The X eCommerce System is a new systematic approach for distributors looking to grow and compete in the digital landscape. In an excerpt from the book “Digital Branch™ Secrets: eCommerce Playbook for Distributors,” Justin King defines this customer-centric system, and why it’s key to eCommerce growth.
Built upon our years of creating profitable, B2B eCommerce businesses, the X eCommerce System is a seven-component approach to building a successful Digital Branch. The XES includes the information and resources you need to drive your eCommerce business—from strategic plan, to your website technology, product data, design, and analysis—all centered around providing a customer-centric Digital Branch. By customer-centric we mean orienting your Digital Branch and your business around making your customers’ work life better.
Each component isn’t a silo—it’s part of a collaborative effort to provide exceptional customer experience. Harald Fanderl, a partner with McKinsey & Company, describes this approach well:
Customers are relatively simple, right? … What creates the complexity is the company. Through the years, for many reasons, sometimes a new IT system, sometimes regulation, some legal requirements, and so on, add complexities little by little. Because companies do not focus that much on…customer journeys, you end up with an extremely cumbersome experience for customers, which is actually not optimized for the customer, but optimized for the company. What we are advocating now is this shift in perspective, so that the customer becomes the center of attention again.
In short, Fanderl’s message is this: your business needs to be in the business of providing an exceptional customer experience. It’s not touchy-feely; it’s good business. This is an area where every business can learn from Amazon’s mission “to be Earth’s most customer-centric company.”
As you go through the X eCommerce System, don’t base your next steps on what your business can do. Rather, focus on being intensely curious about what your customers actually want. For every component, we recommend asking yourself this question: “How can I build this to make my customers’ job faster and easier?”
Four Core Challenges for B2B (versus B2C)
Distributor eCommerce is a complex business. You have complex products, complex technologies, and complex customers. B2B is different from B2C. Here are a few of the core challenges:
- Technological complexities: An eCommerce platform needs to plug into complex existing systems: the ERP, contracts and pricing, taxes, punchout, product content, workflows, etc.
- Resourcing: Finding the right people is difficult. While eCommerce is a hot industry and a lot of talent is out there, those people are often working for cool brands or agencies. It’s hard for distributors that may be located outside bigger cities and in industries that aren’t as “hot” to find great talent. Also, the products sold in B2B are often not “sexy” to those outside the industry. Worse, outsiders may not even understand what these products are or what they do.
- Culture shift: Digital is a big change in the way B2B does business. For organizations that are entrenched or resistant to change, building a Digital Branch represents a change in the demands on leadership and the entire team. Focusing on customer experience will require an integrated effort throughout the organization.
- Purchasing process: Procurement in B2B is usually very different than in B2C. B2B buying typically involves multiple people, different departments, and complex approval workflows—meaning additional transparency about buying decisions is more important. In B2C, only your roommate knows what you buy; in B2B, your boss might have to approve each order.
In short, B2B is drastically different from B2C, and taking the complexities and challenges inherent in B2B and trying to fit them into an eCommerce solution built for retail is really hard to do. That is why we created the X eCommerce System.
A Start-Up within Your Business
If, like many distributors, eCommerce is a younger division in a larger, older organization, it can be hard to understand how your Digital Branch is performing as a business channel. If that’s a challenge in your company, think about treating your Digital Branch as a start-up within your organization—with its own mandate, its own team, and its own Profit and Loss Statement (P&L). This puts the ownership of the Digital Branch into the hands of the operators—where revenue can be separately tracked, and spending is tied directly to the eCommerce business. There are a few innovative businesses that have taken this approach:
- Gamut.com was started as an online-only business launched by Grainger. With a proprietary information system, the site built a robust catalog of product data and focused on elevating products and product sales over branding. Since its launch in 2017, Grainger’s overall revenue from online sales continues to increase, and functionality and user experience features from Gamut.com are adopted on Grainger’s own eCommerce site, Grainger.com.
- Supplyhouse.com is an online-only distributor of plumbing, heating, and HVAC. Launched under the current name in 2014, the site innovates in customer experience and eCommerce growth. Their digital focus allows them to develop content, marketing, and delivery services focused on driving online sales.
- TruPar.com is an online-only parts business started as an independent project of TruPar America. A bootstrapped start-up, the site features nearly eight million SKUs online and is focused on developing automated solutions to serve its over forty-five thousand B2B online customers.
Seven Components of the X eCommerce System
As you know, eCommerce is not “set it and forget it” – it’s a complex system of technology and people that work together to grow your Digital Branch. The X eCommerce System was created to break this down into clear, actionable components that apply to every stage of your business’s maturity.
Its purpose is to give you a clear understanding of how to leverage every component—whether you’re starting at day one or are ten years into the business. We look at seven components of a successful Digital Branch, each centered around your current and target customers: plan, people, technology, user experience, analytics, product content, and operations.
Customers: At the Center of the System
Jan Moore, an entrepreneur, says, “Nothing happens until someone sells something. And nothing is sold until you have a customer to sell it to.” Without customers, there is no business. Therefore, we start the XES at the center: the customers.
One of the favorite questions we hear is “Why are our customers spending their money with us rather than with our competitors?” This question signals that the distributors have started thinking about their customers behavior (rather than their business needs). Amazon, with its goal to be the most customer-centric business, has this question deep at its core. In order to answer this question, we must understand what motivates the customer. To appreciate the power of the XES, we must understand more about why and how customers buy what you sell.
First, we must understand why people buy.
In the 1950s, William Schutz created a theory of human behavior known as FIRO (Fundamental Interpersonal Relations Orientation). According to this theory, there are three main interpersonal needs that people seek: affection, control, and inclusion. Edgar Papke says it this way: “Customers want: attention, competency, and caring.” When customers’ needs are met, they feel good. When they are not met, customers get frustrated and angry.
In the B2B world, customers are trying to complete their job. They want reliability and quality (competency), they want to feel like they are important (attention), and they want to be treated well (caring).
Each customer will likely prefer one out of the three. Your company will also meet one of these needs more than the others. In his book True Alignment, Edgar Papke says, “Often, we define customer experience without fully understanding it, which is why companies become misaligned with their customers’ expectations. Companies must explore the full scope of that experience to understand how to deliver to it.”
Do you understand your customers’ general preference? Is your company aligned to that preference? Most B2B customers prefer either competency or attention. At B2X Partners, we reach out to distributors’ customers and ask: “Why do you buy from Distributor ABC?” In more than three thousand surveys and interviews, we’ve seen a gap between what the company sees as its strengths and what the customers perceive and value.
Using a word cloud, these are the phrases we hear from distributors themselves when asked, “Why do your customers buy from your company?”:
When we ask customers, “Why do you buy from this company?” they respond:
Your task: Understand your customers’ needs. Align your business and your Digital Branch with those needs.
Justin King is the lead author of Digital Branch™ Secrets: eCommerce Playbook for Distributors, from which this article was excerpted. Justin King is President of B2X Partners, a B2B eCommerce agency focused on distributors and manufacturers. Reach Justin at email@example.com and LinkedIn.
The book is available on Amazon and at www.digitalbranchsecrets.com.