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Philips(Consumer Portfolio)
Philips(Healthcare Portfolio)
Few of ourB2B Customer Types
GovernmentHospital
Distributor
Professional
Retail Store
EMS
Buying GroupInsurance Company
What do customers need?
Customer expectations have EVOLVED!We need to transform from selling products…..to selling experiences
Top 3 reasons for B2B buyer to choose you vs competition
Price
Assortment Convenience
Experience
Assortment Value
From: To:
Key learning 1:
A Buyer is also a consumer!And demand personalized experience along E2E buying journey
Contract & Relationship Management
Product Info & Discovery
RFQ/Order IntakeOrder & Shipment
TrackingCustomer Support Profile Management
FROM
TO
Key learning 2:
The growth is in ‘Mobile’ (yes – also for B2B)Especially with payments, quotation request and workflow approvals
Key learning 3:
In 4 years, the share of mobile for Philips has doubled in health sector
Gartner predicts 77% of all transactions to be online in US by 2020
But be aware of where your industry is headed……
Because, sometimes.. The juice isn’t worth the squeeze
"Development" "Growth" "Shake-out" "Maturity"
Online share (%)
100%
Online penetration
Sales growth
Profitability
Online traffic
• <10%
• Not impacted• Online is a complement to
offline
• Higher in store-based retail
• Offline with majority of traffic
• 11-30%
• Offline growth towards zero• Online moving from
complement to competition
• Lower in store-based retail• Gross margins deteriorate
while stores are maintained
• Online gains traffic
• 31-50%
• Offline growth turning negative• Store-based vs. online battle for
market shares
• Converging at low levels • High competition as stores
restructure and online matures
• Online dominates
• >50%
• Markets settle and growth rates converge
• Stabilizing at fair levels • Competition normalizes and
markets settle
• Online dominates
Time
Petroleum products/Energy
Pharmaceuticals
Chemicals
Food/Beverage
Hardware/Home furnishings
Healthcare products Machinery
Office Supplies
Computers/Electronics
Automotive parts
Finding 1: Online Sales maturity varies across the industry
MedTech growth leveling at ~3-4% after financial crisisSignificantly lower than >10% growth rates during "golden age"
200
100
300
0
400
2006 2010 201120092008 2012
+10.9%
+3.9%
2005 2014 201520072004
+9.1%
2013
+3.1%
20172016
D&A
R&D
CoGS
EBIT
SG&A
Note: Composition of MedTech companies sampled has been updated from Milkman v1.01. Based on top 100 MedTech companies (by revenue); Revenues perspective including all companies with 40%+ revenue share in MedTech or more than $5B sales in MedTech; Margin perspective taking into account segment specific reporting for large conglomeratesSource: BCG Value Science® Center, Capital IQ, Evaluescience, Research Insights, BCG analysis
"New Reality""Financial Crisis""Golden Age""Catch-
up"
Traditional sales model makes MedTech commercial spend (unsustainably) high
1. SG&A: Selling, General, and Administrative expenses (in this chart includes R&D expense) 2.COGS: Costs of Goods SoldSource: BCG Value Science Database; Company SEC reports; BCG Commercial Excellence Benchmarking in MedTech 2016
Revenue and SG&A spend for each euro of COGS
1,01,01,0
1,6
2,4
0,30,5
1,0
IndustrialMedical Devices
3,1
High Tech
COGS Revenue SG&A
~3.5x
Unchanged since 2011
~2x (but under pressure)
Competitive example: Medtronic Customer Connectivity Solutions
2010
2011
2016
2018
2008(&2015)
EDI & Data Exchanges
B2B/ProfessionalOnline Shop
VMI & Barcode scanner
MyMedtronic Connect
App Store
Gamification Applications
Alexa App
Hygiene factor Game Changer
14
Risk of new entrants threatening position of MedTech leveraging their digital capabilities
Amazon Business e-commerce platform• Already selling infusion pumps, catheters, IV
bags, sutures, forceps, hospital beds, scalpels and other lab items
Gained approval for wholesale distribution of medical supplies in at least 12 states in USA
Amazon is more likely to enter medical supplies distribution than drug distribution
• Amazon said “Applicant (Amazon) will not store or ship drugs”
• In North Dakota, under license type, it says, “durable medical equipment distributor, medical gas distributor, or both”
We’re thinking about not how we can go mimic what’s already out there. Our goal is to be something new. We’ve been actively building out new capabilities and features” to simplify purchasing- Chris Holt, leader of global health care at Amazon Business
• Critical to establish relationships
with Amazon early on to ensure
access and favorable terms
• Amazon brings “risk” of share shifting
to private label and greater
price transparency
• If distribution handled by Amazon,
then focus on innovation, production
cost efficiencies and portfolio
solutions becomes increasingly
important
Amazon recent moves Implications for manufacturers
Amazon will start with the simpler and more commoditized items. Distributors will feel the margin and pricing pressure. The more high-touch service areas and large contracts are not something Amazon will get into right away, but they may eventually- Head of platform at Applico
Source: Press, interviews
15
TextExample
Butterfly Ultrasound start-up leveraging online channel for product information, access to demos, and ordering
Digital opportunities
FAQ for clinicians and distributors
Direct details to application clearance and reimbursement
Video testimonials (incl. user videos)
Option to directly reserve online
More details (incl. clinical images/videos)
Overview of demo's (with link to event website)
Option for live review with remote clinicians
B2B is not B2C! But we can leverage a lot from B2C capabilities
Trigger
Awareness
Consideration
Purchase Intent
Attention
Education
Evaluation
Purchase
Expansion
Buy
Experience
Advocate
Bond
Champion Funnel (B2C) Organisation Funnel (B2B) Loyalty Funnel (B2C)
What decisions to make for adopting Omnichannel commerce?
eCommerce for B2B is broader than just online sales...
Optimal sales approach
Customer interest
Offering DeliveryValue
maximization
• Digital solution offering
• Digital solution selling
• Digital front-end optimization
• Digital Marketing automation (ABM, inbound, performance)
• Data-driven cross-selling
• eCommerce 2.0
• Data-driven inside sales
• eEnabled Sales force & SFE
• Demand sensing and production optimization
• Predictive inventory optimization
• Vendor managed inventory
• Offer personalization
• Customer success management
• Service 4.0
... It is a key element of an integrated omni-channel setup …
LTV (Lifetime customer value)
Low
High
Learn Try/Demo Buy
Inside Sales
Digital Self-Serve(Led by mobile)
Hybrid salesCustomer success mgmt
Post salesDiscover
Customer journey
Driving incremental sales, reducing cost-to-serve, and improving customer experience
Source: BCG analysis
Inside Demand Response
Face-to-face(direct or 3rd parties)
Example: Sigma-Aldrich developed three B2B e-commerce solutions for various customer sizes
Over 200k+ products
Mobile apps
Expert support and technical consultation
Data sheet search functionality
Additional services, e.g.• Labwork and Research• Product development• Compliance services• Facility operations
• Simple mobile app (for online buying)
B2C like online shop, with minimal additional B2B
functionality, e.g., requesting quotes
• Advanced online shop supporting different levels of
procurement authorizations
Access to information and customized paperless
ordering procedures and information portal
• Integrated e-procurement
System-to-system connection available for, e.g.,
SciQuest, Ariba, SAP, Oracle
Key success factors: Rich content for inspiration,
integration with procurement (e.g. punch-out), roles/
authorization, link to sales rep dashboard
3 different online platforms, tailored to customer size
3
2
1
Source: BCG analysis
Offering a wide range of products and services
1 2 3
Revisit Channel Strategy to enable Omnichannel commerce and media approach
Direct
In-Direct
Pureplayer(retail)
Webstore
Marketplace(shop – in –shop)
Marketplace(3rd party)
Online
Hybrid
Offline
Dealer Portals(shop – in – shop)
Online
Offline
Hybrid(retail)
Physical Store
Brand store(shop – in – shop)
Physical store
“Data Masked”
But we observed, a strong growth in online and more so with Mobile.
Ref: plz use tools like similarweb.com or alexa
Grow and Establish the Shop with Customers
Improve Conversionand Customer Engagement
Build Adoption through Internal Evangelists
Build an ACTIVATION PLAN per channel to focus on
xx% yy%
B2B OmnichanneleCommerce is
20% Strategy80% Execution
Execution is
20% Project Management80% Change Management
STEP1: Build a strong vision and operating model in digital function at a central level
EXECUTIVELEADERSHIP
COMMITMENT IS KEY
STEP2: Create a key role for Omnichannel eCommerce and embed change into existing functions in your commercial organization
Omnichannel
(incl. Mobile)
Commerce Manager
Sales
Product Mgmt
Marketing
OperationsCustomer
Service
IT
Digital Marketing
Activities
Rewards
Governance
Learning
1: “Assess Change Impact”
STOP START CONTINUE2: “Change Stories”
TRAININGs KPIs3:“Monitor Change”
3 Key Takeaways
TAKE AWAY 1:
Build 2 mindsets in your companies
1. CUSTOMER FIRST2. MOBILE NEXT
TAKE AWAY 2:
Its not about having a platform
Right activation isCritical.
Pick right online channels
Relevant portfolio and prices per channel
Relevant customers per channel
Digital marketing activation
Increase Traffic
Improve Conversion
Evangelizing & Change Management is DAILY JOBTAKE AWAY 3:
1.01365 = 37.80.99365 = 0.03
