We’re running a series of previews and interviews that look ahead to the first InternetRetailing Events B2B Summit, to be held in Berlin in January.
Today we hear from Klaus Göldenbot, outgoing president of electronic, electrical and industrial component supplier RS Components, on the challenges that face B2B companies as they move their business online.
InternetRetailing: At the InternetRetailing B2B Summit you’re talking about pain points in digital transformation. Can you tell us about some of the pain points that B2B companies might face?
Klaus Göldenbot, outgoing president, RS Components: There are many potential pain points. In our business we’ve gone from 15 years ago when online made up 3% to 4% of our business to the point now where online is in the high 60%s. In some markets it accounts for 80% of business.
We used to send out millions of catalogues to customers and then introduced the online channel. Our commercial salesforce was very scared about the impact of the internet, and whether the internet would take their jobs.
But actually it turns out that in our business you need the salesforce to make the transition really successful. If you look at the data today, our most successful customers – who have been growing their business with us above average for a number of years – use all channels. They go online but also use phone lines to talk to the salesforce and might also send a fax – while the fax is almost a dinosaur of communication you need to provide it if the customer still likes it. The more a customer uses a multitude of channels the better their sales and profitability.
In the beginning we had to make sure that sales people could explain simple things to the customer, like how you register online. The salesforce could see there was a huge advantage for customers to go online. We needed to go through a lot of education and we incentivised the salesforce through their bonus if they were achieving high online conversion rates with their customers, though today we don’t have to do that any more because online is now part of the business.
We only realised another pain point after a while, when we’d put focus into the website and making it fantastic and easy to use. We introduced a very clear customer experience measurement. But we often found that although customers rated the online experience well, our net promoter score, which measures whether they’d come back or recommend us to someone else, was not so high. How could that be when we’d given them a great online experience? But we found it was about whether the customer’s experience was seamless. Often a customer goes online but might need to call someone, and then they need to be able to find the phone number easily.
It’s taken a while but we found we need to understand the end-to-end customer journey across channels. The look and feel shouldn’t seem any different to them across channels. That’s quite a challenge and I can imagine quite a few organisations will feel the pain of going through that. You need to be up for constantly improving and making change happen.
IR: What positive benefits have you seen from digital transformation?
KG: We’ve seen massive benefits. By being online our reach is so much bigger. We’ve seen an increase in the number of customers we’re dealing with over the years, and an increase in the number of contacts within a customer. We’ve seen a lot more interest from suppliers wanting to list their products on our website.
Another benefit is that the cost of processing an order has reduced. We have been able to give people who maybe were just on the phone, typing an order or processing a fax, much more interesting jobs. Access to the market is a lot faster – the time it takes to launch a product is faster online.
We’re also interacting with the younger generation. In our business, the average customer is typically a male engineer who is 45-46 years old. But we also host online communities that are used by people who predominantly buy from us online. On DesignSpark, for example, electronics designers can download free software and CAD models to make their design better and faster. The average age of these users is 26, and without us having online channels, including these forums and social media activities, I don’t think we would have been able to attract so many younger generation customers – and about 15,000 new customers a month at the moment come just through that channel. That’s important because at some point in time those engineers who worked with us 20 years ago, and used the catalogue, will retire. If you don’t have enough new customers who are using the internet, then your business is at risk. That’s another big benefit of being very active online.
IR: Do you find that you’re more active online than your competitors?
KG: I’m not aware of any of our competitors who don’t do a significant amount of activity online. Many of our customers, whether they are engineers in research labs or buyers, live online. The other segment is people who live less online, and who will be in a factory repairing the kit – and when they need something they’ll go online to buy.
You find that again and again you have to be online. In most of our markets where internet usage is now a given it has become a hygiene factor – it’s expected of you.
We’ve had a big increase in the number of people working on our online activities. We’ve also created a number of agile teams. Three or four years ago we had one agile team with about 10 or 15 employees. They took customer feedback and made changes to our online offer. We managed to get about three or four, or sometimes 5 or 6, changes live a month. At this moment in time we’re releasing about 200 changes a month, and we have six agile teams.
When a customer comes to you, and tells you they’ve seen something online that isn’t working, if you don’t fix it and they come back and see that they have a big reason to go somewhere else. You can now buy most products from several companies – why would you go back? At the end of the day it’s about the experience you get. You need to constantly improve and innovate in order to keep increasing expectations.
IR: Aside from your own speaking slot, what are you most looking forward to about the B2B Summit?
KG: The networking, and getting to meet people from different industries, to see what their pain points are, their challenges, what the opportunities are, spending time with them and discussing things through. Often you can come from very different industries, and have very similar problems but at the end of the day you have to understand how to create an outstanding customer experience. If you do that you can be at the forefront. If you don’t, then lose out. When I look at the attendee list for the B2B Summit, it’s fascinating. There’s a really good mix of industries and companies and I think that’s what I’m hoping to get out of it – to exchange information, see what opportunities and challenges they have, enjoy the time and get something really out of it.
Klaus Göldenbot will be discussing pain points in digital B2B transformation at the InternetRetailing Events B2B Summit in Berlin on January 25. To find out more, visit www.internetretailingsummit.com/internetretailing-b2b-summit-europe. Contact Lee Price
(Lee.Price@internetretailingevents.com) if you’re interested in applying to attend.