What the board is asking data and commerce teams this Q4

Episode 21 - What the board is asking data and commerce teams this Q4 - Transcript

Matt: Welcome to Data Versus Commerce, where we explore the messy middle between database and doorstep. I’m Matt Johnson.

Floyd: And I'm Floyd Blaikie. Let's dig in.

Floyd: Matt, my friend, how are you doing today?

Matt: Oh, doing good, Floyd. I am actually suffering through a bit of a cold right now. But it just goes to show you I'm showing up today because that's how much I care...

Floyd: Dedicated.

Matt: And about our audience. So guys, I'm doing it for you. I'm grinding it out and really happy to be here again with you all.

Floyd: Nice job, Matt. We appreciate that and we appreciate you.

Matt: And just so you know, as an icebreaker, this tells you everything you need to know about me. This is a cup of chai, vanilla latte...

Floyd: Okay.

Matt: And it's a Buc-ee's cup. So...

Floyd: I've heard of this place.

Matt: Yeah, that's right. You gotta drive down to Florida, Floyd. You'll hit a couple of them and you will be amazed.

It is everything that makes America both great and disturbing all at the same time.

Floyd: Is that it? Yes, for anyone not in the know, Matt and I are running an international podcast. Matt's American, I'm Canadian, so I don't know how often our cultural differences show up, but I'm sure that Buc-ee's is a great illustration of at least one of them. Yeah, I don't know. We got Esso, we got The Big Stop.

I don't think any of them hold up to the Buc-ee's branding. It's not quite the same. But none of these organizations...

Matt: Tim Hortons today. Let's go.

Floyd: Oh man, don't, no, I'm not doing it. First of all, none of these brands have paid for placement on our very famous podcast, so they can get in line, frankly.

Matt: We're always dropping brands and we don't get paid for it. This is insane. Come on, guys.

Floyd: I know, it's so rude. And it's Q4, it's time for us to be reviewing our finances and figuring out how viable this business model is for the next year. A lot of people are doing that. It is kind of a stressful time, right? If you are in full planning mode. Let's talk about what that might mean for our listeners this year, Matt.

Matt: Yeah, it is the most wonderful and also maybe the most contentious time of the year for many folks who are either in leadership or they have the ear of leadership, and they're asking for various initiatives and technology and work to be approved and presenting the business case there.

And we're no exception to that. We do the same thing here. But when we were going through some of the exercises, it got me thinking back to some times that I spent in distributor and manufacturer boardrooms, brought me in as a consultant on a go-to-market side.

And so I thought about, what are they talking about, right? And I thought maybe it'd be helpful for us to think through what are the topics in a distributor or manufacturer's boardroom around strategic planning, and how do they tie to data and commerce? So maybe we can go through some of those ideas, and we'll try to pit them against each other.

And hopefully, at the end, like a good therapy session, we can all walk out holding hands.

Floyd: And drinking chai vanilla lattes. I love it. And this is the moment to have the conversation, right, Matt? Because budgets are getting locked, priorities are getting locked. We don't wanna necessarily speed up through the -ber months, my favourite months personally. But January is coming, and when you're thinking about these budgets and priorities and things you need to have sorted before we can all take a nice long holiday break, you gotta translate all that into board speak, right?

It's a very different language, almost an alien language if you're a practitioner. And then if you're someone who's deep in the weeds, deep in the trenches of data and/or commerce or both, how do you talk about those priorities in a way that's going to get you more budget to tackle them?

Matt: Yeah, exactly. Because at the end of the day, everybody has their pet projects, everybody has their needs. They need to tap into dad's wallet and who's gonna get heard, and what do we need to say to get the funding and the... Not only just the funding, it's not just about money, it's about buy-in.

And really you're doing a lot of internal selling at this point, right? So you've gotta tie it back to the things that the board really cares about, which is how are we going to grow our existing customer base? How are we going to attract and convert new customers, right? So new logos.

And how are we going to utilize technology and utilize better processes and systems in our business to drive profitability? I mean, that's what it's all about for every business, but especially in distribution, these are the three things that we've got to tie everything that we wanna do directly to real numbers and real business cases.

Floyd: Right. Let's take it back to something that Sam Schwartz just talked about on the show a couple of weeks ago. She joined us to talk about how manufacturers specifically and distributors can create a better customer experience by kind of getting ahold of their product data experience. So the board says something like that, or if you're taking that concept to the board, we need to create a better customer experience so that we can retain and grow our accounts.

What does that mean in normal people language?

Matt: Right. Well, it's actually, if I was explaining it to my fifth grader, right, I would say, I want to keep the friends I have, and I want to make them better friends, right? I want to keep my customers, and I want to go deeper in those relationships than I had the year before.

And we use a buzzword often in business. We say share of wallet, which means that their wallet, their spend is spread out across all kinds of different suppliers. You're not the only company they spend money with, believe it or not.

So they're buying from a bunch of your competitors. They're buying from marketplaces. And so the thought was, or it is, how do I get them to stop spending some of that budget over there and get them to spend it over here? And one of the things that we're seeing is that digital commerce is playing a big role in that question.

Floyd: Okay. What do we need to do then? How do we take the digital commerce priority and translate that into board speak so we can tell them, "Hey, we're gonna get more share of wallet," which we can stuff into dad's wallet? The metaphors are getting lost here I think a bit, but what do you think?

Matt: Yeah. Well, it starts with looking at your historical data. A lot of folks say, "I want to grow my share of wallet." But ask yourself honestly, are we losing share of wallet? Where is that happening? And is it happening because, right, we don't have the right sales experience?

Is it because customers are going to online competitors that make it easy to find, buy and get those products? And that's where you have to start first. Take a really tough look in the mirror and ask, "What are my customers requiring of us that today we're not doing?"

And so taking a look at the data and then asking those customers, right? Talking to your sales team, "What are you hearing?" Are you hearing that they want less time from a sales rep? Sales rep's never gonna say that, of course. But you could have a consultant come in, for example, and survey your customers and get the truth, you know?

So it starts with the truth. How are customers interpreting your brand today and the way that they buy from you, and what is the gaps? And ultimately, that's going to improve your customer experience retention and the side effect is it leads to growing that share of wallet.

Floyd: Okay, and what are the numbers I put in front of the board? 'Cause they always want numbers, Matt. They never don't want numbers. What are the metrics we need to track here to make the case?

Matt: Yeah. So I would start by looking at digital adoption. This is the place, a lot of folks when they think commerce, they're thinking of it as a lead gen channel, a customer acquisition channel. But in B2B e-commerce, the most important thing is, are our customers using it, right?

Are customers using the portals that we've developed, the tools for quoting that we've created? Or maybe there's none of that in place, and that's where I would start. How are our customers using the website? Are they using the website? That's easy to track, right? I would also look at, are they automating the way that they purchase?

Is there repeat orders, one-click repeat orders being sent through the platform, right? And ultimately, you can start measuring the retention and the growth rate of accounts that are using the digital channels versus the ones that are not, and that might be the most telling statistics for you guys to look at.

Floyd: Absolutely. That's a compelling case that you can make with data if you are able to track all of that. But what about new logos? It's hard to measure over time how new logo spend changes if you've got online ordering tools, 'cause you can really only track that once. So if the board comes to you and they're like, "Share of wallet, fine. We need to get more customers, though, into our customer base," how does that translate into something that either a data or commerce person can actually think about and talk about in that scenario?

Matt: Well, this is the data side of things, right? Because a digital commerce experience and the ability to attract visitors and convert them really comes down to the data that you're displaying in that experience, right? So what do I mean? I mean, first of all, product information, structured in a way that is optimized for AEO, SEO, thinking about the way your customers search and find products.

This is the most difficult and most important step into turning the website into an acquisition channel because ultimately, these sources of search, they're looking at the authority tied around your brand and your website. If your website has inconsistent, incomplete product information, if it has a low brand coverage across other sources on the web, these are things that the agents and human buyers, or excuse me, not human buyers, but the search engines themselves are taking into account when you get found or you don't get found online, right?

So that's all product information, how it's modeled, how it's displayed on the web, and the completeness and the accuracy of it. And I think this is the stumbling block right out of the gate that most distributors struggle with. But then it's not just about the product data, right?

You can be found, but most distributors, and maybe I shouldn't say most distributors. A lot of distributors who have the ability to serve a customer the first time they come to their website don't do it or can't do it because they don't display pricing or inventory.

You're gonna have to log in, you're gonna have to request a quote, call for a quote, to get that pricing, to understand lead time, and that's never going to convert new customers because that's just simply not what they're looking for.

Floyd: No, and I've seen this play out time and time again, different industries, but manufacturing and distribution especially. The older school sales organizations are kind of still operating in that mentality where if you wanna know anything about anything, you gotta talk to the sales guy, right?

And I think that building those types of relationships is still important, but man, you've gotta put your pricing up 'cause what you're doing if you don't is you're just sending people elsewhere. They don't have time, they don't have patience. They wanna see the pricing now. They don't wanna log in.

They don't wanna talk to some guy behind his desk. They wanna see the pricing. There's basically no exception to this. So I don't know. How do you tell that one to the board? "Hey, we actually have to tell people what things cost if we want them to buy from us."

Is this a radical notion, do you think?

Matt: No, but if you are in distribution or manufacturing, you get it because this is a very sensitive subject. You are going to potentially upset your customers or your channel partners if, for example, you're a manufacturer and you're selling direct to customers, and you're undercutting or even matching the price that your distributors are selling at.

That's going to potentially create conflict in those relationships, and it's all about relationships, right? So it is a tightrope that we have to walk if we're going to do this and do this right. But there's ways around it, and this is the thing, if I was in that room and there's a fight going on between the head of sales and the head of commerce and commerce is saying, "We gotta put pricing on there. We gotta put inventory." Sales is saying, "No way. Hell's gonna freeze over before I ever do that," right?

Okay, here's what I would say. Can we get creative about how we do this, right? Can we, for example, have a high list price so that every customer that sees that is gonna go, "Oh, okay, no problem. I get it 20% less than that." But here's the trick. What if you put that list price in there and then you offer a first-time customer a 25% discount?

Floyd: Ooh, tricky.

Matt: So that they get in the door, so that they at least can become a customer, and then you have an account-based approach to onboarding them with contract pricing.

They get their portal, and now they're part of the fold, right? So there's ways around it. You don't have to upset your customers or your channel partners. You can do it in a way that makes everybody happy.

Floyd: And that one seems pretty easy to track too, particularly if you're doing this in an e-commerce channel. It's the same way anyone selling a widget online would measure it. How many people are you getting purchasing for the first time online? What's your conversion rate? How much is that worth?

Am I missing anything that you'd wanna put in front of the board?

Matt: No, but I think it's smart that if you're a B2B commerce exec, that you look outside of B2B and you look at what's happening in retail, and you think about the way buyers are shopping and what they're looking for when they find a new supplier or a new source, right?

So these are things that traditional B2B doesn't often look at, and you can pull a lot of data there, and you can run pilots. You don't have to go all in from day one, right? You can try this for 30 days, 90 days, and see what happens. But good data, good pricing data, good inventory data, it's helpful whether you're outside of a portal or inside of the portal.

So do it regardless, but focus on how you can be creative around acquisition.

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Floyd: Look, I've been in front of enough boards to know anytime you start talking about getting creative with pricing or even discounting, the first thing that comes up is margin. So I imagine that's another topic that our friends in both data and commerce are getting around this time of year.

How do we either protect margin and/or, usually and, do more with same? I don't wanna say do more with less. I'm hoping that's not the situation folks are in. But do more with the same head count or the same budget. When the board asks you that, where do you go first?

Matt: Well, I'll say something that's probably a little bit unpopular, but yeah, maybe controversial. If I was in that room, I would say, "You are maintaining a position that is ultimately going away." And what I mean by that is the traditional rep. We desperately are trying to protect those roles, but here's the reality.

They are going away. Or they're completely changing, which means you need far fewer of those reps. So I'm not here trying to get people to fire reps, but I am saying that if you're gonna talk about margin and commerce, you have to just take the reality and start measuring the difference between a self-serve customer and a customer who requires five different touchpoints from human resources to execute the same order.

And you're gonna find that the margin difference in that cost to serve is dramatically different. Sometimes 80 to 90% less expensive to serve a customer through a portal than it is to serve a customer going through a customer service rep or a field sales rep, checking inventory, pricing, placing that order, answering the question, "Where is my order?"

Right? And then returns, another area, right, where if returns are not done digitally, that's at least five phone calls. So it's a total mess.

Floyd: Yeah, and I think what you're saying, Matt, is not that the high value activities that reps are doing is gonna go away, right? If you've got a new customer coming in for the first time, you've got a really complicated product question, you have a relationship that needs building, that's not what's eating margin.

It's the little, like, "Oh, I've gotta make a return. I need to change one part out of the 10,000 I ordered without canceling the whole order." That's the stuff that is eating margin and can go away, and probably will make reps happier, not make them fear for their jobs.

Matt: I think so. I think a lot of reps feel valuable because they are an integral part of making that order happen. But they need to change their mentality, right? They need to think more about, how do I add additional value to my customers in the way that they want me to? Not in the way that I think I add value, right?

And those are two very different things, and that's a philosophical question with your head of sales. But at the end of the day, right, it is about driving the business forward with higher value activities. The sales role can completely change the way that digital experience works, right?

It can complement it. It doesn't have to be a competitor. It can be synchronized, but the problem is that most of the data that sales has and commerce has are siloed. They don't work together, right? An order happens online, it doesn't make it back to the CRM. Order happens offline in the CRM, it doesn't make it back to the portal.

Customer data is a mess because of those two systems not talking together. So you gotta get together on the same page. We could create a spinoff podcast called Sales vs. Commerce. That would be interesting, because in B2B it is the drag out fight that continues to this day.

Floyd: You know, that's pretty ambitious. Let's start a second podcast. Maybe a third one 'cause I do wanna continue the soap opera about my dishwasher, no pun intended. How do you measure this one, and how do you do it without really angering your sales reps? What's the metric to look at here to see if you're protecting your margin just by automating away some of this lower value manual order management?

Matt: I'm laughing. I'm not gonna let you get away with this. You have snuck your dishwasher into every episode.

Floyd: Every episode, like a little Easter egg.

Matt: I didn't realize what you were doing until just now. That is hilarious. Oh, my gosh. Is over. Dang it.

Floyd: All right. I'll talk about my...

Matt: Oh, man. All right, get serious.

So what are we tracking, right? We're tracking the difference in the delta between human-touch orders and digital orders. And it sounds simple, but oftentimes we're not tracking the true cost of handling a customer offline because historically it's just the cost of doing business.

We're not looking at, hey, because think about it, 15 minutes here, 10 minutes here. What's the big deal, right? But stack that up over 10,000 orders a month, now it is a big deal. And that's something that most companies aren't measuring, but they absolutely should.

Compare that to a digital self-serve, and this is how you start making a really good ROI case for that board, to explain, "Hey, if we just move 1% of our orders online versus offline," and if you drill down a layer deeper and you think, "Here's our top 20 accounts. Can we move five of those high-touch accounts online versus offline, what does that do to the margin?" And suddenly investing in a six-figure e-commerce platform or digital transformation initiative becomes a lot more palatable to those executives.

Floyd: Yeah, fair enough. And look, I know we're getting close to time, Matt, but this would not be a board prep session if we didn't cover the topic that all the boards are asking about, whether you like it or not. Hey, Matt, what's our AI strategy in 2027?

Matt: Gosh, I didn't think we were gonna... Are you sure we're not out of time? Honestly, okay. Here it is, right? Where is your AI initiative, right? Your AI initiative centers around the top five areas in the business where manual work is costing you real dollars. And of course, in distribution, that is gonna look different than in manufacturing because, right, in distribution you're handling orders, you're much more of a sales org

In manufacturing, it's the entire supply chain, right? The production side of things, et cetera. So it's gonna look different if you're a manufacturer or distributor. But let's just say you are a distributor and you're thinking about where do I apply AI in 2027. You're gonna find legacy processes and legacy systems that are holding you back, and the answer is to identify, number one, where those systems are holding you back.

Where is the data need to be prioritized in order to make a fix work in improving margin, improving experience, improving revenue? Because AI should not be a separate initiative. AI in the business should tie directly to the initiatives around profitability, around revenue growth, around customer retention.

What inside of the business are you doing today in those areas that could be improved by removing workarounds? And every company I've ever worked with has all kinds of crazy workarounds because their ERP doesn't support this, their e-commerce platform doesn't do that, their CRM is off here, floating as a satellite, you know?

So take a look at where those systems are disconnected, where the data's breaking, and here's the fun thing, get somebody creative in the org, because they will find a way to make AI work instead of these manual workarounds, right? Replacing those workarounds with a real AI application that patches a hole in those systems that you've already invested in.

Floyd: Wow. Okay. Interesting, and thank you for spending less time on AI. It's a very refreshing change most topics these days. All right, so for all of our friends out there, whether they're manufacturing, distribution, retail, CPG, if they are in the trenches of data and commerce and they are suffering through the Q4 board meeting prep, what is the one thing you hope they take away from this today?

Matt: I hope that you will think about your data and commerce initiatives like an executive, which means everything you do needs to be measured. Everything you want to do should have a thesis around why it's going to impact either revenue, experience, or profitability. And then make a passionate case for it, right?

You have to believe if you want them to believe. And if they believe, it'll flow through the business and change will actually happen.

Floyd: I love it. Very inspirational. It's great. No, that's good. Thank you, Matt. I hope you feel better. 'Cause it's not like you to be so succinct about AI, so...

Matt: Yeah, I just don't have the energy or the patience today, so I'm gonna go lay down and drink my tea.

Floyd: Great. Okay, we'll see you back next week, all refreshed and ready to go.

Matt: All right, see you then.

Floyd: Bye.

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