B2B2C: The Future of Customer Engagement

By Omkar Subhash Lomate, S Ramachandran May 2019   |   Article   |   10 min read   |   Email this article   |   Download
Pure-play B2B sales models are fast becoming obsolete. With the emergence of digital technologies and well-informed customers enjoying seamless connectivity, new sales models are emerging in the traditional B2B market. These new models, termed B2B2C (business to business to customer), offer multiple benefits over existing ones. This paper highlights these benefits and also describes a broad approach to transform from a B2B to a B2B2C business approach.
B2B2C: The Future of Customer Engagement

For original equipment manufacturers (OEMs), the connection with end users does not stop at the point of sale. Technologies available today enable a mutually beneficial, profitable, and ongoing engagement with customers across the entire life cycle of products, with no change in the roles played by intermediary partners.

The blurring of lines — e-commerce, B2B or B2C

A common definition of e-commerce is “…the sale or purchase of goods or services, conducted over computer networks… .” Such trade is termed B2B when it takes place between enterprises and B2C when the consumer is involved.

According to a recent report published by UNCTAD (United Nations Conference on Trade and Development) in March 2019, global e-commerce surged to $29 trillion in 2017, with 13 percent annual growth.

In the United States, e-commerce-based trade was close to 40 percent of the gross domestic product, with more than 90 percent of it in the B2B space.

The proliferation of connectivity has blurred the lines between these terms. The scope of computer networks to conduct trade has extended beyond e-commerce and websites. The internet of things connects devices, exchanging not only product performance-related data but commercial information too, if required — placing an order for parts, for example. The internet and all its connected devices bring in the human element as well. This leads to a situation where any trade will have a digital thread, making these classifications irrelevant. B2B2C is an all-encompassing term for this trend where the product maker is in touch with the consumer at all points in time, and with commercial intermediaries in the ecosystem.

B2B2C for ongoing customer engagement

OEMs have traditionally had a B2B model, shipping their products to wholesalers, retailers, distributors or dealers, who in turn interfaced with customers. They can no longer rely only on a B2B approach, which stops with intermediaries and misses the crucial engagement with customers. At the same time, intermediaries cannot be removed from the supply chain. They have grown to understand the product and customers, and to offer last-mile services financially and for logistics from inquiry to order, installation, operation, service and repair.

The traditional B2B model is linear in nature and channel-driven, not customer-driven, with those inherent inefficiencies. Information and physical goods naturally flow from one entity to another. But such barriers are broken in a B2B2C setup. Information has fewer barriers to its flow when designed and implemented well, as shown in Figure 1. OEMs get a functional perspective aided by real-time information instead of a technical perspective on how their products are used in their intended fields of operation.

Volvo example

When Volvo* wanted to strengthen the connection with its customers, it decided to transform from a B2B to a B2B2C model without disrupting the relationship with its distribution network. Its network of dealers owned the sales and after-sales processes, along with the associated customer knowledge.

Starting with social media platforms and its own web presence, Volvo started a two-way conversation to build trust and loyalty rather than to increase sales or to compete with its distributors. Volvo’s connected car implementation provided a new way to stay in touch with customers and pass on this information to dealers. Timely reminders were sent to both customers and dealers, depending on the vehicle condition and availability of slots at the dealer’s repair shop. Some services were made available directly to customers.