20 years ago, the world was replete with a surge of new internet-based businesses, typically in the B2C space, all claiming they were ready to change the world forever with the anticipated overnight conversion of purchasing behavior from bricks-and-mortar-based retail to e-commerce. Many had no discernible revenue model and based their capital raises on clicks and eyeballs. The collapse of the NASDAQ index post-2000 bolstered the critics and naysayers. We now sit 20 years later with reports of Amazon continuing to devour retail sales, Walmart in a digital war against them, and social media platforms ingrained in our political processes.
The changes in retail, like most innovation cycles, have taken longer to reach broad adoption. However, the trends are now obvious. Let's quickly examine one of the most famous examples to see how understanding the buying process can lead to insights that can transform a business model.
Disruptive Innovations in Buying Processes: The Uber Case Study
Think back to hiring a cab in 1998. In NYC, for example, you would first have to get to street level, regardless of the weather, risk your life stepping off the curb to gain visibility, wave furiously in the hopes of attracting an open cab, give your destination, and hope the cabbie would not take you on a circuitous double-cost route. Upon disembarking, you would pay cash, hoping not to be identified as a target for a wallet or purse snatch.
Today, from the comfort of your lobby, you can input your destination, receive a price, confirm a driver, track their progress to your location, step into your Uber, rate the driver, and complete the transaction without handling cash. Every aspect of the buying process (determining availability, price, quality control, and payment) has been made simpler and better for the Buyer.
The Game-Changing Role of Technology in the Consumer Journey
Technology Has Changed Everything
I recently had the privilege of attending a private panel discussion featuring three CEOs of digital marketing firms. They shared insights into the buying behavior they've observed in their clients' industries, primarily B2B. Two trends were most compelling. First, SEARCH is the beginning of everything. Sourcing, vendor identification, product research, user opinions, everything! This is true across almost every age demographic and for the younger generations SEARCH is virtually the only thing. Second, is buying cycle compression. The stage in the process that involved initial “vendor contact” traditionally occurred early when a buyer was gathering background information, but now when contact is initiated the buying process is well developed. This results in a compression of the cycle and limits the Seller’s ability to shape the process.
Uber's radical change to the buying process was created by the technology of GPS-enabled cell phones with enormous computing power coupled with digital payment technology. Amazon’s brilliant search technology (among its product offerings) coupled with a reordering of the logistics value chain makes comparison shopping almost effortless.
Adapting Your Business Model to New Consumer Behavior
Are You Ready?
Understanding how technology is changing the way your customers proceed through the buying process is critical to shaping your sales and marketing plans and more fundamentally to driving your business model. Remember that as the current generation of 20 – 30 year old’s transverse into the authorized decision makers in B2B commerce, their world is a search enabled super computer in their hand, powered with ever-growing AI, and that they expect you to seamlessly deliver goods and services that they can evaluate, compare and purchase with a swipe of the finger. Are you ready?
The Future & Your Readiness for Change
Am I exaggerating to make a point –absolutely. Yes, I know B2B is more complicated and it is that complexity that creates the opportunity to rethink the buying process and make sure yours is the company capturing the sales, not your competitor, or an upstart. And not every business can follow the UBER model, that is not the point. Thinking through the process and how it is changing will lead to insight.
With the Covid pandemic, gradual trends are becoming torrents in B2C, and the idea of the face to face sales call in B2B may be taking a position on the endangered species list. The exact adaptations will evolve, but the compelling economics of new buying models will outlast the public health factors that have introduced change.
Embracing Change for Competitive Advantage
It is time to question exactly how your customers or potential customers are evolving their buying process and how your business model and processes fit in that model. Moreover, can you embrace change to jump the curve and create a competitive advantage?
Understanding the changing consumer landscape and adapting your business model accordingly can be daunting. At FocusCFO, we provide financial guidance to help you navigate these changes strategically and come out positioned for growth. Reach out today for a complimentary consultation.
Todd Peter is a FocusCFO Principal based in Cleveland.
