Having worked for a long time in the chemical industry and dealing every day with its customers, I know how difficult it is to understand the impact of new buzzwords and to find ways to see their benefits or the risks. I often hear: “Please demystify this for me!”
When the German government announced Industry 4.0 and it gained speed in 2014, everybody started to be more forward-thinking. Robots, chatbots, and data rose to the top of every priority list on the planet. IT projects suddenly became digital projects as the definitions blurred, and soon business was frustrated again: Too many buzzwords had everyone asking, “What’s in for me?”
I had a hard time too, and although I considered (and still consider) myself customer-centric, there were these new terms: “customer experience” (CX) and “customer journey.” The unicorns in the chemical industry were those who were talking about new digital business models, etc.
Getting a new view on the customer—and understanding that there is no such thing as “the customer”—helped me to break out of silo thinking. New KPIs were required, but which ones?
Soon I found myself in design thinking workshops. Scientists had a hard time in these workshops, and controllers were asked to trust the process. They kept waiting for a miracle.
Today, I can hardly imagine these earlier days. The new way of thinking has evolved, and I see clearly now, like many others in the industry.
The challenge was to keep people motivated and to turn these insights and findings into actions. There might be industries more receptive than the chemical industry when it comes to new business models and going the extra mile. Business has been done the same way for many years and has been mostly successful. So why change?
This question might be an option if you just produce chemicals without having any impact or role to play in the market. Your role is not to build on customer relations as your customers are solely driven by price. If selling chemicals is more of a side effect to your core business and the production of commodities is rather simple, somehow you are selling the goods. Producers might argue this way.
The moment you understand something is wrong — that new players, or old players with new gear, have taken over your business relations without changing their product, it might be too late.
What do the numbers below tell you?
Based on a recent Google report, nearly 50% of today’s B2B buyers (among them chemical buyers) are millennials, born between 1981 and 1996. They range from about 23 to 38 years old. What is driving their satisfaction, and what makes them loyal customers? How do older models and aging ways to manage customer relations fit the newer generation? How do you understand what they expect? How do you listen to them? How can you improve continuously?
But there is more…
In addition to your customers and influencers, the press, non-government organizations, and others, there are other voices you should listen to.
One of these is certainly the voice of your product. There is a high interest in the chemical industry in understanding what products are being used for. Organizations are investing a lot of money and resources to drive new innovative solutions. Although Registration, Evaluation, Authorization and restriction of Chemicals (REACh) offers a good hint of how products are used, the data is stored in Environmental and Health Systems (EHS), often in a language that’s not legible to people in business who are looking for new ways to use their products. The people who manage this data are usually not innovators; they’re focused on EHS. It is not surprising, then, that customers often know more about the products than the producer itself, with its limited view on specifications.
So, to innovate or to optimize, why not ask the customer how the product is used?
Customer experience will surpass price and product
Walker, a customer experience consulting firm, predicts in its Customers 2020 Progress Report that customer experience will surpass price and product as the key differentiator by the year 2020. While many experts agree with this statement, many companies continue to discuss it in endless meetings and web conferences. This prediction is already happening, and the chemical industry is not excluded. It reminds me of climate change discussions: Some say it is happening already, others say it is a hype. Your call.
The chemical industry has never been a fan of communicating prices. Wherever possible, price is super-confidential and depending on the business model, so is the market and of course, the product. Customer-specific pricing is business as usual. But for how long?
Services and platforms are already attacking this business model, and you’ll want to be on the safe side when they succeed. Have a look at 1688.com, chemondis.com, chembid.com, gobuychem.com and many more. It ain’t a niche anymore. So what is your secret weapon to keep your business as usual?
Imagine prices are no longer secret: Suddenly the value proposition you’ve sold for years is gone, and information on availability has turned your specialties into commodities. Wouldn’t it be great to understand what makes your customers loyal and what satisfies them?
Maybe it is not just your product, but the mix of how you deal with your target groups. It could be the reliability you offer at every stage or the way you handle complaints (if any). Maybe it is Janine, your sales representative who goes endless extra miles to turn every interaction into a remarkable and positive experience. And don’t forget Josh, the poor soul working in procurement who has to buy 200+ chemicals from 50 suppliers, each with a totally different service level and process. Finally, there is Wesley — who finds a multi-million-dollar business opportunity you would have missed because you can’t imagine that in addition to your existing customers, there are others you did not yet recognize.
Customer satisfaction ≠ Customer loyalty
Every business faces hard times sooner or later. Loyal customers help you to overcome such times by repeating their purchases. They are future-oriented, and even if not every interaction with your company is perfect, the benefits outweigh the problems. Your loyal customers tell a behavioral story with long-term goals.
Certainly, this is not limited to the chemical industry, but think about how you get feedback from your customers, and how you assess loyal customers vs. non-loyal customers. Suppose someone from sales told you a customer is happy with how things run—how can you be sure this helps to distinguish loyal customers from simply satisfied customers? What about the not-so-good feedback?
Your employee will open your customer’s heart
Companies often think that experience management is limited to what is offered to the customer. This is especially true in the chemical industry, where silos prevent many organizations from moving forward. In reality, the product is not the only thing you offer your customer. The product also includes service, and your most valuable asset in this is your people.
The main reason CX projects fail is that they lack empathy and people-oriented change management. The power to assess and convince your own people leads directly to tool- and process-driven project management. Cultural differences, and how they affect the way decisions are made in different countries, also play a major role in finding acceptance.
I am often asked about the biggest risks in digitalization. My response? Time. Time moves quickly, so quickly that you might forget to ask your organization how they hang on and what they think. You do not want to lose your people these days.
How good can your customer service solution be if your internal workforce is not convinced by it? And how good will the service they deliver be once the customer starts using it? I have a guess.
When I talk about experience management, I don’t consider surveys alone. A survey will give you isolated feedback — most likely an assessment of the satisfaction. To grow your business, you might want to build on your loyal customers. To do this, you need to know what keeps them motivated and what drives their loyalty.
Some potential customers might not buy your products because of your company brand. Perhaps they don’t trust you, even if you offer the products they need, because you treated them badly once without knowing it. You never had the opportunity to apologize or to make it better.
Customers don’t forget. Many businesses in the chemical industry are family-owned, and many are so small and agile that even purchasing decisions are made by production, R&D, and other departments. These companies might have a dozen decision makers who openly discuss customers. In the analog business, an unhappy customer would tell maybe six others, but in today’s world, they can easily reach 6000! You need to understand the whole picture, not just a page of questions. You need to understand how to relate the answers to action.
Never underestimate the power of your workforce in enabling new business models or keeping your customers happy and loyal. The customer relationship is something you cannot digitalize – yet. Also, the success of any customer experience project is highly dependent on its acceptance in business communities.
Experience management works across internal silos. To unleash its full power, chemical companies need to understand how to use the insights generated across various touchpoints in the customer journey and those in internal processes. You might want to learn more about your customers and the complexity they have to manage to make your product more usable and become their supplier of choice.
Real magic can never come from assumptions. You must connect the dots and go beyond your comfort zone to realize that what you see is what your business feels.
Author: Pedro Ahlers
About Pedro Ahlers: Pedro Ahlers is a business architect at SAP. In this position, he helps chemical companies understand and apply the values of customer experience beyond products, features, and functions to increase business growth, customer loyalty, and satisfaction. He is obsessed with customers and human-centric change management that empower organizations to accept the challenges chemical companies are facing. With 12 years of experience at BASF, the world’s biggest chemical company, Pedro brings together business and technology know-how.
Article has also been published in www.digitalistmag.com