Quick Take: Reinventing the demand center for distribution

Can B2B leaders redesign this business capability to reflect the experience-driven model that defines the future of distribution?

A short history of demand centers

Since my recent post about demand creation, I've been digging into the concept and capabilities of demand centers. I’m intrigued by the possibilities of demand centers for creating a radical future for distribution, and I sense that an upgrade and repurposing is possible. More on that in a moment, but first, let’s take a brief look at the history of demand centers. 

On the Forrester blog, I found a post published in 2013 helpfully named Should Your Organization Create a Demand Center? In it, Meta Karagianni explains:

A demand center is a central and/or regional hub of shared marketing services, infrastructure and processes. It enables organizations to bring programs to market by leveraging key corporate assets and best practices. Think of the demand center as a hybrid of centralization and decentralization, incorporating a pragmatic center-of-excellence approach.

In a 2018 think piece, Building a Better B2B Demand Center, BCG updates the definition of demand centers:

As digital technologies and changing buying behaviors reshape B2B marketing and sales, the long-standing challenges of generating demand and managing leads are becoming much more complicated. In response, more companies are turning to demand centers, centralizing demand generation and lead management to take advantage of scale economies and deepen the technical and analytical skills needed to orchestrate customer buying journeys.

BCG explains that the demand center approach for B2B marketing is “revenue and outcome driven” and aligned with an automated customer journey and personalized customer engagement points with timely follow-ups. By contrast, traditional B2B marketing is “activity driven” with limited accountability on revenue and a greater focus on volume. Classic customer journeys achieve manual and linear engagement and deliver a disjointed buying experience.

Renaming demand centers for the future of distribution

In the digital age, the historical demand center model must be updated to add artificial intelligence and achieve a balance of technology-driven effectiveness and human-centered business values. Which raises a critical question: What will a center optimize?

I see two problems with optimizing for demand. Demand is an outcome metric, and your customers don’t care about demand. By optimizing for an input metric instead, a center might build a foundation to weather the ups and downs of a company’s ability to execute its promise for customers. By choosing to optimize on something that you and your customers both care about, you can create a center that may build a sense of community, forming bonds of loyalty that go beyond service levels or product features and benefits.

Distributors are moving in a helpful direction by redefining their business models to deliver customer experiences that create value instead of stocking products and taking orders to serve demand. Customer experiences demand a new mindset, in which distributors view themselves not as intermediaries in the value chain but as facilitators at the center of commerce. I first reported on distributors at the center of commerce in Distribution Leans In, writing:

As an intermediary that stocks inventory and serves demand, distributors are constrained in the value they offer and the margins they earn. But by helping our society and economy get through the pandemic, distributors can claim a larger role. Distribution is where government, suppliers, customers, workers, communities, and more come together to get business done.

Let me be clear. If the future of distribution is creating customer experiences, then distributors’ primary role is not to add value to products.  Rather, as “experience” companies, distributors will use metrics that evolve to measure inputs for facilitating experiences and outputs achieved for customers. Distributors will continue to sell products and must generate revenue, but optimizing for demand is lazy and wrong. More is needed, starting with a new name for “demand” centers.

As an interim step, it may be helpful to conceive demand centers as experience centers. Harkening back to my report about demand creation, it’s worth repeating this excellent Harvard Business Review article’s advice:

Business customers increasingly control how they buy. They expect to engage with the companies they buy from through a coordinated blend of human and digital experiences and sales channels. It’s challenging for companies to create a fully-integrated experience. Especially when dealing with many prospects and customers (e.g., small and medium-sized businesses), it’s difficult for sellers to tailor solutions sufficiently to match each customer’s situation.

Words matter, but as an adjective for a critical capability, service is nebulous, passive, undifferentiated, and not compelling. B2B innovators might borrow from the tech sector’s community methods and engage customers in designing and naming “demand” centers. In an earlier edition, I adapted the tech world’s approach for launching digital startups to the needs of B2B innovators redesigning real-world business models. It’s a start.

Your take?

I believe that modernized (and renamed) demand centers put customers in control, blending human-centered business and technology-enabled responsiveness. Do you agree? Are “demand” centers a critical capability for customer experiences? Are you moving in a different direction? Do you need to know more? Please share your comments below or reach me at mark.dancer@n4bi.com.