insights! #68: the synergy of D2C strategy and digital services

Joubin Rahimi:

Wonderful to have you back for a new episode of insights! My name is Joubin Rahimi, and today I get to welcome Saskia Roch from ECC NEXT. Hello Saskia.

Saskia Roch:

Hello Joubin, great to meet you.

Joubin Rahimi:

Me too. We haven't known each other long in this whole business environment. But you've had decades-long career already in same environment we're active in too. That's why I find it mega exciting. Maybe some of you don't know you yet. Would you like to say two, three sentences about yourself and ECC NEXT and the setup?

Saskia Roch:

Happy to. Yes, actually it's a wonder we haven't crossed paths in recent years. I've now been in e-commerce for 15 years myself, even a bit more. I was either in the role of P&L lead responsible for the e-commerce channel, and also very much involved in digitalisation projects. So everything around digital transformation, be it data, migrations, building new IT systems. We once optimised all touchpoints, online and in-store, across the whole journey for the O2 brand — really exciting, and what always comes with that is people. How do we manage, in cross-functional teams, agile ways of working, or also with goal-setting methodologies such as OKR, which I also really enjoy doing, to actually get the whole thing onto the road. That's what drives me. I did that on the company side for a long time, for example at Holidaycheck or also at O2 Telefónica, and I've now been on the service provider side for six years, and what I like there is the variety and, yes, the insights into different industries, but of course also companies, and I always get to accompany really, really great people and projects too.

Joubin Rahimi:

Then it's massively exciting either way, because what you or your team advise on is something you've had to decide on yourselves before. That's often the accusation levelled at consultants: they never face the consequences of what they do. That's different for you. You've lived through it, right?

Saskia Roch:

Yes, I actually got this tip on my very first day in digital consulting, it was: remember what made good service providers good for you. And I try to hold on to that. And I think that's partly about individually addressing the specific needs of the company. That's also why we're a bit away from standard products or a one-size-fits-all approach, as many do. Of course you want a degree of scalability, which isn't always easy in services, but that's what makes the difference. And we notice that in our target group too, the Mittelstand. They need contacts on equal footing, who don't already suggest they've understood everything and know everything, but rather exactly this dialogue with what the company knows. Usually very experienced people sit there. That's what makes the difference, combined with impulses from outside.

Joubin Rahimi:

So what you bring, in parallel with the customer's domain knowledge – that's what you bring together.

Saskia Roch:

Exactly. Yes, and what do we bring to the table? At ECC NEXT we're part of the IFH Group, the Institute for Retail Research in Cologne. It's a market research company. We have market data, but also survey data that we process time and again across various studies. That includes the Retail Trend Check, for example, or the Market Monitor for the B2B sector. And this data is of course powerful. So for every sector we can say very precisely: what's happening right now? What are the macro trends affecting all of us? What do forecasts say for the coming years, and we try to provide orientation there. So we really do see ourselves as providers of orientation. Not always the ones with the immediate answer, but rather the ones who know the network. And really function as a gateway into an ecosystem, where partners like you, but also other retailers and manufacturers, are active, people you can exchange ideas with, and where there's always someone who's already done it or who has a possible solution.

Joubin Rahimi:

That brings two questions to mind straight away. One question is. Macro trends are of course always industry-specific and different per sector. But perhaps you have a trend for 24, 25, 26 where you'd say, that's where it's heading, frame it however you like. And the second thing is, of course. The name Institute for Retail Research speaks to retail. But you also said you have manufacturers and B2B retailers. How does that work together?

Saskia Roch:

Well, happy to start with the trend. So, at the risk of using a buzzword, it's definitely AI, so the impact of artificial intelligence. When I think of German SMEs now, they'll benefit enormously from this, I think. This now opens up, for the first time, the possibility of pre-empting the skills shortage, and also simply catching up on things really fast. But also being independent from programming capacity, for example. And that's great. I think you can really look forward to the opportunities opening up there. And we notice in conversations with a lot of people that speedboats are already out there too, things simply being tried out. And I think a lot of good will come out of that. That's great to begin with.

Joubin Rahimi:

I always go on about it, in the sense of you need to do more. This is your chance, and you have a different perception. That's great. I think that's really so incredibly important for us in Europe.

Saskia Roch:

Yes, perception is also fed by our surveys. There's an AI study that came out, I believe, just one or two months ago, in which consumers but also companies were asked. And if I remember correctly, more than half of companies actually already have some form of AI in use or are planning it, trying it out, and B2B is ahead in this area. For a change.

Joubin Rahimi:

And since you're bringing it up for a change now, I'd like to pick up the second question about B2C or trade, towards, yes, manufacturer or wholesaler?

Saskia Roch:

Exactly. So the Institute for Retail Research was founded almost 100 years ago, I believe in 1929 during the economic crisis, when it was about the trade sector asking itself - How do I deal with these crises? What data do I need to position myself for the future? So actually a very relevant question that still applies today. And we now tend to see "trade" more as an active verb, to trade, and of course we see many, many more companies there too. But what we know and understand are the functions of trade. So what role does trade play, be it wholesale or also retail, and what belongs to that, to make it successful? And that's of course super exciting in discussions with wholesalers. It's often about how do I reposition myself for the future, where are the growth areas, be it new markets, but also new target groups? But also, thinking quite radically, new business models, keyword marketplace or also digital services. Something that keeps us extremely busy. Very, very exciting, but of course manufacturers are also interested, asking themselves what role does trade still offer me, and where might I want to take over parts of this trade function myself, for example, and sell directly to the end customer? Keyword D2C. Exactly.

Joubin Rahimi:

Two questions come to mind: firstly, digital services. What do you understand by that? The term - we're currently rewriting our vision, mission and purpose and what we stand for and what we do. And there we also have digital products and digital services, we googled the terms to get it right, to have the right term. But maybe you can show me a new way now. What do you understand by digital services?

Saskia Roch:

Well, the question is whether that's the same for every company. I think if you're talking as a provider of digital services, the focus will probably be different. In e-commerce, or for the retailer or manufacturer, it's naturally everything around helping their customers run their business well. So first everything around the ordering process itself, whether that's in the pre-sales phase — things like product finders, configurators, personalisation around the products. But then of course, once the order's on its way: things like tracking — where's the thing? When exactly does it arrive? Where's my invoice, where can I download it? Can I return something? Can I order something on a regular basis? And then of course the whole after-sales and service area — maintenance, predictive maintenance. That can actually be mapped digitally very, very well these days too. And concretely, it can be done well through a self-service portal. I think only about half of the companies we surveyed have that. Many are planning to, though, and users, the customers, see the benefit and want it, and want to be able to act and get active themselves. When there are problems, people often still want a human. We see that too. Even the younger generation says, if there's a problem, I want someone on the hotline to help me right away. But otherwise we all tend to want to be self-sufficient, with the option to help ourselves. So those would be the services in the basic form, and then of course there's every other kind of service you could offer, and those could also be mapped digitally.

Joubin Rahimi:

That gets really packed, because we say digital services is everything that's e-commerce, configurator, order process, portal. Those are all digital services, and digital product is something you can then sell on again. If you have a digital product, let's say, I'm just looking round here to see if I've got the tennis racket with me, but no. We built the racket finder for Head, which is a digital service. So which racket is the right tennis racket, and Head itself also has a sensor with an app behind it, where you can train, so where you can improve your game via this sensor. Where we say, that's a product, because they market it independently. In that sense they could also sell it themselves or put a subscription model on it and say that's then a product. That's how we've split it.

Saskia Roch:

Good breakdown, yes. What we often notice – maybe you noticed this back then too. Digital services or products are often conceived and designed completely detached, sometimes by a different department within the company, one responsible for the classic products. And you often see that. People say the website is often a reflection of the internal organisation, and we very often discover that the services just sit somewhere completely different, have their own navigation area and are integrated with little regard to actual need along the customer journey.

So there's a lot of potential there that often still goes unused.

Joubin Rahimi:

Totally. We do that when we have a new client or are in a pitch, we look at the website anyway and often already recognise from the website what many of the challenges are. If they ask us, there's always something in flux. Either they want to change the service provider or they really just want to step up a gear. But you can see the silos there very quickly usually, and also how far the management or owners are. Mentally. So you can already see that on the website. It's shocking how transparent that is. Not directly, it doesn't say so there, but the way you phrase it. And when you then have silo companies, you know exactly, my problem is surely getting the customer journey working across all areas. That would be my guess now. What's your view on that?

Saskia Roch:

Yes, indeed. Yes, I think so too. Your topic is also customer experience and usability. I find that, especially in B2B, you can still sometimes notice this, I don't want to call it the protestant work ethic. Like, if it. It has to be ugly, otherwise it wouldn't be work, put pointedly. So we often have this debate, well, usability, nice little pictures or even just inspirational shopping, we don't need that. We need to get to the goal quickly. But for me that would actually be the definition of user guidance, well-designed user guidance is actually about taking the user by the hand and enabling quick decisions along the customer journey. And that's allowed to look good too, even if it happens in a work context, and there's still so much to be done there. But I don't want to keep saying there's so much to do. I mean, I think there are pioneers in every industry who do this very, very well. But user expectations keep growing too, so you have to stay on top of it. Yes, and then you can sell more too. So even if it's a needs-based step, depending on the business model, you can probably sell more as well.

Joubin Rahimi:

But you had another topic. You brought up D2C – what are you seeing? So why do companies do D2C, or talk about it, or even do it? Or do you recommend it too?

Saskia Roch:

Well, I think it really always depends, there's no blanket answer and it depends entirely on what the company wants and above all on the dynamics in the market or the sector. So no recommendation in one direction that could be given here across the board. We simply notice that. It's a topic that occupies many people and many companies simply observe for themselves or think about. We see that many companies are in two stages. Either quite fundamentally at the question is it something for us? There we would definitely recommend first the major players in the market. Who is moving in which distribution channels? What power do these players have? Keyword retail - What does the customer journey of customers actually look like? Would they even want to buy something like that online or would they want to buy directly from the manufacturer? And yes, how? How are the distribution channels developing quite fundamentally? What trends might be recognisable there and derived from that one can then consider whether it's the right thing. And we've also already had contact with companies that are already further along, asking themselves how exactly do I do it? The decision has been made, whether it's a strategic decision or one made based on analyses. And then it's more about looking at which product segments what suits, also the important answer to the question: Why should someone buy directly from the manufacturer? Why do I do that? What advantage do I get from it? That needs to be clearly answered and worked out. Those are then functions, services, added value in the online shop again and then of course, and you know this well too, all the work that comes after that with prerequisites in logistics, technology systems, service as a keyword. Yes, that's then quite a heap of work to start with. Many manufacturers actually start with Amazon, that's what we see in our manufacturer roundtables, which we hold very regularly and where we have really great brands at the table exchanging views, Amazon is a topic every single time. So Amazon as an entry point into direct sales shouldn't be underestimated.

Joubin Rahimi:

This is exciting, of course, because Amazon on one hand is quickly the shark in the same ocean, but on the other hand also a springboard, as you said, into the ocean you're entering. Can we say that's accurate? With Amazon you easily get into this sales market and can first solve the challenges that aren't digital. You said logistics, perhaps also call centre or customer surveys or customer enquiries to solve.

Saskia Roch:

Yes, absolutely. So I think it's important to strike a balance between trial and error. So simply trying things out, learning, thinking further. But on this topic I would recommend giving it very thorough consideration before getting started. Be it on pricing, but of course also on existing cooperations with retailers.

Joubin Rahimi:

I don't think you need much trial and error there, you just talk to yourself.

Saskia Roch:

Exactly, with me or with my colleagues. I have two colleagues, Mailin Schmelter and Michael Mertens, who were named by Internetworld as Top Twelve to Follow in the B2B environment. And together with the market data and the colleagues we have at IFH, we really have an answer or a solution to almost every question, most of the time. Right.

Joubin Rahimi:

That's great. That's first of all the call to get in touch with you. The studies already mentioned that too. We touched on AI at the start, then moved on to the topic of D2C and the next steps and how to move forward with it. I'd like to get another glimpse from you into the future – if you were a managing director of a manufacturer. Or both manufacturer and retailer. That might be quite exciting too. What would you put on the agenda, or what would you have the company put on the agenda, that should definitely be tackled in the coming years?

Saskia Roch:

So actually, I think it's about setting the right course. Whether that's about the strategic direction of the companies in the coming years. The macro trends we see are bringing quite a bit of upheaval. That means a company is, in my view, resilient when you know where you want to go. So the theme of vision, a clear north star, which should be formulated. It doesn't have to be concrete, but the direction must be set so that employees also understand where things are heading and can act accordingly. This should be developed on a data-driven basis. You should seriously look at the markets, the industry, the trends and developments in the field beforehand, before committing to a vision. And then I'm a huge fan of staying very agile and flexible within this construct. We mentioned OKRs earlier, so thinking ahead in short iterations, giving a lot of responsibility to employees. Using expertise from all areas, using diversity to tackle the challenge. And these will probably also change in the coming years. Every year there will be something new. We don't know exactly how things will continue, but for me that would be a possible setup at a very high level, how a company could position itself.

Joubin Rahimi:

But that probably also explains why an Esprit or Bosch might say: we're data-driven and want to make our decisions much better based on data. That's essentially the foundation you provided.

Saskia Roch:

Perhaps to add, the data that a company collects itself is of course extremely valuable. That's increasingly the case too. The market data that we can, for example, contribute is equally valuable. But what we're also noticing, especially in times of uncertainty, is this desire for exchange with peers. Because some things can't be predicted in detail. And that's where the roundtables, or also the events held at various places, are hugely valuable. We learn something every time too. But it's exactly this exchange within the network where you gain confidence, whether what you do daily is really right. Fascinating.

Joubin Rahimi:

The more digital we become, the more important these physical meetings become, that's my impression. Fascinating. Yes. Yes, great. Thank you. So the last three points. I'll go over this once more with the data and the North Star, which is relatively clear, but then agile sounds so simple once you've heard it in this context. But it will probably make sense to a lot more people now. Why OKR and also why being data-driven is so important and how it can interact within that construct. Thank you for your time, Saskia. As always, I'd love comments from everyone who's watched and listened. And one open question, if you have studies, I know you sell those too. I don't know if you sell all of them. Can listeners and viewers get in touch with you to see whether an extract of one study or another might be available?

Saskia Roch:

Absolutely. And we also have plenty of studies available for free. Just to mention a few. The B2B Market Monitor, for example, which analyses market figures and developments in the B2B sector in Germany. Then we have the B2Best Barometer. There, wholesalers and manufacturers are surveyed on trends and their roadmap priorities. I can go ahead and dig out the links, as that's definitely available through me or via our website.

Joubin Rahimi:

Great. Yes, personal contact is always good, I'd say. Otherwise Google or your website will find it. Yes. Thanks for your time, and all the best on the way to lifting ECC NEXT into new spheres.

Saskia Roch:

Thanks very much, Joubin. We'll see each other again at the latest, and this is also a little call-out to everyone at our ECC Forum on 5 June. One of our events, where this kind of exchange also takes place. Exactly.

Joubin Rahimi:

Exactly, 2014, 2024. 2024. And if this video runs for longer, the forum has been around for a good few years too, and it's certainly worth a look if you want to exchange ideas at the forums, at the B2B Forum. The next one is, if it should be after 6 April. Exactly. Great, thanks again, and all the best, dear Saskia.

Saskia Roch:

Thanks as well.