by Tanguy Catlin, Liz Harrison, Pamela Simon, and Jennifer Stanley
Over the past three years, McKinsey & Company has measured the Digital Quotient® (DQ™) of approximately 200 B2C and B2B companies around the world by evaluating 18 management practices related to digital strategy, capabilities, culture, and organization that correlate most strongly with sales growth and profitability.
The study shows that B2B companies trail consumer companies in terms of their overall digital maturity and that this gap costs them. The average DQ score for the 50 B2B companies in our study was 28, compared with 35 for consumer companies (see Exhibit 1).
Closing that gap is crucial for B2B companies because we also know it’s worth it to do so. B2B players with a top-quartile DQ score grow more sales, earn more profits, and deliver more value to shareholders than the rest of the B2B field (see Exhibit 2).
(For more on this gap, please read “Measuring B2B’s digital gap.”) Some of this is not a complete surprise, of course, since the digital ecosystem can be tougher to establish and navigate for B2B companies. Their sales forces face, for example, a far more complex purchasing environment, with multiyear deal cycles in some cases, lengthy RFP processes, and the involvement of many vendors, decision makers, and influencers.
While these complexities are significant, it would be a mistake to use them as an excuse for falling short in some key areas. Digitization has made consistent, high-quality customer interactions a competitive differentiator. Right now, however, selling models remain largely hitched to offline channels. It’s hard for business buyers to get the pertinent and personalized information they need and want from supplier websites and social platforms and harder still to buy directly (though often that is a supplier’s intentional strategy).
In addition, while B2B sales teams are working harder to close deals that often involve multiple rounds and many more decision makers, they often lack the real-time analytics and digital tools they need to manage the sale profitably by knowing whom to court with what offer or when to conduct personal outreach.
Incremental changes or pilot efforts can provide benefits, but they aren’t likely to significantly close the gap. Top performers embrace an “all in” digital strategy, knowing it’s crucial for making needed core changes. And they don’t focus on just digitizing sales and customer interactions, but on harnessing digital assets internally to enable their sales forces to perform better. Advanced analytics and hand-held tools (such as next-product-to-buy algorithms and custom-offer configurators), in particular, are helpful to manage these complexities and unlock new opportunities.
By focusing on the digital practices that our research shows to be most tied to customer and financial success, B2B players will be able to create and sustain significant long-term value.
Tanguy Catlin is a senior partner in our Boston office, where Jennifer Stanley is a partner; Liz Harrison is a consultant in our Charlotte office, and Pamela Simon is a solution specialist in our North American Knowledge Center.