Twentieth-century business-to-business (B2B) sales were driven by human-to-human engagement. Sales personnel with product expertise educated customers and guided them in their purchase decisions, largely through seller-initiated interactions using both inside and outside sales tactics, meaning virtual initiatives conducted remotely as well as face-to-face interactions in the field. But times change.
Even before the global pandemic put temporary physical limitations on B2B sales activity, the information required to make highly technical and complex purchasing decisions was readily available to buyers online via intelligently enabled self-service tools. As a result of this and other shifts, the traditional B2B sales structure has now lived past its best-before date.
The urgency for change is being driven by disruptive forces with deep-seated root causes that likely won’t be undone. First, B2B customer expectations are surprisingly not following B2C trends, such as Amazon-like shopping experiences, smart product replenishment, and consultative selling. Meanwhile, extremely sophisticated technological capabilities are also automating the selling process, making relevant sales recommendations via responsive interfaces widely available. The retail market is also consolidating, with traditional concepts of shelf space and brick-and-mortar becoming less relevant.
These forces are radically impacting the relevance, efficacy, and efficiency of outside salesforces. And will result in large B2B selling organizations being supplanted by smaller commercial organizations that integrate marketing, sales, and service activities. Data-driven, customer-facing, and unified commercial teams will be the point of intersection between seller and buyer.
In the future, insight specialists will largely curate information for buyers, delivering B2B customers a tailored experience through the sales channel (e.g., online, in person) and medium (e.g., augmented reality). Customer engagement will be increasingly science-based. AI-enabled sales advice will drive better and faster decisions. Storytelling will be hyper-personalized, based on deep knowledge of customer journeys and pain points. Automated interactions will yield unprecedented customer convenience.
On the whole, B2B relationships will become less personal, yet far more intimate, as customers embrace solutions grounded in deep domain expertise and sophisticated problem solving (Figure 1 below highlights changing expectations).
Figure 1: Changing B2B Customer Expectations
Source: Kearney
Pervasiveness of Highly Sophisticated Technology
The growing presence of cloud services and the availability of rich data sourced from the company and from third-party data providers have created fertile ground for the development of highly sophisticated tools that compute, analyze, and operate with massive datasets in short order. Historically, this level of sophistication would have required tens of millions of dollars of capital outlay followed by tens of millions more for infrastructure (hosting, backup, recovery, hardware, etc.). Today, however, it is easier than ever to create an arsenal of industrial-strength tools that leverage internal and external market data to create compelling insights that inform and shape business strategy and execution.
Companies like Amazon, Google, and Microsoft offer turnkey solutions for creating data lakes (of unstructured data), artificial intelligence and machine-learning tools, and complex multi-variate statistical analysis tools—all of which operate with a simple point-and-click interface. Much of this is codeless, in that the skills to master these tools are not mired in programming language but in the application of data science (see Figure 2 below).
Figure 2: Advanced Sales Technologies
Source: Kearney
Changing Retail Market
As noted in a Business Insider article on industry disruption over the past decade, the so-called “retail apocalypse” has hit outside salesforces hard.
Traditionally, outside salespersons would each have a geographically bound territory and would be responsible for hunting and gathering in that territory. They would have their existing and prospective accounts, and they would pay routine visits to replenish stock, advise of new product offerings, suggest ways to optimize shelf space, and answer any support questions. Even with all the technological and market changes, the role of the outside salesperson is not going away. But it is becoming more consultative in nature.
To be effective today, outside salespeople are not necessarily required to serve as territory owners or even plan their routes. Territories and routes can be system-generated, based on leads that inform optimization algorithms to minimize travel and maximize outcomes. Additionally, outside salespeople are not needed as stock replenishers; that is now done through automated data feeds from point-of-sale systems and demand-planning algorithms.
“The forces driving the tidal wave of store closures prior to the global pandemic is a harbinger of what traditional B2B sales organizations face today. The implication for B2B selling in a world of information abundance and growing computing power is what we call the ‘death of the salesman.’”
In their evolved role, outside salespeople will provide consultative guidance informed by system-generated recommendations. These recommendations are not dissimilar to the shopping experience we have on Amazon when a product is suggested to us based on products we have browsed and purchased in the past. The salesperson will ensure that the customer understands the product and how to maximize sales to their customers, either with the right messaging, complementary goods, store layout, or other human-to-human support.
Outside Sales Re-invention
In 1970, Phillip Nelson published a landmark paper “Information and Consumer Behavior,” which explored the impact of information availability on the market structure for consumer goods. For his analysis, he distinguished between two types of purchasable goods: search goods and experience goods. Search goods are easily compared and evaluated prior to purchase (e.g., t-shirts, office stationery), whereas experience goods require a buyer to experience the product to effectively evaluate them (e.g., fine wine, fashion clothing, haircuts).
This distinction between two types of goods based on the availability of information offers a useful framework for understanding why CEOs need to consider transforming selling organizations. According to Nelson, a trip to the store for consumers is but a quest for information. For businesses, the visit from a salesperson serves the same function. However, today, information needed prior to purchasing is readily available through multiple reliable sources. The result? Consumers stop going to the store, and businesses stop accepting visits from salespeople.
Our research indicates that there were more large-scale U.S. retail store closures in 2019, the 11th year of the longest U.S. economic expansion since 1900, than there were in 2008, the height of the greatest economic contraction since the Great Depression. Why? Because information abundance made possible in the Internet age no longer requires consumers to go to the store to obtain information prior to their purchase decision. Instead, consumers can access information without the financial and temporal costs of a store visit.
The forces driving the tidal wave of store closures prior to the global pandemic is a harbinger of what traditional B2B sales organizations face today. The implication for B2B selling in a world of information abundance and growing computing power is what we call the “death of the salesman.”
As we step back and look for patterns in the transformation we are engaged in with clients, we discern the following three pillars at the centre of a 21st-century commercial capability:
REIMAGINED CUSTOMER EXPERIENCE: At the core of every business strategy is the customer. Yesterday’s tools would have you draw journey maps and understand what the customer wanted last week. The future-proof customer experience anticipates the road ahead and designs for inevitable flexibility. B2B is following B2C, but the change is a convergence to “H2H” (human-to-human). Machines will do the transactional work, but humans will anticipate and ensure highly relevant solutions that address both customers’ wants and needs.
TECH-ENABLED SALES EXECUTION: Automation, advanced analytics, recommended actions, and responsive self-service tools coalesce to form highly effective “anti-fragile” sales tools. These tools require rich beds of internally and externally sourced data (e.g., point-of-sale, demographics) and skilled data scientists who can create compelling value for customers and sales teams. The future-state technology blueprint is then fulfilled through an agile approach, with minimum viable product releases, allowing for rapid deployment and simple course correction—further adding flexibility to an ever-changing market.
DIGITAL-READY COMMERCIAL ORGANIZATION: The third crucial pillar is a digitally armed commercial organization. With a higher proportion of customer-initiated sales, there is a high degree of automation in processing and fulfilling orders and in optimizing pricing and targeted marketing to follow through. Inside sales are highly optimized and targeted with system-generated recommendations, including promotions, next-best actions, and tactics (e.g., preferred channel, best time of day to elicit response). Field sales provide consultative guidance to help customers maximize their sales and revenues, and they create a positive feedback loop to product and marketing.
At a B2B marketplace company, the exploration of these three pillars yielded an end-to-end process redesign, coupled with a comprehensive update of the technology stack. We advanced the transformation by rapidly building prototypes and conducting A/B tests of new approaches, tools, and processes to optimize and fine-tune the efficacy and value creation. Once testing showed signs of success, the company scaled rapidly. The results were a 25 per cent growth in sales conversion, 30 per cent reduction in turnaround time, 20 per cent growth in sales productivity, and 50 per cent reduction in technology costs.
As with any well-conceived strategic transformation, the path to the re-invented salesforce begins with a northstar vision of the desired future, punctuated by clear targets (e.g., 80 per cent of sales through self-service channels; 15 per cent year-over-year customer growth; less than 1 per cent year-over-year customer attrition; 40 per cent EBITDA margin). The path forward is iterative and agile, allowing for incremental changes and course corrections to validate and ensure success. There is no final destination; success is an ongoing journey.
Simply put, winning in B2B sales now requires a different selling strategy, a different sales model, a different approach to customer engagement, and rich analytic tools that help customers make smarter buying decisions and provide salespeople with recommended actions to present to customers.
Visionary leaders will move to future-proof their commercial models and realistically pursue major performance targets by breaking free of the past. They will redefine customer journeys and embrace new ways of selling that fully leverage information assets and innovative thinking.
If not, failure will be as certain as the returning tide.
