Optimizing the Business-to-Business-to-Customer (B-to-B-to-C) Experience

About 75% of the companies we’ve worked with over the past 25 years operate in some variation of a Business-to-Business-to-Customer structure.  A wide range of diverse businesses operate in this mode, including:

  • Product companies that sell through retail or distributor channels
  • Financial services companies that sell through independent agents, brokers, or financial advisers
  • Food product companies that sell to restaurant chains or food service businesses

Over the course of this work, we’ve learned that most effective approach to optimizing the performance of B-to-B-to-C relationships is to:  look past what your business customers are asking for to find innovative ways help them be more successful meeting the changing needs of the ultimate customer. In fact, we’ve found that many organizations that consider themselves business-to-business (B-to-B) providers would benefit from adopting a B-to-B-to-C perspective.

One of our first experiences with this was about 15 years ago.  At the time, we were working with a leading tire manufacturer that sells replacement tires through independent dealers.  Our client already spent a lot of time listening and responding to what these business customers asked for… typically improvements in ordering processes and turnaround times, payment terms, and advertising support.  These requests really represented “table stakes” improvements in the basic service levels that define the traditional relationship the tire manufacturer had with these dealers.  Responding to these requests generally involved investments that were difficult to justify; they just added to the manufacturers’ cost to serve without driving additional revenue growth.  They clearly needed to do something different.

Over the course of 2-3 months, we studied the factors that influenced consumers’ experiences associated with their tires and observed how consumers shopped for and decided about replacement tires.  This was done in 5 different European markets.  It turns out that there several innovative ways the tire manufacturer could help their dealers be more successful with the consumer.  For example:

  • In the Scandinavian countries, consumers generally have two sets of tires for summer and winter. In addition, these consumers typically did not have room to store the tires in the off season. If the tire manufacturer helped the dealers set up and run a tire storage service, the dealer would be able to get the consumer back into the store on a semi-annual basis. This would generate stickiness for the dealer and also provide an opportunity to inspect the condition of the tires and make more optimal recommendations about when they needed to be replaced. This created a clear economic benefit for both the dealer and the manufacturer.
  • In the German market, time was more of an issue. In this situation, we determined that the opportunity for the tire manufacturer was to help their dealers provide mobile mounting services that would replace the tires while the car was parked at the customers’ home or workplace.

In each of the markets there were things the manufacturer could do to optimize or improve the relationship between their customer and their customers’ customer.  (See Most Efforts to Improve Customer Experiences are Misdirected!).  Like most of the situations we’ve seen since that time, these innovations are the kinds of things that business customers would never ask for.

After that experience, we started to (semi-jokingly) tell our other clients to stop listening to your customers so much.  We’ve observed that customers typically ask for things that drive up your costs rather than increase your revenues.  Of course you need to pay attention to what customers are asking for (or at least look in their general direction when they’re talking to you)… but the trick is to look past what they’re asking for to find more innovate ways to help them be more successful with their customers.

Since that time, we’ve worked with many companies create similar opportunities, for example:

  • Several financial broker-dealers that now provide innovative services to help their independent financial adviser customers be more successful acquiring, serving, and managing relationships with individual investors.
  • A leading food processor that now provides innovative and collaborative concept development, meal design, kitchen layout, and education services to their restaurant customers… all aimed at helping their restaurant customers stay ahead of changes in consumer expectations for dining experiences.
  • An automotive financial services company that provides dealer financing, pre-paid maintenance, extended warrantee services, etc…  Beyond these basic products, this company’s entire positioning is now focused on collaborating with automotive dealers to improve the profitability and performance of their customers’ finance and insurance function. In addition, the company is now getting paid based on increases in their customers’ profitability not just the sale of their basic products.
  • A leading small group health insurance company that has significantly improved their performance by focusing on how they can help independent agents provide value-added services and advice to small businesses on the management of heath benefits costs and employee wellness/productivity.

In each of these situations, we’ve found that the following seven steps are most critical.  In most cases, the best approach to following these steps involves collaborating with your more innovative and open customers.

  1. Understand how expectations and alternatives are changing for the ultimate customer. In most cases the ultimate customer has a rapidly advancing set of expectations being driven by the best experiences they have with other providers. In addition, these customers frequently have an expanding array of options for meeting the same set of needs.
  2. Understand how these changes affect the nature of the relationship that exists between your business customer and the ultimate customer. Very often the changes identified in Step 1 create tension in the relationship your business customer has with the ultimate customer.
  3. Understand how these changes affect what it takes for your business customer to be successful. This includes changes in what it takes for your business customers to acquire customers, serve and retain them, manage them profitably, etc… In a large portion of the situations we’ve seen, changes in ultimate customer expectations lead to a fundamental shift in the dynamics of your business customers’ operations. In some cases, these are shifts that your business customers may have not fully recognized.
  4. Ensure that you have a solid “economic model” of your customers’ business. This should include understanding the basic processes and costs associated with acquiring, serving, retaining, and managing their relationships with their customers. This provides a foundation for focusing on the elements of the experience that have the highest impact on your customers’ business (very often not the “table stakes” requests they make of you). It also provides the foundation for knowing how to communicate with your business customers about the innovation you develop in a way that reinforces the business value to them.
  5. Brainstorm any and all opportunities to help make your business customers be more successful meeting the changing needs of their ultimate customers. Generally these opportunities have a direct impact on your business customers’ effectiveness in acquiring, serving, retaining, and managing their relationships with these customers. We’ve found that it helps to surface the explicit or implicit “rules” that constrain your traditional relationship with the business customer. Very often the greatest opportunities to innovate come from uncovering the opportunities and implications of breaking these rules.
  6. Analyze the impact that each of these potential innovations have on the economics of the customers’ business and prioritize them based on business value, complexity of implementation, and your credibility with customers on delivering that innovation.
  7. Present these innovation opportunities in terms of their economic value to the business customer. In some cases, there may be a considerable sales cycle to helping your business customers get their head around these innovations… particularly if they have not been directly involved in the above process with you.

While these seven steps describe the overall roadmap, there are clearly other factors that need to be considered and will be discussed in future posts.  One of these other factors is the development of a B-to-B-to-C Brand Strategy that answers the following questions:  How to we build a strong supplier brand?  How do we improve the “transmission rate” of your brand message through business customers to the ultimate customer? etc…

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  1. […] Optimizing the Business to Business to Customer Experience […]

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