Deep Dive: In pursuit of proximity
Can B2B innovators apply a world-class innovation concept, as applied in B2C, and tailor it to fit the changing needs of the business buying community?
I’ve just discovered a fascinating article, Proximity: Closing the Gap Between Desire and Delivery, by Kaihan Krippendorff, author and founder of The Outthinker Strategy Network. Krippendorff builds on Robert Wolcott’s concept of proximity—the use of technology to drive the production and provision of services and products closer to the moment of demand—to explain that as consumers have “experienced the convenience of one-click shopping, intuitive interfaces, and quick, low-cost shipping” they will not want to return to “standing in grocery store lines, hunting for parking spots, [or] lugging shopping bags.” The lasting impact of COVID-19 is that the “instant gratification economy is here to stay, and it’s cutting the time from desire to delivery in ways that will impact much more than how we purchase clothing or groceries for the week.” These observations caught my attention and made me wonder how they apply to business-customer buying preferences and the lasting impact of COVID-19 on the B2B customer experience. I shared these ideas with a few B2B practitioners and innovators and found that proximity is an actionable concept, and that it may apply differently for innovating business products, services, and customer experiences. My findings and questions follow, and I welcome your thoughts as we all dig deeper.
When B2C and B2B align
It bears repeating: proximity is the use of technology to drive the production and provision of services and products closer to the moment of demand. Proximity means that when a need emerges, it is met. When a question arises, it is answered. When frustration happens, a solution is revealed. Supply and demand are aligned instantly, most often through the magic of digital technology. Already, when a consumer checks out an influencer on a social media platform, technology allows the consumer to instantly obtain whatever the influencer advocates, clicking through to order a product, schedule a workout, book a cruise, and more. Krippendorff offers an example that goes further, where there is zero lag (or latency) between an emergent need and a fulfilling solution:
Imagine someone driving down a highway. Their car hits a pothole and is damaged, sensors diagnose the damage, repair instructions are immediately beamed down, and software in the car activates the repair—all before the driver even notices the bump.
To me, this B2C example is immediately applicable for many B2B companies. Businesses buy and operate all manner of damage-prone vehicles, including cars, trucks, forklifts, tractors, airplanes, trains, and more. For consumers, instant recognition and repair provide an uninterrupted driving experience, strengthening automobile manufacturer brand promises around safety, utility, comfort, and performance. Some of these apply to business experiences, but business benefits might also be measured as business profits, wealth creation, equipment downtime, employee productivity, worker safety, operational productivity, work-related injuries, OSHA compliance, professional standards, union grievances, and more.
In previous research, I confirmed that B2B companies responded to the COVID-19 pandemic by offering instant gratification innovations around online shopping, outfitting kiosks with click-to-talk capabilities, and forward-deploying predicted purchases at worksite locations. Encouraged by the overlapping benefits for consumers and business buyers, B2B innovators can pursue proximity as a driver for customer experiences by acting on Krippendorff’s three principles, shared below with my added comments, all of which point to the future of business in a post-COVID world:
Push physical value closer. COVID disruption of the global supply chain has created opportunities for distributors that offer local inventory and services. Innovations to consider may include placing technical support and other valued resources at customer locations or enabling “find my” features via smartphone to locate supplier resources—people, inventory, delivery trucks, and so forth—using geolocation capabilities.
Deliver digital value faster. COVID encouraged online ordering, but it is essential not to confuse socially distant buying with faster provisioning of support and services through digital means. Make a list of every service need, information request, and customer complaints, and redesign how your company responds through digital connections.
Enhance emotional value. Emotional value is vital for business customers, but it is not usually measured as raw happiness, self-actualization, or social status. Instead, business emotions involve job satisfaction, goal attainment, and increasingly, helping employees satisfy the very human need to contribute to a higher purpose through job responsibilities and work activities. Measuring and acting on customer emotions is a human-first requirement for state-of-the-art digital customer experiences.
Where B2C and B2B diverge
B2B and B2C are as distinct as they are alike, but in my experience, the similarities receive more attention and justify more innovations than the differences. One foundational distinction is that the point of demand is very often not the point of purchase for business customers. A decision to buy a product or use a service is often at a time that precedes the actual placing of an order. Moreover, the decision to repeat a purchase is made after an order is placed, when the efficacy of the product or service can be judged in use.
The relationship and timing of the point of demand versus the point of purchase are found by examining customer buying habits across customer buying situations, of which there are at least eight situations common across every industry and line of trade:
Convenience. When buying on convenience, business customers buy familiar brands with only a quick check for price, performance, and new features or benefits.
Price shopping. The name says it all. Price shopping is about aggressive price checks with decisions judged against price, landed cost, or total cost of ownership.
Spot buys. Spot buying is about taking advantage of momentary low prices, often created by market conditions or supply chain fluctuations.
Solutions. Solution buying involves solving a problem or executing a project and often involves bundled or coordinated buys of products and services.
Customization. Similar to solution buys, custom purchases are made when a business customer requires specific product or service configurations that are not widely available, and in some cases, non-existent or reliant on collaborative product development or service design.
Projects. Buyer needs require delivery of projects and services over an extended period of time, delivered by multiple companies in the value chain, to achieve a specific goal or outcome.
Replenishment. Replenishment buys are often predictable or pre-planned purchases against an established operational timeline or sequence of events. They can include products purchased as input for OEM products or items needed for maintenance, repair, and operation of customer plants and facilities.
Emergency. Businesses buy products and services in response to (or preparation for) “acts of God” that might include fires, floods, extreme weather, geopolitical conflicts, and more.
Careful analysis of each purchase situation involves understanding the customer’s need as a business, with details that include identifying decision-makers, influencers, users, applications, formal and informal buying processes, purchasing controls, the role of professional buyers and purchasing departments, expected returns on investment, and more. The first three buying situations—convenience, price shopping, and spot buying—may be consumer-like and allow individual decision-making. However, requirements around purchasing authorizations, budget, audits, and oversight can influence the relationship between realizing a need and making a purchase.
The difference between business purchasing behaviors and consumer buying activities is very different in all other buying situations. This is familiar to B2B leaders, managers, marketers, and salespeople, although what is commonly known is frequently forgotten. It is incumbent on B2B innovators to go “back to the basics” when setting out on a course to leverage proximity for competitive advantage.
Thinking strategically about B2B proximity
Rather than applying B2C proximity innovations to B2B situations, it may make better sense to start from scratch, with a B2B mindset and foresight about the future of business. Three applications spring to mind:
Can proximity be more about provable returns than instant gratification? Businesses buy on impulse, but not often. When a customer buys more thoughtfully, there is a more significant opportunity to create a B2B partnership, which leads to lasting relationships and predictable profits. Putting proof of value at a customer’s fingertips may be a better approach for harnessing proximity for B2B innovations.
Can proximity be about collocating your algorithms at customer locations? As I understand it, 5G infrastructure delivers higher bandwidth and lower latency, leading to more connected data and platforms. B2B companies are racing to leverage AI tools to improve all aspects of business customer experiences. By placing those algorithms at the customer's location, B2B innovators may encourage customers to contribute more of their data, combining with supplier data. More data means better outcomes. Better outcomes mean improved loyalty and sales. Placing algorithms in close proximity to customer data may be a step forward to putting trust at the center of B2B innovations.
Can proximity spawn a new wave of B2B platforms? After Amazon Business, B2B marketplaces seem to have hit a wall. Collaboration-minded digital startups are finding it challenging to build B2B relationships. Distributors balk at putting their products in a buy box with competitors. Manufacturers wonder if they can go it alone and not rely on an upstart marketplace to achieve dreams of differentiation. Neither party wants to give away hard-earned customer loyalty and profit margins without truly new created value. A fresh approach to proximity may be the solution. Marketplaces built around accepting orders in a buy-box environment may fit convenience, price shopping, and spot buys. I suspect that a marketplace (or market network) built for any of the other buying situations (described above) would offer a very different business customer experience, one with the potential to strengthen collaboration between distributors and manufacturers, rather than stoking conflict. Is this true? Have you seen such a platform? If so, please reach out!
Join our innovation community (by asking questions)
I encourage readers to answer the three questions offered above with serious intent. I believe that proximity, properly applied for B2B innovations, will be a powerful and game-changing mindset for creating not only radically different customer experiences, but radically different B2B collaborations across the B2B ecosystem of manufacturers, distributors, dealers, contractors, platforms, vendors, service companies, data aggregators, and more. Please reach out with your questions, ideas, and experiences.
I will close with a somewhat unserious potshot at today’s fashionable jargon. My list and description of customer buying situations (above) are decidedly old-school. As e-commerce has taken root in B2B, it seems to me that thought leaders have felt the need to offer a new lexicon to go with new technologies. Sometimes newer is not better, and I take exception to the impression made by new customer terminology, if not the actual intent. Consider the following “fashionable” terms:
Personas. In marketing, personas are often defined as a fictional representation of an actual user. Businesses have the resources to determine a customer’s true priorities, needs, and behaviors. Moreover, persona implies personal. Very few business buying decisions are left up to the personal discretion of the buyer.
Journeys. Businesses manage their purchases by executing well-designed and controlled processes and policies. Moreover, processes are measured—against required returns that are translated into supplier expectations. Journeys can be voyages of discovery. Processes and policies are about achieving intentional outcomes.
It could be that the terms “persona” and “journey” migrated from the B2C lexicon to B2B. I believe there is value in examining B2C trends and input to B2B innovation, and I have explored consumer innovation theory here, here, and here. Sometimes, the use of technology begins in applications for consumers. But not always. And B2B innovators should never accept the easy and lazy mantra that “because it happens in B2C, it will happen in B2B.” B2B innovations require B2B thinking. It’s our future, after all.
Don’t be a stranger. Share your thoughts in the comments section below. If you prefer, reach out directly at mark.dancer@n4bi.com.