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Imagine 2025 B2B commercial excellenceMay 2017

Imagine 2025 B2B commercial excellence | 32 | Imagine 2025 B2B commercial excellence

ContentsExecutive summary 4

Commercial strategies of leading B2B companies in 2017 6

Imagine 2025: position for commercial success in a disruptive marketplace 8

A proven journey to commercial excellence 14

Conclusion 15


Executive summary Exponential technologies are redefining today’s B2B landscapeAdvancements in digital technologies are progressing at a pace greater than B2B companies could imagine. Typically, B2B companies are notoriously known as the laggards in adapting to disruptive technologies. Now, however, B2B customers are behaving similar to those of B2C companies in that they expect the B2B companies to rapidly innovate and offer tailor-made customer experiences. With this change in customer expectations, B2B companies have no choice but to keep up with exponential innovation.

Forward-looking, leading B2B companies continue to differentiate themselves from average organizationsB2B companies that anticipated future trends, made calculated investments in cutting-edge digitization opportunities, prioritized customer needs and challenged themselves to behave like B2C companies are on the forefront of future market imperatives.

The B2B landscape in 2025 is going to be fundamentally differentWe forecast five major trends that will disrupt and redefine the B2B landscape in 2025:

1. Paradigm shift in competitive landscape: B2C companies will try to become B2B companies and change the traditional B2B competitive landscape.

2. Debunking the norm: Large B2B organizations will shrink their formal commercial workforce.

3. Human-machine intelligence: The perfect blend of human and machine intelligence will become a reality.

4. Reinvention of business models: B2B companies will generate alternative revenue streams by leveraging valuable information assets.

5. Cultural shake-up: Successful B2B companies will be start-ups at heart.

The next two years are critical for B2B companies to prepare for commercial excellence in 2025Over the next 24 months, B2B companies can take pragmatic action in order to emerge as winners in 2025. Ambitious B2B companies need to:

• ‒ Invest time and resources to imagine the known and unknown opportunities and threats for their company and industry

• ‒ Assess their current commercial maturity to benchmark their positioning relative to leading B2B companies

• ‒ Define a clear commercial transformation road map for the future, accounting for the future threats and opportunities, as well as current maturity

Imagine 2025 B2B commercial excellence | 7

Commercial strategies of leading B2B companies in 2017

“The future is an unknown, but a somewhat predictable unknown. To look to the future, we must first look back upon the past. That is where the seeds of the future were planted. I never think of the

future. It comes soon enough.”

– Albert Einstein

The gap between leading and average performers widened significantly in the last five years, thanks to several digital disruptions. While there is no secret sauce to exceptional commercial performance, leading B2B companies have implemented common strategies that set them apart from their competition.

Targeted investments in future opportunities, not by chance, but by choiceA leading commercial organization has the ability to visualize and commit to future investment opportunities. Most commercial leaders are preoccupied by the short-term goals of meeting quarterly or annual sales targets. Our interactions with high-performing commercial officers reveal that they often dedicate a significant portion of their annual budget to visualizing the future economic outlook, macro trends and enabling upcoming disruptive technologies.

Kept customers, not technologies, at the center of innovationCommercial leaders are often overwhelmed by the volume of technologies they can deploy to drive effectiveness. Our experience has taught us one rule: keep your customers at the center of innovation. Leading B2B companies live and breathe this rule. It is easy for a commercial leader to deploy the “cool” technologies, but if the investments do not solve a specific customer need, then the investments yield diminishing returns. For example, a B2B commercial leader was planning to invest in a marketing automation tool to improve the lead generation process. However, upon conducting a rapid commercial assessment, it was evident that customers demanded pricing transparency and switched to a competitor’s product for a lower price. Given the situation, the commercial leader revisited the investment decision and shifted focus to make pricing transparency the immediate priority.

Adopted “Go Digital” as their mantra for the last five yearsLeading B2B companies realized early on that digital disruption is the key enabler for success. When we speak with top B2B commercial executives, they clearly understand the difference between CRM and digital strategy. Average companies assume that top-notch CRM and CPQ tools suffice to meet their digital needs, while leading performers embed digital across all aspects of the commercial ecosystem, such as marketing automation, product innovation, sales and service optimization, omnichannel strategy, pricing transparency, and analytics.

Strove to act like a B2C companyLeading B2B companies truly believed “B2B customers are behaving like B2C customers” before it was a reality. The distinction between B2B and B2C customers continues to blur; and one of our client executives summarized it best by asking, “Why can’t our commercial processes and customer experiences be like Tinder or Airbnb?” While the statement sounds provocative, B2B companies cannot deny the truth behind it. Leading B2B companies are investing heavily in harnessing big data to create personalized customer buying journeys to meet the varying needs and expectations of customers at each stage of their sales and service cycle.

So, what did they do differently? Leading commercial organizations …

6 | Imagine 2025 B2B commercial excellence

Imagine 2025 B2B Commercial Excellence | 9

Imagine 2025: position for success in a disrupted marketplace

“Planning is bringing the future into the present so that you can do something about it now.”

– Albert Einstein

The B2B marketplace is experiencing significant disruptions: a new competitive landscape is evolving, customers are challenging existing business models, machines are getting smarter, more data is available, and most importantly, advancements in innovation outpace the rate at which companies try, test and pilot new technologies. These significant disruptions inspired us to imagine: what will the future of B2B commercial excellence look like in 2025?

Leveraging our vast experience in the B2B commercial space and our collective insights through many discussions with B2B commercial leaders, we have identified five key trends that will disrupt the B2B commercial space in 2025.

Imagine 2025Reinvention

of business models

Human-machine intelligence

Debunking the norm

B2B companies will become start-ups at heart, while start- ups will become B2B companies in culture

B2C companies will also compete directly with B2B companies for share of wallet

Large B2B companies will move away from single-source traditional revenue streams and invest in alternative revenue streams

Commercial workforces will be built out of customers and advocates rather than just employees; largest B2B organization will own a small commercial workforce

Companies make full push into technological future, making the perfect blendof human and machine intelligence a reality

Cultural

shake-up

Paradigm shift in

competitive landscape

The paradigm shift in the competitive landscape: B2C companies will try to become B2B companies

While the B2B companies in 2017 are trying to become B2C, we expect the inverse to happen and disrupt the B2B marketplace in 2025. Leading B2C companies are already doing everything a B2B company is aspiring to do: micro customer segmentation, personalized interactions, pricing transparency, effective marketing techniques and investments in exponential digital capabilities. The only thing they are missing is a compelling B2B product. We already see a few examples of this shift. Amazon’s launch of Amazon Web Services marks its foray into the B2B space, and they are already one of the top competitors for traditional B2B companies. Do we think that all leading B2C players are going into the B2B space? Probably not. The point is that there has to be a fundamental shift in how B2B companies evaluate their competitive landscape in the future; it is not just about having a competitive strategy against the known B2B players, but also having a strategy to counteract the unknown B2C players.

Debunking the norm: B2B companies will shrink their formal commercial workforce

Let’s rewind to 2005: do we think we would have believed the following statements?

1. The world’s largest taxi company will own no taxis

2. The world’s top hotel services provider will own no hotels

Now let us imagine 2025. We are not far from imagining a large sales organization with a very small sales force. Large companies will enable a “platform-based B2B commercial ecosystem” where every member of the ecosystem, such as customers, influencers, distributors and other partners, comes together in a digital platform to own either part or all of the entire selling process. Coty, a traditional beauty company with a large direct sales force, recently acquired Younique, a leading online peer-to-peer social selling platform. This acquisition is an example of companies shifting away from a sales strategy that relies on a direct sales force, as Younique’s business model is to provide a platform that enables a community of independent players to sell their products to peer customers.



Today’s market shows that leading companies have already initiated progress toward the perfect blend of human and machine intelligence. Volvo, for example, leverages machine learning to predict when vehicles will need servicing. In a B2B context, think of a Volvo customer who manages a fleet of Volvo trucks. By using machine intelligence, Volvo has automated the process of identifying customers in need of service, thus enabling its commercial sales and service teams to dedicate their time to other value-adding activities. Through this, Volvo has positioned its organization for commercial success in a future that will be increasingly driven by machine intelligence.

Undoubtedly, human intelligence is still critical for a successful commercial organization, but the way human intelligence is utilized will be different in 2025. Human intelligence will focus mostly on shaping the commercial strategy, managing relationships and making emotional decisions.

Reinvention of business models: B2B companies generate new revenue streamsLarge B2B companies will capture enormous amounts of information due to exponential technologies. In addition to using this data to enhance customer experiences, B2B companies will discover innovative ways to complement their existing revenue models, such as packaging collected data and selling “data as a service” to non-competitive companies. As a hypothetical example, credit companies that offer loans to small and medium-sized businesses traditionally rely on the borrower’s credit history and personal information to determine the loan offer and interest rates. However, crowd-sourced review companies are constantly collecting data about the health of these businesses through public reviews. This data can be packaged and sold to credit companies through a “data as a service” model. In this example, the crowd-sourced review company can realize a new revenue model by leveraging the big data it constantly collects. On the other end, the credit company is able to leverage alternative data to assess a borrower’s capability to repay, and this data is real-time and equally compelling to that of a credit score. Our hypothetical example is a mere sneak-peak into the massive opportunity that lies ahead for B2B companies.

Cultural shake-up: successful B2B companies will become start-ups at heartPresent day, we are witnessing many “wannabe start-up” B2B companies with investments in dedicated innovation groups within the organization, partnerships with incubators and a massive increase in hiring millennials. Currently, B2B companies are collaborating with start-ups for two reasons:

1. B2B companies have an unmet business need and are looking for start-ups that can provide solutions.

2. B2B companies scan the start-up market to monitor new innovations and proactively partner with start-ups to create new business models.

In 2017, there is great momentum in the former, and we expect 2025 to show great momentum in the latter.

Today, leading companies like Capital One have already started infusing their corporate culture with a start-up mindset. In 2011, Capital One launched C1 Capital One Labs, its own internal product and technology incubator and accelerator. The group’s purpose is to look 2–3 years into the future to identify high-value opportunities and develop relevant solutions capable of satisfying future customers’ needs. Since its founding, C1 has not only successfully delivered and scaled new product launches, but its innovative, forward-thinking work has also helped shape the overall company strategy, demonstrating the vast impact of a start-up mindset. We also see this happening in the reverse manner. Companies that originated as start-ups, like Uber, are investing in B2B companies. For example, Uber recently acquired Otto, an automated trucking company. What once started as a consumer ride-sharing business is now entering the B2B logistics market.

Leading B2B companies in 2025 will have a strong start-up culture at heart. They will incorporate a risk-taking attitude into their formal performance management process, become a platform to gather all players in the ecosystem in order to drive innovation, actively collaborate and acquire start-ups, and most importantly, will own fewer assets within the organization.

Human-machine intelligence: perfect blend of human and machine intelligence becomes a realityThe market is already experiencing great traction on the applicability of artificial intelligence (AI), machine learning, and Internet of Things (IoT) in the B2B commercial space. While data gathered by these technologies is extremely valuable, it can also be overwhelming to run live analytics on a day-to-day basis, providing continuous insights to a commercial organization. The objective is to find the right balance between human and machine intelligence. Leading B2B companies will leverage the enormous amount of data collected through machine learning to automate most of the non-value-added activities, such as researching customer information to assess needs; sending targeted, personalized value proposition materials; matching pricing to competition; and processing sales and service transactions.

Imagine 2025 B2B commercial excellence | 13

Is your organization prepared for 2025?

How do we suggest companies prepare to face 2025?

1. Index your business against present-day leading practices • Evaluate your current state commercial practices

and processes

• Benchmark your commercial organization

• Conduct a gap analysis to identify opportunities for improvement

2. Imagine 2025 by preparing for disruptions• Follow your customers to understand their

disruptions

• Follow start-ups to identify strategic investments being made in your industry and the long-term impact for your company

• Follow macro trends to proactively address potential industry disruptions

3. Initiate actions within the business to position it for success• Based on how well your commercial

organization is performing today and the anticipated disruption to your company, commercial leaders can:

• Enable your current business model and commercial organization by adopting new technologies to enhance current operations

• Extend your business model and commercial organization by identifying new, complementary revenue streams

• Reinvent your business and commercial organization to gain a competitive advantage in a disrupted marketplace

“Self-awareness involves deep personal honesty. It comes from asking and answering hard questions.”

– Steven Covey

Index 2017 Imagine 2025 Initiate actions

How does your company fare against leading B2B commercial

practices of 2017?

Question

How will your industry be disrupted in 2025?

Question

Given where you are today and how you will be disrupted in

2025, what do you need to do?

Question

Follow…

2. Follow the money• Identify where B2B companies,

venture capitalists and universities are investing in disruptive innovations

3. Follow the macro trends• Identify and analyze industry and

economic macro trends • Assess and understand their

potential impact to business

1. Follow your customers• Understand your customer’s value

chain • Recognize disruptions across the

value chain and their potential impact to customers’ revenue streams

Smart Easy “Phydigital”

Ecosystem Proactive Digital

Machine Purpose

1 2 3

4 5 6

7 8

• Move from traditional macro to micro segmentation to find new pockets of growth and offer tailored products, pricing and value proposition to specific segments

• Provide enhanced customer experience throughout the commercial process, e.g., one-click reordering, predefined product configuration and personalized customer service

• Integrate physical and digital sales and service channels to take advantage of every customer interaction to inform him/her about the product, promotion, price, make a sale, or turn the customer into an influencer

• Get involved in the entire value chain of the commercial ecosystem to drive value to all players. Make presence felt through brand influencers and end user feedback

• Guide commercial analytics team to look at customer behavior patterns and prompt the marketing and sales teams to proactively reach out for opportunities

• Leverage internal and external data to understand and strengthen commercial relationships, e.g., LinkedIn sales navigator

• Invest in chatbots and RPA to automate a large portion of non-value-add commercial activities performed for low-value customers

• Invest in purpose creation to differentiate in the market, attract millennial talent and sell products to millennial customers

Eight practices serve as differentiators in today’s market

m

Enable Extend Reinvent• Leverage new technologies

and services, such as robotics and automation, to further enable a company’s salespeople and stay relevant with the latest sales practices of 2017.

• Understand the core value proposition and bring that value to other products or services that will exploit revenue streams different from those traditionally targeted by the firm.

• Transform the entire business model to exploit revenue streams in a way that vastly differs from how they have operated in the past.

Reinvent

Extend

Normative Disruptive

Maturity against 2017

leading practices

Enable

2025 disruption

Lagging

Leading



A proven journey to commercial excellenceOur client, a leading global diversified industrial products manufacturer, serves as a proven case of commercial excellence. The client set out to transform its commercial operations in order to increase shareholder value and margins, while also enhancing its customer experience. To achieve such a large undertaking, EY started small and focused on delivering a phased transformation that would enable, extend and reinvent the client’s commercial operations. At completion, the transformation will generate $100 million in annualized run rate benefits.

This client has achieved leading B2B status through its successful commercial strategies, which align with the four aforementioned characteristics of leading commercial organizations. First, our client puts its customers at the center of its innovation efforts. A large-scale customer service initiative is underway with EY’s collaboration, supported by vast technological enablement capabilities. These innovative changes are being implemented for one reason: not to deploy cool, fresh technologies, but to improve the overall customer experience. Creating superior customer experiences across the value chain is at the heart of all innovation decisions and investments, which is a critical component of our client’s successful strategy.

Lastly, our client has challenged itself to adopt the “act like a B2C” mindset. One thing we constantly hear from client executives is a desire to perform like Amazon. With the increasing needs and expectations of B2B customers, our client is rising to the challenge to meet and exceed those expectations by serving and fulfilling like a B2C powerhouse. Being “Amazon-like” has become a mantra at this global client, and it is that type of thinking that has allowed our client to propel itself to become a leading performer in the B2B commercial space.

ConclusionOverall, we anticipate that the future of B2B commercial will look vastly different from what we see in the market today. Nonetheless, it is never too soon to prepare for the future by considering leading practices, trends and disruptions. Our client experiences prove that companies can greatly benefit from assessing their current commercial operations against their expectations of the future in order to set the standard for the future of commercial excellence.

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EY is a leader in serving the global financial services marketplaceNearly 51,000 EY financial services professionals around the world provide integrated assurance, tax, transaction and advisory services to our asset management, banking, capital markets and insurance clients. In the Americas, EY is the only public accounting organization with a separate business unit dedicated to the financial services marketplace. Created in 2000, the Americas Financial Services Organization today includes more than 11,000 professionals at member firms in over 50 locations throughout the US, the Caribbean and Latin America.

EY professionals in our financial services practices worldwide align with key global industry groups, including EY’s Global Wealth & Asset Management Center, Global Banking & Capital Markets Center, Global Insurance Center and Global Private Equity Center, which act as hubs for sharing industry-focused knowledge on current and emerging trends and regulations in order to help our clients address key issues. Our practitioners span many disciplines and provide a well-rounded understanding of business issues and challenges, as well as integrated services to our clients.

With a global presence and industry-focused advice, EY’s financial services professionals provide high-quality assurance, tax, transaction and advisory services, including operations, process improvement, risk and technology, to financial services companies worldwide.

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This material has been prepared for general informational purposes only and is not intended to be relied upon as accounting, tax or other professional advice. Please refer to your advisors for specific advice.

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