-D print an item at their location and pay a license fee online. B2B2C strategies empower customer-involving/customer-responsive innovation.
Leverage the data
This is more than collecting and analyzing data. This is about monetizing data. For instance, if you make nuts and bolts to secure tires, you can embed sensors in your products, gather data on performance and stability — then sell the data to insurance companies to support premium discounts for predictive-maintenance customers.
Or change your commercial model, create a co-marketing offer with a tire company for a “service subscription,” with data-driven predictive maintenance. Customers would no longer buy tires — because that’s not what you’re selling; tires are just a product. What you’re selling is safe, dependable driving — that’s a result: a highly valued customer experience.
Data has become a new product. Think about the likely markets for your data — and what data would be of value to them that you are uniquely positioned to collect. Share this data with your channel and ecosystem partners — because anything that strengthens your ecosystem is a rising tide that lifts all boats.
How do you implement such initiatives? First, make sure you’ve got the strategic talent and C-suite support to move ahead with identifying B2B2C opportunities. EY leads ideation workshops with our clients. We’ll look 3-5 years out. We’ll rank macro trends by uncertainty, cross-indexing with impact. When you identify the trends with the least uncertainty but the highest potential impact, that’s your opportunity to create the most disruption — and competitive advantage — in the marketplace.
But you have to move quickly. Implement partial solutions and iterate. No one starts with version 4.0. But in the B2B2C world, your brand is not based on the solution itself, but on your ability to create the best solution for each customer. Now, even in the IP sector, the customer is king.