B2B payments can't evolve if customer experiences don't improve
Customer experience (CX) has transformed from a marketing buzzword into a business strategy. Few industries illustrate this more than payments, with companies like Venmo, Square and PayPal delivering remarkable customer experiences with the help of innovations in data mining and technologies like machine learning.
As consumers, these companies make payments appear like magic, jumping from device to device with the mere touch of a finger (and maybe, soon, voice). However, a lack of CX prioritization within B2B organizations has made B2B payments a cumbersome experience.
Recently, several drivers have shifted the way that B2B organizations think about CX.
Today’s employees bring their own devices to work, split their time across multiple screens, and can conduct their jobs from anywhere. This has forced companies to focus more on the end user rather than at the organizational level when it comes to the technology they procure and manage.
On top of this, today’s business leaders share an underpinning of excellent CX (think Amazon, Netflix, Square), which has reshaped our expectations as consumers. According to McKinsey & Co., however, 65% of B2B customers don’t think their experiences with other businesses match their experiences with consumer companies. We don’t stop being consumers just because we go to work.
Another driver of CX is Generation Z and millennials coming of age. These digital natives have grown up with unfettered access to technology and information, and are using next-gen payment technologies on a frequent basis.
In fact, 79% of Gen Z and 75% of their older millennial counterparts are using P2P payment platforms once a month. Compare that to 65% of Gen X who report the same and it’s clear that the younger generations are increasingly conditioned to expect easy and painless payment experiences.
While many assume that CX will overtake everything, including price and product quality as the top brand differentiator by 2020, CX laggards have prioritized areas that have an immediate impact on their bottom line, rather than preparing for the future impact of CX. That’s a misguided approach.
Experience-driven businesses see an average annual growth rate of 15% (versus 11% for other entities). Companies that put CX first also grow revenues significantly faster than those that don’t. To put it simply, companies that want to boost profitability in today’s tough business environment must deliver an engaging CX.
The B2B payments space was once plagued by an innovation problem. Today we face a CX problem. Payments innovations are outpacing the adoption of CX strategies within B2B organizations. For example, payments have gotten smarter, faster and more secure, and companies have designed easier ways to transact across the globe, yet 51% of the transactions are still paper-driven and full of friction.
You can’t harness the power of jet propulsion if you don’t master the art of flying first.
Instead of looking to the latest tech as a panacea, organizations must first look at their most important asset: their customers. From credit, invoicing, payments and collections, the entire life cycle of a B2B transaction needs to be designed with the customer in mind. Yes, technology will be a critical element of this, but it will only be useful if it’s applied in a way that truly addresses the pain points that exist.
Those that do this will achieve market leadership. Those that don't will fall by the wayside.