This article was first published on Feb. 18, 2020 on the Harvard Business Review website.
Since the dawn of the internet era, experts have predicted that technology will replace salespeople, and it’s easy to find examples. From 2005 to 2017, U.S. pharmaceutical companies slashed one-third of their salespeople, while the use of digital information sources (email, podcasts, mobile apps, websites) grew. From 2009 to 2019, industrial supply distributor W.W. Grainger cut more than a quarter of its branch locations and numerous field sales jobs. Since the mid-1990s, Grainger had been investing in digital capabilities to supplement its network of branch stores and salespeople. By 2019, Grainger’s purely online “endless assortment” business was 15% of sales and growing. Grainger’s still dominant “high-touch solutions” business deployed a combination of field and inside sales forces, and digital channels against the largest customers. Meanwhile, Amazon’s industrial products distribution business, launched in 2015, was already half the size of Grainger’s in North America.
But the impact of the “third industrial revolution” (i.e., digital revolution) on sales organizations is not as simple as digital replacing salespeople. While digital is taking over tasks such as information-sharing and order-taking, salespeople are still needed in situations that involve complex solution sales. For example, the cloud computing industry is adding salespeople. Thomas Kurian, Google Cloud’s newly hired chief and an Oracle alumnus, is leading a rapid sales force expansion to compete with market leaders Amazon Web Services and Microsoft Azure. And across industries, digital affects more than the number of sales jobs, as it creates new challenges and opportunities for all sales organizations.
Sales organizations can survive and thrive in the new digital world by responding to the changes digital brings to products, customers, salespeople, and sales channels. A more data-driven approach to sales decision-making will be critical for success.
Products: Leveraging digital as part of the offering
Some products, such as software and information, are inherently digital. But growing numbers of non-digital products are adding digital value elements. And the digital support of buying processes can enhance customer value for any product.
The sales of digital products have been in a prolonged boom, with an increasing proportion of such sales being subscription-based (e.g., SaaS) or consumption-based (e.g., cloud services). This means that most value accrues over time as customers benefit from their purchase and continue and expand purchasing. Consequently, sellers must embrace a change in mindset from “win the customer” to “show the customer the path to value.” Not surprisingly, roles such as customer success manager are growing rapidly.
Many nondigital products are adding digital features. For example, by using data from sensors in jet engines, locomotives, and entire factories, General Electric creates “digital twins” or real-time digital representations of physical assets. Over a million digital twins have helped GE customers create more efficient machines and processes, for example, by detecting maintenance needs and suggesting performance-enhancing adjustments to operational parameters. Salespeople have to step up their digital savvy and help customers get value from these digital features.
For all products, salespeople can use digital tools to add value in the customer’s buying journey. Digital tools can help buyers find solutions, compare alternatives, and assess the ongoing value of their purchases.
Customers and salespeople: Embracing digital natives as buyers and sellers
With easier access to information, today’s customers explore options and gain insights before dealing with salespeople. The trend is accelerated by the growing majority of Digital Natives (DNs) in the workforce. DNs are comfortable forming opinions by doing their own internet research and taking cues from peers and social networks.
As more informed customers shift power away from sellers and the ranks of DNs grow, companies can respond in three ways: First, companies can influence their online presence and persona, thus ensuring the information buyers get before engaging with salespeople puts the company in the best possible light. Second, salespeople must focus on discovering what customers have learned through their pre-buying research, thus providing a backdrop for identifying opportunities to add value. Third, companies can take advantage of the skills DN workers bring to sales roles. These include proficiency with digital tools, connections on social platforms, such as LinkedIn, and skills well suited to sales roles DN buyers value, such as solution architects and customer-success managers. At the same time, companies can manage the diversity DNs bring to sales organizations by implementing more creative and diverse approaches to team motivation and management.
Sales channels: Enabling multichannel customer connections
Today’s customers get information from multiple sources. They “pull” information from company websites, online videos, and review sites. They get additional insights when companies “push” information via email, text, and salespeople.
To make multichannel connections work, companies can start by designing a channel mix that fits the situation. A purely online platform might work for smaller customers with straightforward solution needs. Larger customers with more complexity might need a choice of channels including field sales, inside sales, and digital. The mix of channels will need to adapt as technology and customer needs and channel preferences evolve.
With the right channels in place, companies must orchestrate the channels to create a consistent buying experience. Customers will become frustrated if, for example, the information they see on a company’s website is inconsistent with what they hear from a salesperson. CRM and AI tools can help companies deliver a synchronized multichannel customer experience.
Data-driven approach: Using analytics to power sales decisions and processes
In almost every domain of sales, data-driven decisions are replacing instinct and gut-feel decisions. Sales organizations use data and analytics to improve sales strategy and resource deployment, talent management, sales team motivation, and customer engagement.
A financial services company used analytics to help its outbound inside sales team sell credit and lending products to small businesses. By examining millions of phone records and analyzing phone calls, the company discovered insights for improving sales effectiveness. First, by focusing on just seven of 14 target industries, salespeople could increase profits by 16%. Second, by shifting calls to the right time of day, salespeople could triple the probability of sales and increase profits by 20%. Third, by using specific consultative sales techniques employed by top performers, salespeople could further enhance their performance.
In another example, companies (including LinkedIn itself) leverage LinkedIn to source better sales talent. Data scientists mine LinkedIn to characterize and identify potential candidates for sales roles. Then, AI provides insights about how likely candidates are to succeed (by comparing to people who have succeeded in the past) and how likely candidates are to join if made an offer (by comparing to people who have accepted past offers). Candidates who score high on both dimensions receive a “warm outreach” from a one-step LinkedIn connection encouraging them to apply.
Sales organizations that proactively address these challenges are more likely to navigate the tumultuous digital landscape successfully, thereby driving success for their customers and company.