SALES TRANSFORMATION

It was long held that B2B customers would shun digital channels, explaining why many suppliers have been slow to make significant investments in them. Wisdom had it that the products and services purchased were just too complex. New research puts that claim to rest, but it also makes clear that B2B suppliers cannot choose between a great sales force and great digital assets and capabilities. To drive growth, they need both. The research further suggests that companies should see their initial digital investments as the glue that holds together a powerful multichannel sales strategy.

The findings

We surveyed more than 1,000 buyers in four countries in a range of industries to identify their preferences when dealing with suppliers. The responses showed that industry sector is not a factor in buyers’ decisions to turn to a digital channel rather than a traditional one when deciding what to buy. What determines the channel of choice is whether or not the buyer is making a first-time purchase.

“We’ve got to go digital.” Every sales leader has heard some variation of that statement. But what is digital, actually? And of all the digital things to do out there, what matters most for driving sales growth?

To help answer this question, we conducted a survey of more than 1,000 US and European sales executives, as well as interviewing dozens of sales executives and doing research for the book Sales Growth: Five Proven Strategies from the World’s Sales Leaders. In our first article from this data set, we looked at the five areas where sales leaders outperform their peers.

For this article, we looked at how sales leaders drive performance organizationally. Our analysis revealed that fast-growing companies1 successfully connect seemingly opposite approaches:

◾ Front to back: They create a dynamic experience for customers, and use digital tools and data to power operations. It’s common for companies to overemphasize one or the other, but the greatest success lies in a marriage of both.

◾ Top to bottom: Successful sales organizations also overhaul the way things are done, from sales leadership all the way through frontline sales reps.

While this structure might sound like a “do everything” approach, its value is in providing a simple way to think through the connections needed throughout the organization to get the most from digital capabilities, from automating processes to delivering experiences across all channels to using analytics to enable the sales force.

Of course, this is all much easier said than done. In our survey, a majority of sales executives said that their companies are increasing their investments in digital sales tools and capabilities for the near term. Yet less than 40 percent believe they are even moderately effective at it, and a mere 17 percent rate their capabilities as “outstanding.”

There are, however, companies that are excelling—driving higher revenues from their digital channels and using digital technologies to power sales. Here’s how they’re doing it.

Front to back

Front end: The customer experience

Determine what your customer needs. Every effective digital strategy begins and ends with understanding what customers are thinking along every step of their decision journey and working religiously to meet those expectations. That means understanding what their unmet needs are and how they use the web, from searching sites to browsing on apps. At Grainger, which sells over one million industrial and commercial products, customers often don’t know exactly what they’re looking for. “We spend a huge amount of time understanding how we manage the tension of exact search versus a search that returns an unmanageable 200 products,” says Debra Oler, vice president for Grainger’s US industrial-supply business.

As part of the digital customer experience, companies should allow the option of an all-digital experience, e.g. provide instant price quotes online as opposed to requiring contact with a sales rep. One electronics company, for instance, built tools that let customers compile customized orders of differently configured products and then immediately see the impact of any changes on the price, even after the order is placed. The tools also allow customers to see how the manufacture of their order is progressing.

Go mobile. Since most customers are likely to be devoted owners of smartphones, all digital content should be optimized for mobile devices, including order entry, purchasing, and order history. This is especially crucial for companies with large numbers of customers on the move. Grainger, for instance, developed an app whereby technicians, who may be responsible for maintenance on dozens of hotels or other commercial properties, can quickly live-chat with a Grainger product expert to get answers to repair or parts questions. Technicians can also use their phones to take a picture of an unfamiliar part and send it to the company for identification and then purchase. As a result of these and other features, the portion of Grainger’s e-commerce traffic coming from mobile devices is 15 percent and rapidly growing.

Continuously test to optimize offerings. Thanks to the ultralow cost of e-commerce and the highly trackable nature of digital interactions, companies can and should adopt a spirit of discovery toward their digital offerings. Relentless testing of different site formats, promotions, and configurations can maximize visitor numbers, transactions, and revenue. One leading multibillion-dollar global e-commerce site launched more than 100 new marketing campaigns within six months of its launch, using a rapid test- and-learn pilot approach—and Amazon, the oft-cited leader in all things digital, employs a large team of PhDs to constantly analyze the layout of the site, using advanced testing techniques to evaluate multiple versions of it at any given time and find which permutations generate the most sales.

Back end: Sales operations and insights

Our survey reveals that many fast-growing companies use digital tools and analytics to empower salespeople to work more effectively and more efficiently. Some 43 percent of fast-growing companies say they are successful in using digital tools and capabilities to support their sales organizations, versus just 30 percent of slow growers.2 When using analytics to make decisions, the disparity is even greater: 53 percent of fast growers rate themselves as effective, compared with 37 percent of slow growers.

Get in front of the best sales opportunities. When we asked sales execs to identify which specific factors were the most important for driving sales growth, their top choice was the ability to identify the right customers and opportunities. Analytics and tools for lead qualification and scoring are crucial. They can evaluate the likelihood that a lead coming from a particular type of customer or particular channel—say, a website email, referral from a conference, or inquiry at a retail store—will result in a sale, letting sales reps prioritize their time and efforts. In the same way, sales leadership can use analytics to make ongoing deployment decisions about which reps should go to which accounts in which markets, and how much quota to assign. One large IT company used FORFIRM's sales-coverage planning software, Rep Planner, to reposition and ultimately reduce the numbers of its sales reps, yielding a 5 to 7 percent improvement in sales productivity.

Analytics should also focus on identifying customer trends and patterns that provide next- product-to-buy or related-purchase recommendations tailored to each customer, thereby delivering a great customer experience. For instance, one Fortune 500 market leader in business outsourcing found that its customers who had bought a particular product, had a growth rate above a certain threshold, and had expanded internationally within the previous 12 months were disproportionately likely to buy another particular product. Analytics can also be used to flag when a customer might be ready for an upgrade or renewal.

Integrate with channel partners. The best sales organizations have extended their own digital systems and data to connect with resellers and marketplaces, sharing, for instance, prospecting lists and support for managing sales-rep performance. Cisco became a leader in this practice after it realized it was getting a lot of the same complaints from resellers: the deal-registration process was a headache, and deal reviews and approvals were slow. Channel partners complained they were losing deals as a result. Now, when a partner’s rep registers a deal on Cisco’s portal, she can see immediately if her contact person is available to approve the deal on the spot. If not, a voicemail gets converted to text and delivered to the Cisco manager, who can quickly accept, decline, or transmit to the next approver via mobile phone.

Optimize pricing. Survey respondents told us that optimal pricing for deals and products is the sales function with the highest impact on sales productivity. Digital tools offer unprecedented ability to compare current deals with a wide array of past data on similar sales and circumstances. Such dynamic deal scoring and discounting controls can help identify the highest possible price that will result in a sale.

Top to Bottom

Getting your organization ready

2. Too often, “going digital” means loosely stringing together pockets of digital activity instead of developing and implementing a coherent and unified digital strategy. The result is that customers are left hanging, either unable to get what they need or receiving incongruent communication. The best-performing companies couple top-down leadership with bottom-up change management to truly transform the way the organization works over the long term.

Top down: The biggest determinant of the outcome of any digital sales transformation is leadership commitment, clarity of strategic vision, and authority to run the show. Our survey showed that clear and consistent communication from sales leadership is more important in motivating an organization than, for instance, the level of resources expended.

Leadership must also work to bridge the divide between the marketing, sales, and IT departments. Digital transformations are cross-functional in nature, but these three functions often operate in silos. Our survey showed a significant disconnect in how the IT and marketing organizations evaluate their effectiveness, compared with the perception of their effectiveness in the sales force. One way to enhance collaboration is through an empowered sales-operations team that straddles sales, marketing, and IT. Successful sales-operations teams are able to work effectively across organizational boundaries to drive both front-end and back-end digital innovations in sales, for example, by working with marketing to improve the digital customer experience on the website, or working with IT to upgrade customer-relationship management and customer data.

Bottom up: Pairing back-end analytics and digital expertise with the right people out on the front lines is a crucial way to ensure that digital strategies pay off. This means having digitally literate sales reps who can integrate the information and insights gleaned from new tools and analytics into the way they sell. To make that happen, fast growers in our survey spend significantly more time and money on sales-force training than slow growers do. Given today’s shifting sales dynamics and norms, the best managers spend the time to mentor high-performing salespeople and support them in building new skills.

The best companies are also willing to adopt an experimental approach, continuously testing tools, analytics and features to make sure they are in line with how their sales teams sell and with what customers want. Companies can no longer afford to spend two years laboring away in isolation to achieve perfection.

While developing digital capabilities is essential to driving sales growth for B2B companies, capturing their full value potential depends on how well businesses can integrate people and technology across the organization.

Few business leaders would dispute the fact that sales teams must evolve. They are already investing billions of dollars in sales technology and training in response to automation and artificial intelligence, which are making ever deeper inroads into the sales function.

The trouble is that these investments aren’t paying off. We speak with many sales leaders who are frustrated with the lack of clarity on the ROI of their investments and surprised when their new “shiny toys” (such as a new lead-generating tool) fail to deliver meaningful performance improvement.

The truth is that driving sales growth today requires fundamentally different ways of working as well as outstanding execution across large, decentralized sales teams and channel partners. While many sales leaders accept this reality in principle, they don’t put sufficient energy or focus into driving that level of change. Advances in digital and analytics, however, mean that sales leaders can now drive and scale meaningful changes that pay off today and tomorrow.

Companies that get this right typically see 5 to 10 percent revenue growth with the same or improved margins. And they see many of those benefits quickly, often within a few months. In addition, their longer-term health, as measured by better customer and employee satisfaction, improves.

The four ways digital and analytics drive successful change

Digital and analytics can radically accelerate and improve the chances of delivering successful change. But undisciplined investment can be counterproductive and expensive. In our experience working with companies that have successfully boosted the ROI of their sales investments, these four actions make a meaningful difference:

Provide insights that sales reps need

A wealth of sales insights are discoverable today through advanced analytics, but they often don’t translate into sustainable revenue for a few reasons: the front line does not trust the data, the insights are overly complex, or reps simply feel that their own experience and expertise are being ignored. Successful change programs rely on a deep understanding of the needs of the salespeople and a willingness to work back from there to deliver insights that actually help reps sell better. The best sales organizations use data to understand the effect of all the steps in sales, from what matters most in driving a sales opportunity forward to where reps struggle or miss opportunities. They then package those insights and send them to sales reps. Actively involving sales reps in the process greatly increases the chances of providing relevant and easy-to-use solutions.

Car manufacturers offer an excellent example of how to manage frontline needs. Their dealer networks are often quite autonomous (stocking and product-configuration decisions are made by individual dealers). This means, for example, that having 2,000 dealers in a given market equates to 2,000 separate decisions on what stock to take. Traditionally, there has been little attempt to use data from the entire dealer network to optimize those decisions. As part of a shift to optimize and upgrade the stock at its dealerships, one manufacturer aggregated data on specific car configurations (engine type, trim, color, etc.) purchased across the network. It then calculated the optimum mix of stock based on a combination of profitability and customer appeal, which could be updated in real time as sales were made.

The insights were played back to each dealer, to speed up the process and make them better informed, with specific recommendations on which cars to order. What was fascinating was the degree of uptake of the new system. The adoption rate within nine months was 80 percent, a striking contrast to a previous effort where the adoption rate was below 10 percent. Cars spent far less time in the showroom before being bought, heterogeneity of vehicles increased (which helped with residual values), and the contribution margin grew by more than 10 percent.

What changed? The first time around, the company had been clear on what the outcome needed to be, but it hadn’t taken the individual dealers’ perspective into account. The dealers resisted what felt like a top-down idea imposed on them, because they didn’t really understand the benefits, and implementation was difficult. This time, the digital tools that delivered the insights were built hand-in-hand with the dealers from the outset, to understand what functionality and information was most helpful for them. The manufacturer also used an agile approach to development, refining the tool quickly based on real dealer feedback. The dealers were engaged in the process, understood what the company was trying to achieve, and recognized it would make their lives easier. As uptake was so high, the impact for the company was also high.

When done well, this approach can also empower the sales force. As part of a sales transformation focusing on pricing and growth, a chemicals company used analytical tools that gave the field sales force transparency on the overall business, which encouraged and enabled them to create their own strategies and implementation plans. They could create their own projects on the platform, which of course could be tracked by managers, and the impact was impressive: within just a few weeks of implementation, churn was down and pricing was up, and within a year, it contributed an additional $50 million to EBITDA. The magic was the combination of getting insights to the front line in a simple, easy-to-digest way while allowing reps the freedom to explore some of the underlying input, which let them develop their own ideas.

Use digital to enable what matters for each sales rep

We often find companies that have excellent operational discipline but fail to apply a similar rigor to sales. They seem to linger under the misunderstanding that sales is all about relationships or that sales teams are motivated solely by incentives.

The core elements in enabling effective sales operations are focusing reps’ time and attention on the handful of metrics that disproportionately matter. Those often include the size of the pipeline and conversion rate, and incentives that are consistent with the company’s overall vision for its transformation, rather than those based on out-of-date ideas or on criteria beyond the sales rep’s control. Embedding weekly routines and daily expectations of activities reinforces the ultimate goal of driving sales growth. Crucially, then, sales leaders need to focus on digital and analytics capabilities that deliver on these needs.

A technology company had limited data on sales, margins, and products sold at the rep level, and no performance-management systems. When it attempted a large transformation that involved capturing new growth, realigning coverage to match opportunities, building frontline capabilities, and redesigning compensation structures, results were slow to arrive and quarterly-target pressure did not let up.

The company realized it needed to use analytics and an automated report system to create dashboards personalized for each salesperson and highlight the opportunities they needed to follow-up on.

Reps now see their top opportunities on a daily basis, which helps them prioritize their actions. The techniques were also used to help sales support staff drive the most efficient selling process. Pricing specialists were flagged on where the hottest opportunities were and also on opportunities to cross-sell with their customers.

Importantly, from a performance-management perspective, the dashboard also introduced transparency. Managers all the way to the C-suite could now identify the best-performing reps and what opportunities they had closed, and where reps needed coaching. It worked both ways. Reps could also flag where they needed help, all the way to the C-suite, which ensured that priority opportunities got the right level of attention.

The combination of reporting, enablement, and coaching delivered an enormous impact very quickly: a $55 million uptick in revenues for that quarter using “quick and dirty” tools effectively rather than making enormous investments. The trick was making the information available at the individual level.

Using digital tools is necessary to scale solutions across the sales organization. That includes creating tailored dashboards for all sales personnel as well as decisioning tools to help reps in the field make better decisions. These don’t need to be overly complex; even quick and dirty solutions can deliver profitable results without waiting for more sophisticated IT investment and development.

One software company turned to digital to crack a recurring problem: the sales force was so fragmented and dispersed that it was hard to know whom to call for help. There were more than two dozen sales roles within the function, from account managers to software architects, and the company realized that the right people were seldomly working on the right deals. It developed a digital tool to embed within the CRM system that could give sales reps the precise names of the right people to call for any particular deal—there could be as many as ten at any one time based on their specific experiences. This tool also scrapes email and calendar data to understand what patterns of sales-staff interaction are most highly correlated with strong performance: How often do they interact, at what stage of the deal, and which specific combinations of people work well in which situations? Ultimately, the company has recognized the power of collaboration and is using data and analytics to change the behavior of thousands of sales reps, guiding them to better outcomes.

Use data to prioritize and personalize capability building

Best-in-class sales organizations place an enormous emphasis on building frontline capabilities during a transformation; this applies to their own sales force and channel partners. They recognize that otherwise there is no hope of any new tool or new approach delivering results. But they don’t stop there. These sales leaders use analytics to get very specific on what skills to teach and to whom in order to reengineer the very DNA of the sales organization.

By using analytics to identify the traits and skills of top performers, it becomes clear where everyone’s gaps are. Then digital tools can be deployed alongside more traditional learning mechanisms to effectively roll out coaching to large and widely distributed sales forces.

The technology company above understood that building frontline skills was the key to a successful and sustainable transformation. But with so many new skills needed, they struggled with prioritizing them. Sales leaders turned to analytics. Our analysis (based on our Sales DNA database on sales rep performance) revealed that although pipeline management was an important skill, it was also one that the organization was already quite good at. The data also showed that top performers were much better at understanding the customer needs and quantifying the value proposition being delivered.

Once the company knew which skills to prioritize, it used multiple formats to deliver the training. First, the company reinforced key concepts through e-learning modules that then were applied in daily routines. These modules included interactive elements and videos from experts on subjects such as how to tailor a value proposition, which reps could then practice on the job.

Second, frontline sales staff had to record their own value-proposition delivery, or elevator pitch, using a digital platform that allowed managers to observe sellers and their behaviors. These mini-testimonials were then benchmarked by assessors and the top performers’ pitches were disseminated to highlight best practices. Managers did their own assessment of the videos but were also flagged on where there were important gaps so that they could provide coaching. The new approach delivered a 5 percent quarter-on- quarter sales increase for those reps whose skills demonstrably improved.

There are times when digital tools have to take a backseat to more traditional training methods. At the chemical company mentioned earlier, much of the training was done using the new data-driven tool, but a huge amount of work had to be done by the sales managers in weekly one-on-one meetings. Managers need to devote significant time and attention to teaching reps about the business and imparting critical-thinking skills so reps can understand what the data are showing and tailor it appropriately.

Communicate, communicate, communicate

Sales leaders need to set out bold vision based on where the opportunities for growth lie, but then they need to make that personal for each seller and manager. Advanced analytics can help set granular targets and personalize those targets to each individual region, manager, and seller.

Some of the digital tools that B2C companies use to personalize the customer journey and change consumer behavior can be used very effectively to communicate changes to each individual in the sales organization. Specific tools that work well include shared dashboards, visualizations of activity across the team, “gamification” to bolster competition, and online forums where people can easily speak to one another.

Leading companies also make sure they demonstrate progress, using analytics to communicate real-time insights and share early wins. More sophisticated tools can even show individual contributions toward the common goal, which can be very motivating. Overall, this sort of communication makes the change feel more urgent and real, which in turn creates momentum.

A large technology company uses an incredibly data-rich scorecard fed by data from across the sales organization. It tracks up to 50 metrics, which are updated daily and fed into leadership meetings on a weekly basis so managers can see what’s working and what’s not and adjust course accordingly, feeding insights back to the front lines for rapid realignment where necessary.

Digital tools and analytics insights, if correctly applied, offer a powerful way to accelerate and amplify a sales organization’s capacity to grow. However, let’s be clear: the tool should not drive the solution. Each company should have a view of the new behavior it wants to reinforce and design a practical, integrated approach to leverage digital and analytics.

The need to invest operations and processes with digital capabilities touches every company and industry. B2B companies, however, face added challenges. Their customers increasingly gravitate toward digital tools to research and buy products after all, they use Amazon at home just like everyone else does. Yet B2B buying and selling is often more complex. There are more decision makers and influencers involved in final purchasing decisions, often higher price points, an array of products and specifications, and many competing sales channels, both traditional and digital. B2B customers can also have different needs at different stages of the customer decision journey, requiring a balanced approach across channels that includes, at times, digital-only interactions.

To get a better portrait of the digital readiness of B2B companies to respond to this changing landscape, we mined our database of Digital Quotient (DQ) assessments. Over the past three years, we have built a perspective on the most important digital characteristics needed to improve financial performance. 1 We have found that strong scores across management dimensions of strategy, culture, organization, and capabilities correlate strongly with higher margins and shareholder returns. For the first time, we compared the DQ of B2B companies with those of B2C players to get a benchmark of B2B’s digital strength.

Breaking it down

We looked at B2B versus B2C Digital Quotient scores across the four dimensions and also peered into the survey data for details on underlying practices for each dimension.

Strategy: attention deficit. B2B companies are behind B2C companies in how they use digital tools and data to set strategy. They often treat overall strategy and digital strategy differently. Only 10 percent see digital as one of their top three investment priorities, about half the average for B2C companies. As a result, digital strategies are often fragmented rather than adopted coherently and fluidly across the enterprise. Revealingly, fewer than 24 percent of executives understand how their industries are being disrupted by digital. And in the critical customer-facing area of mobile, only 6 percent of B2B companies have a mobile strategy, compared with 30 percent of B2C companies.

Organization: beyond legacy structures. Most B2B players haven’t taken concrete steps to mobilize the organization around digital tools and data. The average DQ score for organizational maturity was 27 (versus 35 for B2C companies), in the range of laggard companies across our global sample, signaling a struggle to push digital initiatives. Only one in four companies said their leadership communicates digital strategy clearly, and most said there is confusion about digital roles as well as ownership of digital initiatives. One reason for the fuzziness: we found efforts to define metrics associated with the effectiveness of digital initiatives were below the levels of B2C companies.

Capabilities: skills deficit. With lower levels of strategic focus and organizational discipline, it’s not surprising that B2B companies are behind those in the B2C sector in digital capabilities. They aren’t using social media or digital-content creation as effectively in their outreach to customers. They are also behind in their use of data and advanced analytics. That shows up in their inability to offer satisfying experiences to customers across channels.