Since the turn of this century, a number of the planet’s most successful businesses have increasingly focused on promoting value to customers, rather than services or products. In other words, instead of simply creating new products or decreasing their costs to stay competitive – companies have instead distilled and improved the value of their existing offering.
A large factor behind this shift has definitely been the increased availability of information, which has given associations unprecedented insight into client behavior. By using this data, companies have been able to quantify how much money and time their clients save by using their products and have been in a position to fine-tune their offerings based on usage and feedback data.
Facebook’s business model, which charges advertisers to get access to uniquely concentrated and precise sections of its international customer database, is the perfect example of this change towards harnessing the power of a large, communal pool of data to offer consumer value. Having the ability to target an incredibly specific section within a bigger pool of customer data has allowed consumer-facing companies to more fully understand their clients’ requirements, and consequently to cultivate a more loyal and satisfied client base.
Regardless of the exponential growth of tech behemoths employing this model, and the achievement of consumer-facing businesses which have embraced the granular, data-driven strategy, we’re arguably yet to see B2B companies really capitalize on using data to deliver greater value.
Rob Bernshteyn, CEO of Business Spend Management software company Coupa, and Writer of Smarter Together: How Communities Are Shaping the Next Revolution in Company asserts that those in the B2B space should be taking a leaf from the technology giants’ playbook, and start looking more closely at using amalgamated customer information to deliver further value to their clients.
Coupa uses artificial intelligence to filter through its Big Data warehouse of nearly $2 billion in company spending worldwide and then aggregates the anonymized data it manages to provide tailored insights to its customers. As an example, the platform enables customers to benchmark themselves against their peers on things like average savings attained, how efficient their financial procedures are and how digitized their organization is compared to others, by making that anonymized pool of information available to all who contribute to it.
Bernshteyn states: “More and more businesses are taking the approach of quantifying the value delivered against the purchase price of what is being compensated. In a bid to deliver this, why would not firms begin to tap into the insights and data out of their collective neighborhood of consumers? This could ultimately be for the advantage of each individual client, making us smarter together.”
Rather than the usual mindset of companies hoping to protect and nurture their personal customer base, Bernshteyn asserts that there’s much more value to be found by combining those insights and taking a look at the market as a whole. From that point, it would be possible to identify and target certain sections within that pool. Just as Facebook and the tech giants made it clear that casting a broad web and sharing the spoils works out better for everybody, Coupa is trying to deliver the same collective strategy into the B2B space.
When comparing the accessibility of consumer information with business data nevertheless, B2B organizations are not as keen to ditch the secrets of the client base, without some sort of guaranteed mutual sharing from their opponents.
He says: “The side of the discussion that is not talked about enough is that the value that you create from getting insights, which are distilled from aggregated data. In other words, why would a business choose to contribute unless the worth outcome is higher than the total cost of the associated risk?” The danger of sharing client information and not getting the same from the competition is obviously an obstacle to the idea of B2B cooperation becoming a true reality. But considering the success of this design in the consumer space, it’s surely only a matter of time until B2B businesses begin to pool their assets as well.
Though there’s a caveat to having a single source of buyer info, however, that’s the chance that small companies would lose out. It wouldn’t be unreasonable to believe that an automatic platform will push decision-makers towards bigger, more renowned suppliers (as has arguably become the case in the consumer space), creating an infinite and more concentrated loop back towards fewer larger players. Bernshteyn insists that Coupa is taking measures to proactively mitigate this by offering data in this manner that buyers can slant their purchasing decisions towards, by way of instance, suppliers from minority groups.
By integrating this type of algorithmic filter in their platform, Coupa helps to ensure an aggregated data pool does not become a free-for-all, with the biggest companies simply muscling everyone else out. And, what’s more, that it creates appropriate conditions under which human market segments are readily ruled out based on specific criteria – that way the smaller businesses can reach their market segment, and the large players may still get a more generic customer base.
The societal and financial strength of the purchasing community created by Coupa can be used to start up opportunities for young innovative businesses, or, possibly, entrench monopolies. Bernshteyn is adamant that Coupa’s platform provides buyers the community intelligence to create more informed decisions rather than to necessarily follow the crowd, but he does understand that the threat. “If you place these conclusions on autopilot, then people just take the path of least resistance and do not necessarily take advantage of conscious decisions.” The question is, how can we rely on people to avoid that path of least resistance, and, in turn, draw power from the FAMGAs of the world?
When studying the benefits of a shared pool of consumer data, the evidence is in the pudding when it comes to consumer-facing businesses – they jumped on board and have reaped the rewards of more targeted advertising, as well as the capability to attract a more tailored offering nearer to their customers. When it concerns the B2B area, using fiercely guarded secrets and extreme competition for sales and customer loyalty, it might be more difficult to convince business leaders that their market share will not decrease, and in fact may become more solidified, by sharing their own resources.
Coupa’s commitment to avoiding the monopoly-making errors of the FAMGAs of the world, and its focus on creating greater value for customers, could well tip the balance and generate a data-driven B2B market. However, until then, businesses will be waiting with bated breath to see who is first to take the plunge.