B2B digital commerce is already 3x bigger than B2C and it’s only set to get bigger. B2B moves the world economy and often dictates our future experience as consumers. Yet the evolution of technology can often make it difficult to predict with any meaningful certainty the future for B2B businesses looking for tangible means of growth. Until now.
Merkle’s CXO Benoit Soucaret sat down with the B2B Marketing Podcast to discuss 4 key areas for B2B growth identified in our latest report “B2B Futures: The view from 2030”. These shifts are machine-to-machine commerce, the traceability imperative, marketplace model dominance and a new era of speed to market. Benoit discusses in detail the forces driving these changes, the staggering facts and figures behind them and the 4 key questions B2B businesses need to ask themselves to be able to capitalise on these shifts in their go-to-market strategies.
Full Interview
B2B Marketing: Hello, everyone, welcome to the B2B Marketing Podcast. My name is David Rowlands, I'm the Head of Content at B2B Marketing at Propolis, which is the global community for B2B marketers. I'm joined today by Benoit Soucaret who is the Chief Experience Officer at Merkle EMEA, so Benoit welcome, how are you doing today?
Benoit: I'm great thanks for having me, I’m happy to be here.
B2B Marketing: No worries, anytime. We're going to talk about your new report, B2B Futures and some of the findings within that. But before we do, I just thought it would be interesting to learn a little bit about you and your background and how you got to where you are today in Merkle if that's okay?
Benoit: Sure, so I started in advertising, in traditional advertising, something like 20 odd years ago. And the first jobs that I got were to do with digital commerce or just digital in general, when digital was not what it is today, UX was still calling for mission architectures and stuff like that. I ended up falling into digital by mistake almost and I ended up staying in this world, it's been almost 20 years that I've been working in the digital space. I worked agency side, client side, I’ve worked with all sorts of organisations, from very small startups of 5 to 6 people and now, you know, being part of Merkle/Dentsu, which is a global organisation with many, many, people, many offices around the world and my career grew through that. I started as a designer and my background is very much the craft of design, and it then evolved into interaction design, experience design and this is how I got to Chief Experience Officer for Merkle today.
B2B Marketing: Fantastic, well that is a really interesting background. I mean, quite often the people we speak to either started in sales or, you know, in marketing, obviously, but design, you really have that creative background. Do you think that's put you in good stead for your career as a CXO?
Benoit: I think so. I mean, it's my interpretation I'm sure, because CXO is such a new role and new-ish title, before 2010 it didn't even exist so I imagine companies have slightly different definitions of what a CXO should be. I think a lot of it is about the craft and the craft of design, the craft of experience design. A big part of my job is to make sure that customers love the brands we're working with, so my job now is to come up with plans that make sure customers have a great time every step of the way with the different brands that they interact with. This background in creativity and design is key to that. It's really about how you use data and design in a creative way at the intersection of technology and business to create or give customers top notch and reliable stuff every time that they interact with a brand.
B2B Marketing: Yeah, of course. So, you know, Merkle has recently released this report that I mentioned at the beginning called “B2B Futures: The View from 2030”. This report assesses academic and cultural signals and looks at both proprietary and public data sources as well as interviews with internal and external experts. It's a really comprehensive view, and it's all about forecasting what the world might look like for B2B industries in six years’ time. We'll get to the findings shortly, but what encouraged you to create and publish this report in the first place?
Benoit: Put it this way, the first thing is we were super curious about where the whole B2B scene was headed. Businesses buying from each other is a huge deal right, which keeps the wheels turning on the economy and it's always changing. We really wanted to share our 2 cents on what we consider new and most importantly, what's next, and how businesses are going to stay ahead of the game. We figured it might help other people or clients make sense of it all and get a leg up in their own game which was important to us.
The other thing I suppose is, if you look at successful B2B brands today, they're really starting to take a position of deep relevance in business culture. They understand how business culture is evolving and how the needs of B2B buyers and their companies are changing with it. As a result, they are constantly evolving their brand experience at speed and at scale in order to stay relevant which we thought was a really interesting space to dive into.
B2B Marketing: Yeah, absolutely. And before looking forward to 2030, which is actually worryingly close now, it sounds far away, but I guess it's really not. Before we look that far ahead, the report outlines five areas that you think marketers should really focus on if they want to differentiate themselves today. Could you tell us what these five areas are and why you feel they’re so important?
Benoit: Yeah, of course. We have a really strong B2B market research team, it's called B2B International, part of our Merkle B2B division and Dentsu business. We've been tracking the ever-evolving shape of business culture and diverse subcultures since, I think it's four years now, since 2019. We have this yearly comprehensive B2B research survey, which is called the Superpowers Index. What we see through this research is, like most businesses, it's a game of inches and we've identified five areas which are those inches or otherwise called success factors. The first thing is safety signing a contract. The overall importance of this attribute has massively increased steadily from 2020, to the point where it's now the number one most important factor and it influences brands success rates, so that’s safety signing contracts. There's the importance of brands complying with regulations, so following rules and standards, that’s obvious. But alongside that there's a brand that aligns with my personal values and ethics. So it's not just in B2C, it's very much present in B2B, and they need to be approachable and transparent. And then the fifth one is trying to provide expertise and support. As businesses are sort of forced to become leaner and work more closely with their suppliers and partners, we started to really see an increased interest in the expertise and support which you can give to suppliers alongside the main offering. These have really become significantly more important to the winning outcome this year versus last year.
B2B Marketing: Sure. When you say safety signing a contract, what do you mean by that exactly?
Benoit: Making sure that there’s transparency and that there's nothing hidden in the contract so that it’s easy to understand and there are no grey areas in that sense.
B2B Marketing: I see ok. So looking forward to 2030 then, you've identified four seismic shifts you expect to see which are machine-to-machine commerce, the traceability imperative, marketplace model dominance and a new era of speed to market. Starting with that first one, machine-to-machine commerce, what exactly do you mean by this and why do you think it's going to be so prevalent in a few years’ time?
Benoit: This is one of my favourite ones. Basically, what the research shows is that a huge part of business-to-business sales will be done by machines talking to each other. The analogy is to say, imagine if your next customer is not a person but a machine with its own wallet. Breaking that statement down further, and what the research shows, is simple sales are already being automated, right? Thanks to technology like AI or blockchain, we have things that used to need a human touch that can now be done entirely by machines. You have machines that are getting smarter. With so many devices connected to the Internet, to each other, what we call IoT or Internet of Things, you have machines that can now collect and share data on their own. This means that they can handle tasks like managing inventory or ordering supplies without the need of a human telling them what to do. We already have things like pre-order or order again on websites and those are things that are already being done.
The last thing is, which I think is also important, is everyone's getting used to machine help, right? Just like we're used to asking Sia or Alexa for help at home, businesses are starting to prefer dealing with machines for their needs. As a result, they expect a smooth experience similar to what they can get as regular customers. What's on the horizon for us is first of all, we're going to start seeing, and the data shows this in the B2B Futures report, supply chains will be on autopilot. By 2026 which is not far away, we expect that 65% of decisions about what to stock and when will be made by machine. And that's thanks to visibility provided by things like IoT.
The other thing is smart shopping for businesses. Companies are already using data to figure out when someone might be ready to buy and that makes it easier to reach out at just the right moment. By 2030, according to our research, we think that businesses will let AI do their shopping, they’ll let AI do their negotiation deals with other machines and this means that we're going to see big changes for how things like loyalty and shopping experiences are designed, which is really interesting. More and more, we're going to have businesses that are comfortable making large purchases digitally without the need to meet in person. And we're already seeing that, businesses are already feeling much more comfortable. People, procurement leaders that are, you know, Gen-Z or younger millennials are already really comfortable making big purchases on big ticket items without the need of a real-life interaction.
And then one thing that's important, which I think AI will play a key role as well, is self-service. So self-service options are not just convenient for B2B buyers, but they can also open up new markets. They can help you build direct relationships with customers and as a result, which is one of the key pain points of B2B, leading to faster sales and more repeat business because the B2B sales cycle is typically quite long.
Lastly, I think machine-to-machine commerce will help make complex purchases easier and that's because by improving the online buying experience and making pricing clearer, that's how you can help businesses feel more comfortable making big purchases on their own right. In short, I would say the world of B2B, or B2B sales specifically, is changing and is changing fast. I think if machines take on more of the work this will make things easier for everyone involved so this is why we're really positive about this prediction that over a third of purchases by 2030 will be done by machine-to-machine.
B2B Marketing: That's really interesting. I guess my immediate follow up question to that is, what impact does that have on marketers? Because a lot of what we do as marketers is creating content and creating a creative that appeals to humans. I would imagine that what's going to appeal to me sitting on my phone at home is not necessarily going to be the same thing that appeals to an AI bot, so is this a danger sign for marketers, do you think?
Benoit: I don't think so. I see it more as an opportunity, from my creative perspective. I think we're definitely at the turning point for marketeers and creatives, and when you have new technologies like Gen AI or, you know, lots of data, I think companies are expected to be really sharp and careful with every move they make, even when they're trying to be daring. I think we as marketeers and creatives have to develop a happy relationship with AI in order to really amplify human capability, I wouldn’t see it as necessarily something that will always take people’s jobs. It's more a tool that will, in my perspective, help you amplify your own capabilities. We're going to see AI become a huge part of creativity and to your point, we're going to see it become a huge part of content creation, which it already is. We've just seen ChatGPT launch Sora, which is this unbelievable text-to-image plug-in. Personally I see these technologies as a tool that will make us better at our jobs, make things more efficient too that's for sure. From a customer and workers’ point of view, I think generally speaking, this will make things a lot easier for us, whether it's for commerce, marketing or sales, I think it will just help amplify the work that we do.
One last thing, we often talk about 1-to-1 personalization at scale and how it's key for brand. The reality is, a lot of big brands today often struggle to give customers something that's just right for them, simply because they're just not set up for it and I think that new technologies like AI and Gen AI will make doing that a lot easier.
B2B Marketing: Yeah, no, sure thing. I mean, obviously, there's four seismic shifts that you've mentioned. So that's the first one. The second one was the traceability imperative. So what does that mean exactly? And again, why do you think it's so important?
Benoit: By 2030, the B2B Futures report is really looking at shifting the B2B space by 2030. By 2030, we are predicting that knowing a product's backstory, if you will, will become super important for businesses buying from other businesses. Right now, the price tag is what everyone looks at, but we really think that soon it's going to be all about traceability. This means businesses will want to know, 1) where the product was made, 2) if the area it's made in is stable, 3) if the workers are being paid fairly, 4) and if the way it's made is good for the environment. And lastly, if the whole process that they're going through is on the up and up, ethically speaking. Businesses are going to have to care so much more about this stuff that they'll pay extra for it, we really think that.
We first of all need to contextualize traceability and so when we talk about traceability, the analogy I use is it’s a product's life story from the very start where the raw materials come from, to every step of its journey until the end when it’s in the buyers hands. This is tough because products tend to, as we know, travel all over the world and there's a lot to keep track of. But what we're seeing from the research is that buyers are saying we need to know. They're not just buying something, they're buying the whole story that goes with it, how it's made and the impact it has on people and the planet. We see B2B businesses really pushing for this clarity and they want to make products on a reliable schedule and make sure they're made in a way that's good for the planet so they can tell their customers, hey, we take care of our workers. That way they can ask for better prices and this is why I think brands will be willing to pay a bit more for that transparency. And looking forward in the future, I think businesses will choose who to buy from based on who's doing the best for the world, their workers and who's being honest about what's in their product and how it's made. It's really about being a good partner in business and doing the right thing, that's really the main thing.
The other thing to address is why this is happening, why traceability is all of a sudden, or at least what the research shows, will become one of the main key decision drivers. First of all there was the pandemic, Covid-19 shook everything up. It obviously made everyone realize how tricky it is when you can't see how your product is being made, because there's a lot of talk about businesses needing to be socially responsible. Politics is playing a role, too. There's a there's a bunch of new rules coming up about making things in a way that's better for the environment and businesses need to be able to show that they're keeping up. It's a “must” now. And then finally, for a long time figuring out a product's life story was really hard. But now, again thanks to new technology like tiny chip tracking devices or like I said earlier the Internet of Things and Blockchain, it's more possible to really see where everything comes from. For example, we use Walmart as an example in the report. Walmart uses new tech to track down where their mangoes come from in seconds, not days, which is pretty incredible. The way businesses buy and sell is changing and that’s what we're highlighting in this report. Being open and honest about your product is becoming a big deal and will become even more so by the time we get to 2030.
B2B Marketing: Yes I can absolutely imagine. I can see it's easy to find those connections when you're talking about products, when you're talking about an actual physical thing. But do you think the same thinking applies when you're talking about a service?
Benoit: It's a good question, I think it is trickier. First of all, we’re in the experience economy. In order to be successful in the experience economy, you have to understand when you’re in the service business, meaning that even if you're selling products, you're also in the service business. You’re no longer just selling a product, you're selling what I call the augmented product, which is not just the tangible aspect of a product and of your brand, which is the product that people can have in their hand, but you're also selling the services that go with the product, the more intangible aspect of the product, and that's what I call Augmented Product. All this goes hand in hand and the way you have to approach the design of that service around the product that you sell has to be as holistic as possible. What we often tend to talk about at Merkle is the front stage experience and the backstage experience and how you cannot deliver a top notch customer buyer experience without putting your house in order in the backstage. So I think the short answer is yes, I think it's as important for services as it is for product. It may not be as easily trackable, but it's definitely something that is a big deal, whether it's product or services, it is a big deal.
B2B Marketing: Yeah I think I would agree, but I had to ask! And so the third seismic shift, marketplace model dominance, what is meant by this and why do you think that it's going to be so prevalent?
Benoit: We dove into a bunch of data about B2B commerce and online marketplaces, looking all the way up to 2030 again. It turns out there isn't a lot of information out there when it comes to market-based sales. We took a crack at sort of designing what the global B2B online sales might look like by 2030 and specifically like you said, the part played by marketplaces. I'll be honest, it's a bit of a guessing game since everyone from research groups to investment firms seem to have a different take. But the inside scoop from our work if you will, is that by 2030 and again all of this is in the report, we believe that all the businesses buying and selling online could be worth somewhere between $26 and $33 trillion. That's a growth rate of a little over 19% every year. If we just look at 2022 and we take into account the multiple reports that we've looked at and doubling with the size of things like the US market to today's world's total, market places might have sold around $320-$330 billion worth of goods. If things grow steadily at 30% each year, then we can see those marketplaces making 10% of that total $30 trillion in online B2B sales by 2030.
For the folks selling stuff, these marketplaces are a gold mine, and we truly believe that. They're like huge online malls where you have manufacturers and distributors that can sell bulk quantities of their industrial quality goods directly to other businesses. We've helped clients in various industries set up their own marketplaces and they've seen incredible results. Those marketplaces also come with perks, for example, it's a single place to sell all your stuff. You have access to buyers who mean business for you. You're cutting out the middleman and therefore boost your profit and that’s the results I just mentioned about some of our clients. The catalogues show products by location or industry which is incredibly useful and they usually have all the technical and safety details that go with it, which can be hard to find. From an experience standpoint, we have incredible teams of designers that can now make those interfaces a lot more user friendly. It's not what you have in mind of what the B2B digital experience used to be like, it's a lot closer to what B2C is today. You also have things like handy features for managing bids and sample requests, all the bells and whistles of big time e-commerce and customer engagement systems, you have it in marketplaces.
For buyers, those marketplaces become treasure troves because they can shop around on those marketplaces. They can buy from various certified sellers in one place. For them, the benefits are they have a buffet of suppliers and prices. It's like a giant catalogue stuffed with specialty and commercial grade goods, it’s smart tools, it’s data that can help you with your buying decision and it's a much smoother process for buying stuff. It's a digital-first space where you can track the whole buying process from start to finish and that's something that you don't really get anywhere else other than on marketplaces.
In the report we highlight three big trends relating to this shift, 1) marketplaces are opening doors for less obvious B2B niches, 2) B2B buyers want more choices and better reliability which is a massive plus of marketplaces, and 3) as a business owner, having your own marketplace is a super smart move if you want to grow your business. Get this, since 2019, the number of niche B2B marketplaces has tripled. If you look at the US back then, we had barely a hundred of these specialized B2B marketplaces. Now we have over 400 in the US and 250 in Europe. We all know about the giant one-stop-shop like Amazon B2B and Alibaba, we have data in the report that shows how their sales have exploded. It's definitely a huge advantage for B2B businesses, but also for buyers so there’s big focus for us on that by 2030.
B2B Marketing: Yeah, some incredible stats there as well. We've only got a couple of minutes left today, so I just want to quickly go through that final shift, which is a new era of speed to market. From my point of view, speed to market has always been important. So why do you think that is that going to accelerate in a few years?
Benoit: Again that's a super interesting one and you're right in saying that speed to market has always been important. Because of these new technologies like artificial intelligence, like machine learning and IoT, by the time we hit 2030, we're looking at things moving up to three times faster than when it comes to getting new products out there today. We’re stepping into a future where the way we make and do things is about to get a massive makeover. That's thanks to cool technologies like AI and also breakthroughs in bioengineering and things like that.
What we mean by speed to market is how quickly an idea becomes something real and that you can buy. We're talking about speeding up a whole process, as in dreaming it up, designing it, making it, testing it, getting bigger and delivering it. That's about to get a lot faster. I forgot to mention, for each shift identified, there are three forces driving them. For speed to market shift, we've got our eyes on three big game changers. First, like I said, it's AI kicking things into a really high gear. It’s ditching the slow, boring stuff and blasting through a ton of data to make sure that when we make something, we do it right the first time which is a massive plus. It's being able to scientifically guess if a product will be a hit or miss before we make a bunch of them, which can potentially save a boatload of cash. Then the AI is making the hunt for new materials and chemicals way faster than the old trial and error way, there's loads and loads of other things like that.
The second force is we've got advanced manufacturing that's making prototyping cheap and fast. Think 3D printing. It's been talked about for a long time, but think 3D printing on steroids. You’re zapping together everything from metal to resin, for example but before we even start making things for real, we can run simulations to squash any bugs ahead of time. In Amsterdam for example, they've created a bridge and they built a digital twin of that bridge to test how the bridge will function, the materials, how it would age, etc., it's incredible what you can do now.
Last but not least, we've got this whole world of smart computing that’s always on 24/7, like I mentioned before about digital twins and the Internet of Things. This technology is all about making sure every everything runs smoothly, adding to the speed to market. From the machines making things to the services and keeping them running, this is where AI will help doing that. For example, one of the examples in the report is General Electric is using these new technologies, digital twinning and Internet of Things, to design and manage wind farms. Get this, they perform 20% better thanks to those digital twins which is another incredible finding from the report. By 2030, the way we bring all kinds of new things into the world is going to be way, way faster and way smarter so it really feels like we're putting everything on fast forward thanks to that.
B2B Marketing: Yeah. Well Benoit, thank you very much for your time today and before anyone goes, I just want to say that we'll leave a link to the report in the description as well. We've touched upon some of the main themes today, but obviously if you want all the detail, please do read that. Benoit, thanks very much!
Benoit: Thank you, David.
