What can you learn from your local retailer? A lot, even if you’re in an entirely different field. Luke Burns of Ascent Venture Partners shares what he finds worth watching.
In today’s guest post, Luke Burns of Ascent Venture Partners shares the retail insights that help shape his enterprise investing strategy. Have an interesting idea for a guest post? Email email@example.com.
It’s always interesting to examine retail innovations during the peak shopping season, especially within the online and mobile shopping segments. As an investor in enterprise IT, I tend to draw parallels between the innovations of retailers and the broader enterprise market. Often I find that the enterprise lags retail, especially in areas like improving the customer experience, perhaps because the applications or benefits are less obvious – but no less important. Here are some areas where B2B is catching up with B2C.
1. Delivering a customized customer experience
Amazon was a pioneer in delivering a personalized customer experience, but there’s been a great deal of evolution beyond basic recommendations and discounting for targeted shoppers. E-tailers have embraced complex, rich customer profiling, using prior site browsing patterns to customize future visits. In the B2B world, it’s historically been the responsibility of the salesperson to develop a customized customer experience (using a high touch approach to focus in on a prospect’s specific needs). As the B2B sales model has evolved to embrace ever increasing automation (low touch is now the goal), vendors have struggled to deliver the targeted customer experience needed to be successful. This is beginning to change as tools are improving and knowledge is spreading amongst enterprise sales teams. Some of our portfolio companies, for example, are creating rich profiles of prospects who visit their websites, and are using this data to formulate customized marketing campaigns and for more efficient lead scoring. It’s still early, but eventually we will see B2B vendors achieving the same sophistication as their B2C equivalents.
2. Pulling more data from more places
Retailers have always used data to make better business decisions. But the data opportunity extends far beyond location, age, gender, or prior purchase data. What if you could merge data from many sources—demographic data with broader market data, with external purchase data, with web browsing data, with behavioral data and on and on? Some retailers have started down this path, but many in the B2B space have lagged. Yielding big data insights in the enterprise is a tall order – hampered by a talent shortage, technical constraints, and political infighting (as data is just another asset over which to fight a turf war). Big data analytics remains a very difficult task for most corporations, and it is an area of rapid innovation and one of strong investment interest for us. The potential is there; Big Data is transforming the retail business as it will transform most corners of the economy from healthcare to finance and more.
3. Moving to real-time
It’s well and good to make product recommendations based on what the customer has typically shopped for. But what if the customer logs in and starts browsing within a completely new and unanticipated product category? Some retailers are moving beyond weekly automated “batch jobs” for understanding the customer, and are beginning to react immediately to their customers’ activities. Recent technical innovations in database design and compute infrastructure have made real time a real possibility for many areas including mobile, social, and web. But this development in the enterprise has lagged for many of the same reasons that big data analytics are lagging. If a company can’t get the systems in place to yield any impactful data insights, there’s no value in getting lousy answers more quickly.
4. Embracing transparency
Amazon was a pioneer in the area of transparency by making customer reviews a critical part of the buying process. Customers want full disclosure when making a purchasing decision; they don’t want to be gamed or misled. Such transparency lags in enterprise sales because the enterprise sales process is often archaic – round of golf, steak dinner, and so on. But today’s enterprise customers are demanding something different. Customers like to see the pricing, terms, and conditions of a product up front. It helps to create a relationship of trust with a prospect and ultimately makes for a more efficient sales process. Some of the most successful enterprise software vendors in recent years have embraced this model, and the industry as a whole will eventually catch up.
5. Protecting privacy?
The issue of privacy remains in the background as we talk about many of these themes. Personalization creates a better buying experience, but requires an ever broadening set of data on each individual. Privacy is widely debated in the consumer space, and retailers have been doing an increasingly better job at maneuvering these waters—but the enterprise has not given privacy the same attention. Many employees are accepting of the fact that their employer owns their email and can access their conversations and web browsing. But how does management feel about an outside vendor watching their every move? As more applications continue to shift to the cloud, e will be forced to answer these questions, and the issue of privacy and control in the enterprise will become a more heated debate.
Luke Burns is a Partner at Ascent Venture Partners, where he works with innovative early stage companies with a focus on mobility, data analytics and security. Earlier in his career, Luke was co-founder and CEO of e-commerce software provider Emercis Corporation, and he also has held consulting roles with Bain Co. Luke holds an AB in chemistry and physics from Harvard University, and an MBA from MIT’s Sloan School of Management.