For years B2B Manufacturers and Distributors have thought about their commerce platforms, conceptually, as extensions to their ERP. This is one of the core reasons why commerce adoption in B2B remains extremely low.
For years B2B Manufacturers and Distributors (referred to as B2B from here on out) have thought about their commerce platforms, conceptually, as extensions to their ERP. This is one of the core reasons why commerce adoption in B2B remains extremely low, typically below 5% of a B2B organization’s total customer base.
Rather, if B2B organizations approached commerce as an extension to CRM, they would see user adoption averages closer to 50%. Here’s why.
Understanding B2B eCommerce
eCommerce is complex, but it’s not complicated. We can break down the components of successful B2B eCommerce adoption into some basic components:
Logically, Data power Systems, which power your Experiences.
We can break these down further in the following ways:
Understanding the B2B eCommerce Strategy
OEM and MRO products will be what B2B customers buy online.
As a rule, B2B organizations will want to drive adoption by having their customers buy SKUs that don’t require complex engineering, ie Original Equipment Manufacturer (OEM) or Maintenance, Repair, and Operations (MRO) SKUs.
OEM SKUs are typically bought on a recurring basis, items that customers need to be replenished on a given schedule. MRO SKUs are typically bought on an as-needed basis.
When looking to drive adoption, B2B organizations will then want to identify which customers are buying the same SKUs with a given recurring frequency and incentivize them to simply re-order those products using an easy-to-use experience.
Brands will also want to understand which customers have bought products that require ongoing maintenance and incentivize them to go online, and on arrival be greeted with experiences that acknowledge previous purchases and a guided workflow on how to purchase parts for MRO.
Connecting CRM and eCommerce
With these examples, the common theme is to be able to ask questions of an organization’s data and to act on it. Here then is the crucial consideration – where do customer data and previous order history live?
Ideally, both in an Org’s ERP and CRM. However, where do opportunities to upsell and cross-sell live? Only in the CRM. Which system is usually easier, cheaper, and faster to work with? Always the CRM.
The instinct to think of commerce as an extension of the ERP is natural – it's where the orders go to be processed. However, that is akin to thinking of physical retail stores as extensions to warehouses and accounting departments – they’re not. Stores are areas to understand, market to, and sell to your customers. Warehouses are areas to fulfill and accounting departments to bill. Commerce is the place to understand, market to, and sell to your customers. CRM is a place to understand and track opportunities to your customers; there’s a lot more overlap here. ERPs, and eCommerce’s connection to it, are crucial, however, they should be integrated with, not extended.
Technically speaking, keeping a unique customer, order, and product record across Sales and Commerce (and Service) will allow an org to ask incredibly interesting things of their data, and more importantly quickly and cheaply act on that data in a way that all the revenue channels (Sales and Commerce) are connected.
Faster Builds with Commerce as an extension to CRM
Personalized Product Recommendations
In a CRM-centric approach, as customers interact with the commerce platform, their behaviors, preferences, and purchase history are tracked and stored within the CRM system. This data can then be analyzed to provide personalized product recommendations during future visits. For instance, if a customer frequently purchases a specific type of machine part, the CRM can trigger the commerce platform to highlight compatible accessories or replacement parts, anticipating the customer's needs and facilitating a smoother purchasing journey. This personalized approach not only improves the user experience but also increases the likelihood of cross-selling and up-selling, thereby enhancing the overall customer journey from discovery to purchase.
Automated Quoting and Contract Management
For B2B transactions, especially where bulk orders or complex products are involved, the quoting process can be lengthy and intricate. A CRM-centric commerce system can streamline this process by automating quote generation based on a customer's purchase history and contract terms stored within the CRM. For example, a distributor could use CRM data to instantly generate a custom quote for a returning customer, taking into account their specific pricing agreements, past order volumes, and negotiated discounts. By making the quoting process faster and more tailored to the individual customer, the CRM-centric approach reduces friction in the evaluation and negotiation phases of the customer journey, leading to higher satisfaction and increased loyalty.
3 Benefits of Building eCommerce as a CRM Extension
Why these experiences are faster and cheaper to build as extensions to CRM
ERP systems are 5x-10x more expensive to work on
A critical part of this theory is the acknowledgment that ERP systems are much more expensive to build in and much slower to get data in and out of. The typical ERP developer is 40% more expensive than a typical CRM developer, and an ERP data analyst is 70% more expensive than a data analyst that needs to work in CRM.
ERP data models are much more complex than CRM data models, so extracting data is more complex.
Finally, most ERPs don’t allow for easily deployable code within the system, or require higher maturity in the DevOps of an org to manage code and merges; CRMs are typically in the cloud and orders of magnitude easier to build customer components in.
ERP are not built to externally scale – performance will be very poor
OPEX aside, ERP systems are not built to support the multi-millisecond data response time needed to power the type of experiences CRM and Commerce demand. Therefore when the customer needs a specific experience and the data resides in an ERP, the experience is one of waiting (in general) 30-120 seconds for data to load. Current wisdom is that abandonment rates skyrocket on wait times above 3.x seconds.
Demographics are skewing towards more online purchasing
All of this may be trumped by the most important fact that population trends are rapidly shifting to buying decisions being made by generations’ that have primarily bought only online. While there is high elasticity to talk to humans for complex purchasing flows, there is low tolerance to do so for easy-to-buy items, and a very fast replacement rate to jump to another supplier (or browser).
In conclusion, it is imperative for B2B manufacturers and distributors to reconsider the traditional paradigm of extending their commerce platforms from ERP to CRM systems. By doing so, they stand to significantly enhance user adoption rates, moving closer to the more favorable averages seen with CRM extensions. The core of this argument rests on the agility, cost-effectiveness, and customer-centric nature of CRM platforms, which are better suited to leverage data for creating personalized experiences and actionable insights. CRM systems facilitate a more intimate understanding of customer needs and behaviors, thus enabling organizations to drive tailored marketing and sales strategies that resonate with modern purchasing trends. As such, businesses that adopt a CRM-focused commerce strategy are better positioned to capitalize on the digital transformation of B2B commerce, fostering stronger relationships with their customers and achieving a competitive edge in the marketplace.
About the Author
Rohit is a forward-thinking eCommerce evangelist, especially focused on re-energizing the B2B sector and merging the old disciplines with new technology opportunities. He is passionate about delivering profitable growth through people-driven digital transformation. Watch his talk on digital transformation.