Last week we covered what a digital enterprise means, especially in a B2B2C scenario, how an enterprise needs to expand its digital footprint to its partners, then to customers, then to the ecosystem. However, this comes with an immediate challenge and insecurity on part of the stakeholders. That is the first and the biggest challenge in digital transformation, TRUST.
Everyone is worried about how your shining Digital Transformation is going to impact them in – person.
- The employees are afraid that they might lose their jobs.
- The partners are afraid that you might go or sell directly to the customers.
- The customers are scared of how you will use the greater information you now have.
For example, in an automobile company, if the dealer doesn’t trust you, why would he/she participate in what you are trying to transform with your customers. This applies to other industries as well. I learnt it the hard way when we were doing the industry’s best and biggest CRM about 2 decades back.
There was everything so good about the program, but dealers were wary of us owning the information, using it to control them, losing their customer data to OEM, and so on. I personally ran communication sessions across the length and breadth of India, often partnering with my regional leaders to communicate a Win-Win-Win picture; as well as giving security and data privacy assurances and evidences to our partners. I don’t think the program would be a success without such trust-building efforts. But why do you need it in a greater way today – digital disintermediation.
Digital Disintermediation shaping market models
Digital Disintermediation of channels is commonplace today. In industry after industry, digital first players are owning the customers and disintermediating the businesses and the channel partners; dictating terms and changing the market dynamics. This is concentrating power in the hands of the platforms and edging out the intermediaries from the value chain. Some examples are:
- Taxi services: The travel agencies are being edged out as Uber and Ola create innumerable options for people to travel short and long-distance.
- NoBroker.com: It’s pushing out the property brokers and connecting the lessor and the lessee together, and providing all the middleman services.
- Food delivery services own the customers and dictate onerous terms on restaurant partners.
Trust: Threat of Internal Disintermediation
Enterprises that expand their digital footprint are working with a good intention of enabling channel partners. However, in the digital disintermediation-led market context of today, this is likely to raise eyebrows of partners; if the intent is not communicated well, and if the change is not managed well.
People have watched the footprint of digital edging away from the intermediaries and they look at your digitalization efforts with suspicion.
I once booked a vacation with a travel company by using its website. I still had to go to the local office for giving my passport and other documents. I was shocked by the differential treatment I received, probably with the tag, I carried – coming through a digital channel. It was very obvious to me in the way my transaction was handled that I was not welcome.
Probably the answer will be in policies and processes. If this travel company is not giving incentives on portal-based leads to its local offices (who are handling the physical leg of transactions); the digital customers will face discrimination – like I experienced. Similarly, if you do not provide incentives to your dealers for such portal opportunities, are they going to treat customers well? These examples indicate the importance of communication, change management and explicit efforts at creating trust. You need to create the policies and boundaries of digitalization. For example, “we will not sell directly to customers. We will enable the platform where the customer will buy from my dealers”. This can be a statement of a company with existing channel partners, which is creating a platform for customers to buy directly. It obviously doesn’t want to alienate its channel partners, from servicing the digital customers well and hence needs to provide explicit policy clarity. Or you can give extra incentives to your dealers for portal or app based opportunities – to shape your own digital future.
As a corollary, in absence of such policies, you’ll find the digital customers, getting a differential treatment, just because you didn’t create enough trust.
So, your policies, processes, incentive schemes have to reflect your focus on digital and rather giving a better treatment to your customers who come through digital channels.
The article has been written by Jagdish Belwal, Founder and CEO, Jagdish Belwal Advisory