Investing in digital capabilities is a priority for every company, says McKinsey in their article “Measuring B2B’s digital gap.” This is true for business-to-business companies too, as their customers are increasingly using digital tools to research and buy products. However, B2B companies face additional challenges and lack behind their B2C counterparts.
True, business customers have different needs than consumers and transactions are more complex: There are more decision makers involved in the final purchasing order, often higher price points and an array of products and specifications are competing on a range of sales channels. However, product shelf lives are shrinking, and customers are demanding for price transparency and better experiences. Over the past years, McKinsey has identified the most important digital characteristics needed to improve financial performance and has now compared B2B and B2C companies regarding the four important factors culture, strategy, organisation and capabilities:
On average, B2B companies are not far behind their B2C counterparts in core areas such as trust and internal and external agility. However, there is a big gap between digital leaders and laggards and many B2B companies lack some essential tools such as test-and-learn approaches to new digital business initiatives. Thereby, it takes a third of B2B companies more than a year to implement a new digital idea. With many fewer B2C companies requiring that much time, B2B players are much slower than their B2C counterparts.
Strategy and digitalisation are often disconnected for B2B companies. Only ten percent see digital as one of their top three investment priorities while about half of B2C companies do so. Fewer than 24 percent of executives understand how their industries are being disrupted by digital. Digital strategies are thereby often fragmented rather than coherently and fluidly adopted across the enterprise.
Most B2B are not taking concrete steps to implement even their fragmented strategies. Only one in four companies said their leadership is communicating the digital strategy clearly and most are unaware of digital roles as well as ownership of digital initiatives.
With lower levels of strategic focus and organisational discipline, B2B companies are not investing in building up digital skills. They are, for example, not using social media or digital content to reach their customers and use data and analytics to a less advanced level. While they have automated internal processes, B2B companies lack the ability to automate and optimise customer interactions and marketing decisions.