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Recession Won’t Be An Easy Ride, But Digital Is Light At End Of Tunnel

Forbes Business Development Council

Denis Clifford is the Chief Customer Officer at Virto Commerce, a leading provider of B2B digital solutions.

Last month the European Central Bank raised interest rates for the first time in 11 years. This week it has announced another 0.75% increase and has signaled more to come. The U.S. Federal Reserve has been doing likewise in increments this year.

These landmark moves seek to tamp down runaway inflation. Raising the cost of borrowing reduces demand for products and services and should therefore reduce prices. Done with anything other than a delicate hand, this can also tip economies into recession. Sometimes that is precisely the point.

Whether or not we are on the brink of a worldwide downturn, we know our banking system is not quite under the same pressures as those of 2008. However, businesses are absolutely under stress. Input costs are up, employee wage demands are coming, and the internal budget planning cycle for 2023 will be difficult. Some businesses will not survive.

This pressure on costs and budgets is reminiscent of the early days when “going digital” first gained such an important role in reducing costs.

While it may recently have fallen out of favor as a main business case driver, it remains relevant, perhaps more now than at any other time in recent years.

Digitization As A Cost-Saving Strategy

Taking business online has long been seen as a means of reducing costs. Indeed, digitization will certainly lower costs in the long run and might even pay off handsomely in the future.

In a simple example, to reduce front-line FTEs in the contact center of sales organizations, manufacturers or wholesalers can create an online portal. Processing orders is (arguably) a relatively low-value task. It is the sale and management of a customer account that carries the most value. Indeed, this was the main pillar of many business cases I was involved in earlier in my career.

This is a valid way to approach the project in one sense. Once customers start transacting online, one doesn’t need sales reps to do the job, so reducing the headcount to save money seems like a legitimate strategy.

But there is a bit more to the story. Simply put, an online portal won’t run itself. You need specialist roles to run an effective e-commerce business or online portal. If you take all the headcount savings to the bottom line, who will onboard customers, solve the inevitable customer service queries and check customer satisfaction? Content for your platform won’t write itself, either!

Many commentators see the human element as the key success factor in digital interactions—using human experience and business knowledge to tailor the online experience to the customer’s needs. Replace too many experienced people with digital, and you end up with bland experiences that really don’t solve the customer’s pain points.

Seeing The Bigger Picture And Embracing Wider Benefits

In order to get the best from your business case, you need to consider—and ensure you’re getting the most out of—the wider benefits of digital transformation. Here are five things you should look for in any digital solution.

1. Increased Revenue

Just by listing your assortment online, you get instant visibility, while your customers gain access to a wider range of products than perhaps they were aware of. You can fill stock gaps with suggested products, promote certain new listings and remind customers to place orders or finish abandoned baskets. Your average order should immediately increase in size and value.

2. Efficient Promotion

Instead of mass promoting certain products, you can tailor promos to the most responsive customer segments. You can track redemption more accurately and make your promotional spend work better in general. Your trade marketing department will thank you.

3. Data

Your customers’ ordering behaviors are now at your fingertips. You can analyze plenty of data to get valuable insights into a myriad of different attributes, such as the time customers typically place orders, from what devices orders are placed, who at a joint account has placed the most orders, etc. You can then monetize this data in many ways.

4. Competitive Advantage

If your customer portal happens to be the first-to-market in your segment, great—you are now at a considerable advantage over your competitors. If not, then don’t panic: You now have the chance to canvass your customers and find out what you can do better with your online offering to outsmart the competition. Here you can grow your share and market penetration.

5. Improved Service

Digital means being available 24/7/365 for orders, account inquiries and all manner of other services. Customers can now access your store when and how they want rather than waiting until the office opens. Your customer satisfaction should grow, as should your retention, as your churn drops.

Of course, to make your digital enterprise successful, you’ll need to seek advice on the roles and capabilities of your solutions. These resources are not free, and you will not always be able to convert former sales/account/customer roles to become e-commerce operations roles either. But if your goal is to save costs in the long term, then digitizing your route to market offers tremendous opportunities. Just remember that these are not the only business case opportunities available.

Digitization: Still The Future

Online transactions, customer portals and digitization of customer interactions will help you to manage and adjust your bottom line to the new reality of increased costs and budget pressure. I can say with absolute certainty: Digital is a real cost-saver—and in some cases, life-saver! And it has the real potential to be your company’s light at the end of the tunnel.


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