Chemicals

Missing out by misunderstanding customer needs

December 17, 2020

RESEARCH REPORT

In brief

Accenture’s 2020 Global Buyer Values Study for Chemicals found that companies are missing out on opportunities by misunderstanding customer needs.
This is the third in a series of reports that explore the study findings and identify actions for companies to take to be more customer centric.
The chemical industry’s broad customer base insulates it from volatility but makes it challenging to meet specific needs of specific industries.
With the help of technology and good data, companies can manage the continual trade-off between the standardization and customization of offerings.

The chemical industry’s diverse customer base insulates it from volatility in one customer industry or another, helping to stabilize revenues and increase resilience during downturns and times of crisis.

But when it comes to customer centricity, that broad customer base can have a significant downside. For many chemical companies, there is a tendency to look for increased efficiencies by offering fairly similar products and services to customers across industries. And that can mean that they are sometimes failing to meet the specific needs of specific industries and customers.

Indeed, Accenture’s Global Buyer Values Study shows that chemical companies do not always have a clear understanding of what their customer industries value and want from them. They often over- or underestimate the importance of certain product and/or service attributes, compared to what buyers actually think is important. And, the research shows that the preferences and needs of customers often differed from established beliefs about what they value. (Figure 1) These gaps point to unmet needs—and to opportunities for chemical companies to adjust their offerings to provide the things that matter most to their customers.

Figure 1: Select perception gaps between sellers and buyers (cross-industry average)

Research shows the preferences and needs of customers often differed from established beliefs about what they value. The gaps point to unmet needs and opportunities for chemical companies to adjust offerings to provide what matters most to customers.

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The research also found that these unmet needs vary widely by industry. For example, product and packaging customization showed the largest gap between buyer and seller perceptions in the study on average. And yet, only two industries cited it as a top underestimated need. These included transportation and machinery manufacturing, both of which have complex supply chains, just-in-time production processes and numerous input materials. In spite of those similarities, however, those two industries had different responses for the next-most important unmet needs. A similar picture emerges when considering the areas where chemical companies overestimate the importance of various attributes to their customers. (Figure 2)

Figure 2: Top 3 perception gaps between sellers and buyers for select industries

Research found that unmet needs vary widely by industry. Product and packaging customization showed the largest gap between buyer and seller perceptions. Transportation and machinery manufacturing cited it as a top underestimated need.

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Unmet needs across buyer industries offer a fragmented picture, underscoring the importance of industry-specific customer centricity.

Moving from insight to action

Chemical companies need to improve their ability to understand and meet customers’ needs particularly those that are currently going unmet. For those that do, the opportunity is great. As revealed in Part 1 of this research series, customers are ready to buy more and pay more if their needs are met.

As chemical companies look for ways to tap into this opportunity, technology will play a vital role—a fact that many sellers in the survey recognized:

66%

said that using new technologies more extensively to get customer centricity right could help them boost profits by more than 10 percent.

35%

thought new technologies could help them increase profits by more than 20 percent.

To use technology to better meet customer needs, chemical companies should:

Get their (data) house in order: The research found that chemical companies lack consistently good data, with 74 percent of sellers reporting that they face data-related challenges (i.e., too much, too little, unusable or poor-quality data) that impact their ability to be customer centric. Thus, they need to establish a robust infrastructure for gathering, analyzing and using customer data—for example, using the cloud to integrate structured and unstructured data; automating master data and data cleansing processes; and using Artificial Intelligence (AI) and predictive analytics to produce recommendations for the next best actions for interacting with customers.
Develop a deeper view of customer needs: While customer-centricity initiatives are not uncommon in the chemical industry, there is still plenty of work to be done. Companies can establish more touchpoints for the intake of data in order to gain a 360-degree view of the customer, which is essential for more sophisticated segmentation, customized pricing and offerings, and effective customer support. Companies should also increase their use of analytics to develop a data-driven view of customers and enable their workforce to use those insights through connected customer relationship management tools. In addition, the insights allow virtual agents to automatically help customers and support sales and service workers.
Enable large-scale targeting of products and services: Improved customer data management, advanced analytics and differentiated value propositions by segment can help companies practice mass customization. The ability to efficiently and effectively provide numerous customer-specific offerings across various industries is critical. Companies should also establish a “test and learn” mindset that constantly assesses how well products and services are aligned with customer needs. In addition, analytics can be used to accelerate product innovation, while digital interfaces and AI can be used to improve customer interactions. Customer centricity ultimately depends on managing the standardization/customization trade-off—a continual process that is perhaps more involved than anticipated.

By taking these steps, chemical companies can get a better grasp of where they may be falling short in the eyes of their customers. They may also gain a more realistic view of the effectiveness of their technology strategy. The survey results indicate that 70 percent of chemical companies consider themselves to be first or early adopters when it comes to adopting new technologies to better understand customers—yet their data struggles suggest challenges remain.

Regardless, for chemical companies that ultimately mind what matters to their customers, today’s unmet needs can turn into tomorrow’s opportunity to build loyalty, increase revenue and drive growth.

Chemical customers are willing and able to switch

The Accenture 2020 Global Buyer Values Study for Chemicals assessed and compared the perspectives of chemical companies (sellers), their customers (buyers), retailers and end consumers. The study identified areas where seller and buyer perspectives are aligned and where they differ, and where sellers have an opportunity to do a better job of meeting buyers’ needs.

This report covers only a portion of the study’s extensive findings, which can be used to provide an in-depth understanding of a range of factors affecting customer centricity—for specific companies, as well as the industry as a whole. The next report in this series looks at what the research means for portfolio management at chemical companies.

Thank you to Accenture’s David Apel, Bruno Djapanovic, Michelle Ganchinho and Karin Walczyk for their help in executing the study and writing this report.