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McKinsey Survey: Global B2B decision maker response to COVID-19 crisis

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As governments and organizations continue to work toward containing COVID-19 and stem the growing humanitarian toll it is exacting, the economic effects are also beginning to be felt. Through a series of regular, global surveys, we are tracking how customers’ expectations, spending, and behaviors are changing throughout the crisis across multiple countries over time.

Published in: Business

McKinsey Survey: Global B2B decision maker response to COVID-19 crisis

  1. 1. McKinsey & Company 1 Optimism is relatively high and steady: Half are optimistic about the economy, flat from two weeks ago Confidence level on economic conditions after the COVID-19 situation1 % of respondents 13 12 42 43 45 45 April 9 April 28 Optimistic: The economy will rebound in 2–3 months and grow just as strong as or stronger than before COVID-19 Neutral: The economy will be impacted for 6–12 months or longer and will stagnate or show slow growth thereafter Pessimistic: COVID-19 will have lasting impact on the economy and will show regression/fall into lengthy recession 1Q: How is your overall confidence level on economic conditions after the COVID-19 situation? Figures may not sum to 100% because of rounding; a “prefer not to answer” option was given, but <1% of respondents filled it out in 2020. Source: McKinsey COVID-19 B2B Decision-Maker Pulse #1 3/30–4/9/2020 (n = 3,619); McKinsey COVID-19 B2B Decision-Maker Pulse #2 4/20–4/28/2020 (n = 3,755)
  2. 2. McKinsey & Company 2 Optimism varies greatly, with China and India most optimistic and Japan least optimistic 12 11 9 12 18 12 10 41 13 12 10 43 47 47 50 49 50 29 19 48 58 51 41 45 42 43 37 33 39 68 71 10 30 37 50 ItalyFrance UKSpainAll countries Germany 2 China India Japan S. Korea Brazil US Confidence level on economic conditions after the COVID-19 situation1 % of respondents Optimistic: The economy will rebound in 2–3 months and grow just as strong as or stronger than before COVID-19 Pessimistic: COVID-19 will have lasting impact on the economy and will show regression/fall into lengthy recession Neutral: The economy will be impacted for 6–12 months or longer and will stagnate or show slow growth thereafter 1Q: How is your overall confidence level on economic conditions after the COVID-19 situation? Figures may not sum to 100% because of rounding; a “prefer not to answer” option was given, but <1% of respondents filled it out in 2020. Percentage- point change in optimism between April 1–9 surveys and April 20– 28 surveys Europe APAC 1% -9% 4% 7% 0% 0% 12% 3% 2% 8% -10% -5% Source: McKinsey COVID-19 B2B Decision-Maker Pulse #2 4/20–4/28/2020, (US n = 607), (France n = 219), (Spain n = 215), (Italy n = 407), (UK n = 218), (Germany n = 414), (China n = 443), (South Korea n = 200), (Japan n = 202), (India n = 411), (Brazil n = 419)
  3. 3. McKinsey & Company 3 Near-term spend continues to decline, but reductions are decelerating Company’s budget (changes already made)2 Expected in the next two weeks3 55 54 26 24 19 21 April 9 April 28 Spend shifts as a result of COVID-19 % of spend changes Global4 50 42 28 32 22 27 April 9 April 28 1“About the same” refers to ±3% change in budget. 2Q: How has the coronavirus (COVID-19) situation affected your company’s budget for the following areas? Percentages may not add to 100 due to rounding. 3Q: How do you think spending on the following may change in the next two weeks? Percentages may not add to 100 due to rounding. 4Includes survey respondents from (France n = 200), (Spain n = 200), (Italy n = 400), (UK n = 199), (Germany n = 400), (China n = 400), (South Korea n = 201), (Japan n = 200), (India n = 400), (US n = 619), (Brazil n = 400). IncreasedAbout the same1Reduced Source: McKinsey COVID-19 B2B Decision-Maker Pulse #1 3/30–4/9/2020 (n = 3,619); McKinsey COVID-19 B2B Decision-Maker Pulse #2 4/20–4/28/2020 (n = 3,755)
  4. 4. McKinsey & Company 4 Respondents report downward budget shifts across all categories, with banking and insurance least affected to date 59 48 46 58 55 55 60 56 58 59 53 52 51 22 27 31 21 25 25 22 21 21 23 26 26 28 19 25 22 21 20 20 19 23 21 19 21 22 21 Processing supplies Distribution and transportation Software and telecom Banking and insurance Commodity inputs Specialty inputs Energy Packaging Finished goods Vehicles Capital equipment IT hardware Real estate Reduced About the same3 Increased Budget changes due to COVID-19 (changes already made)1 % of respondents Net intent2 Services Inputs Capex -24% -22% -40% -36% -35% -35% -41% -34% -37% -40% -32% -30% -30% 1Q: How has the coronavirus (COVID-19) situation affected your company’s budget for the following areas? Figures may not sum to 100% because of rounding. 2Net intent is calculated by subtracting the % of respondents stating they expect to decrease spending from the % of respondents stating they expect to increase spending. 3“About the same” refers to ±3% change in budget. Source: McKinsey COVID-19 B2B Decision-Maker Pulse #2 4/20–4/28/2020 (n = 3,755)
  5. 5. McKinsey & Company 5 Budget decreases are seen across industries and categories Budget net intent1 per category for each industry2 Overall industry net intent % where budget is about the same3 Advanced industries Technology, media, and telecom Global energy and materials Pharma and medical products Travel, transportation, and logistics Global finance, banking, and insurance Consumer/Retail Services Inputs Capex Net intent: % of budget decreases subtracted from the % of budget increases Below -50 -50 to -25 -25 to 0 0 to 25 25 to 50 50+ Specialty inputs Energy Processing supplies Packaging Commodity inputs Finished goods Software and telecom Banking and insurance Distribution and transportation Capital equipment IT hardware Vehicles Real estate 24 24 25 24 24 27 23 1Budget net intent is described as the % of budget decreases subtracted from the % of budget increases. 2Q: How has the coronavirus (COVID-19) situation affected your company’s budget for the following areas? 3“About the same” budget changes are those that are +/- 3%. Source: McKinsey COVID-19 B2B Decision-Maker Pulse #2 4/20–4/28/2020 (n = 3,755)
  6. 6. McKinsey & Company 6 Budgets will decline over the next two weeks but with decreasing severity; several pockets of near-term spend increases are emerging Net intent: % of budget decreases subtracted from the % of budget increases Below -50 -50 to -25 -25 to 0 0 to 25 25 to 50 50+ Next two-week spending net intent1 per category for each industry2 Overall industry net intent % where budget is about the same3 Advanced industries Technology, media, and telecom Global energy and materials Pharma and medical products Travel, transportation, and logistics Global finance, banking, and insurance Consumer/Retail Services Inputs Capex Specialty inputs Energy Processing supplies Packaging Commodity inputs Finished goods Software and telecom Banking and insurance Distribution and transportation Capital equipment IT hardware Vehicles Real estate 31 31 30 32 31 37 34 1Net intent is described as the % of spending decreases subtracted from the % of spending increases. 2Q: How do you think spending on the following may change in the next two weeks? 3“About the same” spending changes are those that are +/- 3%. Source: McKinsey COVID-19 B2B Decision-Maker Pulse #2 4/20–4/28/2020 (n = 3,755)
  7. 7. McKinsey & Company 7 Technology, media, and telecom Advanced industries Travel, transportation, and logistics Global energy and materials Pharma and medical products Global finance, banking, and insurance Consumer/Retail All industries are shifting capacity down in light of tempered demand; advanced industries and travel seeing sharpest declines -5% -10% Demand for products/ services Operational capacity (eg, production)3 -5%-10% Impact of COVID-19 on demand and capacity1,2 % change due to COVID-193 1Q: How has the coronavirus (COVID-19) situation affected your company’s production (operation) capacity? Percentages may not add to 100 due to rounding. 2Q: How has the coronavirus (COVID-19) situation affected demand for your company’s products/services? Percentages may not add to 100 due to rounding. 3Weighted average uses following midpoints: “increased/reduced 25+%” is +/- 30%, “increased/reduced 11–25%” is +/- 18%, “increased/reduced 4–10%” is +/- 7%, “About the same (+/- 3%)” is 0%. Source: McKinsey COVID-19 B2B Decision-Maker Pulse #2 4/20–4/28/2020 (n = 3,755)
  8. 8. McKinsey & Company 8 Companies are reducing marketing spend in all regions; more than 60 percent of global B2B companies have reduced their marketing 62 63 58 56 68 71 62 69 65 71 58 57 18 19 21 23 18 14 19 8 26 20 16 20 20 18 21 21 14 15 19 24 8 10 26 23 SpainAll countries Germany ChinaFrance USItaly UK India S. KoreaJapan Brazil Europe APAC Marketing spend change1 % of responses 1Q: How has the coronavirus (COVID-19) situation affected your company’s marketing spend across all channels? Percentages may not add to 100 due to rounding. 2“About the same” refers to ±3% change in budget. IncreasedAbout the same2Reduced Source: McKinsey COVID-19 B2B Decision-Maker Pulse #2 4/20–4/28/2020, (US n = 607), (France n = 219), (Spain n = 215), (Italy n = 407), (UK n = 218), (Germany n = 414), (China n = 443), (South Korea n = 200), (Japan n = 202), (India n = 411), (Brazil n = 419)
  9. 9. McKinsey & Company 9 The importance of digital sales has doubled over that of traditional sales interactions since the onset of COVID-19 Importance of digital vs traditional to B2B buyers themselves1,2 Points allocated out of 100 1Q: Prior to COVID-19, how important were each of these methods in delivering an overall outstanding sales experience? Please distribute 100 points across these two items, giving more points to the method that you believe is more important to you personally when interacting with your suppliers. 2Q: Now, thinking about the next two weeks given the environment with COVID-19, how important are each of these methods in delivering an overall outstanding sales experience? Please distribute 100 points across these two items, giving more points to the method that you believe is more important to you personally when interacting with your suppliers. 3Q: Prior to COVID-19, how important was each method in delivering an overall outstanding sales experience? Distribute 100 points across these items, giving more points to the method that you believe is more important to your customers. 4Q: Now, thinking about the next two weeks given the environment with COVID-19, how important are each of these methods in delivering an overall outstanding sales experience? Please distribute 100 points across these two items, giving more points to the method that you believe is more important to your customers. Source: McKinsey COVID-19 B2B Decision-Maker Pulse #1 3/30–4/9/2020 (n = 3,619); McKinsey COVID-19 B2B Decision-Maker Pulse #2 4/20–4/27/2020 (n = 3,755) Importance of digital vs traditional to B2B company customers3,4 Points allocated out of 100 47 65 53 35 Before COVID-19 April 28 +40% 48 66 52 34 Before COVID-19 April 9 +40% DigitalTraditional
  10. 10. McKinsey & Company 10 Digital channels are now seen as the most beneficial for researching suppliers 1Q: What ways of interacting with a supplier would be most beneficial to you when researching/considering suppliers going forward? Rank up to 3 that would be most beneficial. A free-response option was given, but 0% of respondents filled it out in 2020. Most beneficial supplier interactions for researching/considering suppliers1 % of respondents ranking in top 3 Digital Self-serve Directed Self-serve Directed Traditional Source: McKinsey COVID-19 B2B Decision-Maker Pulse #1 3/30–4/9/2020 (n = 3,619) 25 22 20 20 17 24 20 11 17 16 14 13 11 23 22 15 Text from sales rep Email from sales rep Info on mobile app Supplier website Live chatOnline material from supplier Post on social media/online Google/web search Referral from someone in my industry Customer referral Trade show Industry publication Print material from supplier Meeting sales rep in person Call from sales rep Direct mail from sales rep
  11. 11. McKinsey & Company 11 When ordering from suppliers, B2B customers find value in a mix of omnichannel interactions 1Q: Which of the following methods do you/would you most prefer to use when submitting your order? Please rank up to 3 that would be most beneficial. Self-serve Sales rep involvementInternal processes Most preferred method for ordering1 % of respondents ranking in top 3 Source: McKinsey COVID-19 B2B Decision-Maker Pulse #1 3/30–4/9/2020 (n = 3,619) 46 36 37 34 39 34 28 27 Using call center/customer service Using a supplier’s website Using my company’s procurement department Using a mobile app Emailing sales repUsing my company’s e-procurement portal Calling sales rep Ordering from sales rep in person
  12. 12. McKinsey & Company 12 The majority of companies that serve other businesses have shifted their go-to-market model in response to the COVID-19 crisis 55 46 52 46 3 21 40 62 51 3 In-person/field sales team (eg, meeting with customers face to face) Inside sales team (eg, interacting with customers on the phone) Other Online/web support (eg, chatting with customers via video/website/mobile app to support purchase) E-commerce (eg, products/services sold directly online with no sales rep involved) Before COVID-19 During COVID-19 Go-to-market sales model during COVID-191,2 % of respondents 1Q: In what ways was your company’s product or service sold before COVID-19? 2Q: Now today, in what ways is your company’s product or service sold during COVID-19? 3Q: Which of the following statements best describe the changes your company has made to its commercial and go-to-market model during COVID-19? Figures may not sum to 100% because of rounding. 96%3 shifted their GTM model during COVID-19 Source: McKinsey COVID-19 B2B Decision-Maker Pulse #2 4/20–4/28/2020 (n = 3,755)
  13. 13. McKinsey & Company 13 E-commerce revenue is up more than 20 percent since the onset of COVID-19 Percent of company revenue driven by e-commerce before and during COVID-19 (among companies that sell online)1,2 Average % of total revenue 1Q: Approximately what percentage of your company’s revenue before COVID-19 was driven by…Figures may not sum to 100% because of rounding. 2Q: Approximately what percentage of your company’s revenue during COVID-19 is now driven by…Figures may not sum to 100% because of rounding. 45 56 Before COVID-19 During COVID-19 +24% Source: McKinsey COVID-19 B2B Decision-Maker Pulse #2 4/20–4/28/2020 (n = 3,755)
  14. 14. McKinsey & Company 14 E-commerce share of overall B2B company revenue is up in all countries, most notably in Brazil and Italy Percent of company revenue driven by e-commerce before and during COVID-19 (among companies that sell online)1,2 Average % of total revenue 45 56 51 47 46 47 44 42 47 61 42 40 56 65 56 64 51 57 52 47 53 68 62 52 ChinaUKItaly IndiaGermany BrazilAll countries France Spain Japan S. Korea US 1Q: Approximately what percentage of your company’s revenue before COVID-19 was driven by…Figures may not sum to 100% because of rounding. 2Q: Approximately what percentage of your company’s revenue during COVID-19 is now driven by…Figures may not sum to 100% because of rounding. Before COVID-19 During COVID-19 Source: McKinsey COVID-19 B2B Decision-Maker Pulse #2 4/20–4/28/2020, (US n = 607), (France n = 219), (Spain n = 215), (Italy n = 407), (UK n = 218), (Germany n = 414), (China n = 443), (South Korea n = 200), (Japan n = 202), (India n = 411), (Brazil n = 419) Europe APAC 23% 16% 11% 21%36% 20% 12%13% 11% 46% 29%12% X% % change
  15. 15. McKinsey & Company 15 9 18 27 39 7 Somewhat less effective April 9 As effective as before Much less effective Somewhat more effective Much more effective 100 1Q: How effective is your company’s new sales model at reaching and serving customers? Figures may not sum to 100% because of rounding. 64% of B2B decision makers believe the new sales model is as effective or more s0 than prior to COVID-19 (up from 54% in early April) Effectiveness of new sales model in reaching and serving customers1 % of respondents 11 25 29 28 7 April 28 100 54% as effective or more so compared to prior to COVID-19 65% as effective or more so compared to prior to COVID-19 Source: McKinsey COVID-19 B2B Decision-Maker Pulse #1 3/30–4/9/2020 (n = 3,619); McKinsey COVID-19 US B2B Decision-Maker Pulse #2 4/20–4/28/2020 (n = 3,755)
  16. 16. McKinsey & Company 16 Companies are likely to keep their new sales model for more than 12 months after the onset of the COVID-19 crisis 32 48 17 4 Unlikely to sustain 12 months after Very likely to sustain 12+ months after Somewhat likely to sustain 12 months after NA, made no go-to-market changes 80% are “very likely” and “somewhat likely” to sustain these shifts 12+ months after COVID-19 Staying power of new sales models1 % of respondents 1Q: Which of the following statements best describe the changes your company has made to its commercial and go-to-market model during COVID-19? Figures may not sum to 100% because of rounding. Source: McKinsey COVID-19 B2B Decision-Maker Pulse #2 4/20–4/28/2020 (n = 3,755)
  17. 17. McKinsey & Company 17 More than 80 percent of B2B companies have adjusted incentives in response to the effects of COVID-19 35 29 18 16 14 13 More fixed incentives More variable incentives No change Higher quotas Lower quotas Short-term bonuses/incentives Sales team incentive structure changes in response to COVID-191 % of respondents 1Q: To what extent has your company made changes to the incentive structure of your sales team in light of COVID-19? Figures may not sum to 100% because of rounding. Source: McKinsey COVID-19 B2B Decision-Maker Pulse #2 4/20–4/28/2020 (n = 3,755)
  18. 18. McKinsey & Company 18 24 19 19 13 11 8 5 Advanced industries Travel, transportation, and logistics Technology, media, and telecom Global energy and materials Global finance, banking, and insurance Consumer/Retail Pharma and medical products 10 20 20 19 19 12 $1M to < $25M $1B to < $10B $25M to < $100M $100M to < $500M $500M to < $1B 10B+ 3 5 16 22 31 11 7 6100,000+ 10,000–49,999 50–99 <50 100–499 1,000–9,999 500–999 50,000–99,999 22 17 16 12 10 7 7 5 5 Shipping/logistics Purchasing Top management Engineering R&D/Innovation/Product design IT/computer services Operations Sales Marketing 1Percentages may not sum to 100 because of rounding. Survey respondents by no. of employees of company % of respondents1 Survey respondents by role in company % of respondents1 Survey respondents by industry % of respondents1 Survey respondents by annual revenue of company % of respondents1 Pulse #1 closed on April 9, 2020 Pulse #2 closed on April 28, 2020 B2B Pulse Decision-Maker Pulse #2: Respondent Overview Source: McKinsey COVID-19 B2B Decision-Maker Pulse #2 4/20–4/28/2020 (n = 3,755)

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