Note: this article first appeared at the Harvard Business Review online, here.

Summary.   Digital tools powered by relevant data can help to generate customer insights, better allocate sales resources, facilitate channel interactions, and improve brand value. But, like any tool, digital systems are only as good as their users. It’s not just data, but information relevant to sales and channel partners; and it’s not just information, but management and process initiatives that translate that information into marketplace results.

Smart companies are combining human teams with digital tools like AI to improve sales productivity, quality time with customers, and transaction costs. Based on research and consulting with many companies, this article examines both sides of the buyer-seller exchange and offers examples of solutions that combine good management and digital systems.

On the buyer side, suppliers and buyers interact through web search, supplier websites, procurement portals, user forums, video conferences, phone, and in-person meetings. Buying, especially in B2B markets, is not a linear “pipeline” of prospects marching through a “funnel.” Understanding how customers navigate channels in your market and how to interact with them is now central to effective selling.

It’s the sales force that does this in most situations. Most B2B products are part of a wider usage system for the buyer. This means integrating the product or service with and within that system. Also, buyers must justify a purchase to others in their organization who are also competing for their share of a limited budget. Some of the combination of economics, solution integration, and organizational politics can be handled online, but most buying journeys also rely on knowledgeable sales help.

On the seller side, solution selling and account management still matter, but how this is done effectively is changing. For example, the nature of customer references has changed. In the past, a seller would cite a few satisfied customers (whose satisfaction might be tied to a price discount, not product performance). Now, customers get others’ purchase and usage experience through review sites like Power Reviews and community sites like SAP Developer Network and Marketo’s Marketing Nation. Similarly, selling now means working effectively with third-party channel partners that are influential during and after the sale — or, to use the fashionable term, building and managing the relevant “ecosystem” of collaborators.

The Challenge of Hybrid Sales

The challenge, then, is not only understanding an omni-channel customer journey but adding value in interactions with buyers and partners without inadvertently decreasing sales productivity. Years ago, Peter Drucker lamented that sales professionals “now spend so much time serving computers…[and] filling out reports rather than calling on customers…This is not job enrichment; it is job impoverishment. It destroys productivity.” Since then, the situation has grown worse while, ironically, companies boast about their “digital transformation.”

But some firms are driving productivity and quality interactions via a hybrid human-and-AI sales approaches. For example, in many segments of the consumer-packaged goods (CPG) industry such as coffee, snacks, soft drinks, and others, market research firm Kantar calculates that before the pandemic, out-of-home consumption in hotels, cafes, bars, restaurants, and other venues was 40-50% of unit sales globally — and, by mid-2022, consumption in those channels had already recovered more than 90% of its pre-pandemic volume. Hence, the go-to-market in those categories is typically a multi-tier system where distributors play a key role in reaching many diverse retail outlets. Competition is intense with multiple overlapping categories knocking on those doors in a struggle for shelf space, support at the point of sale, and a need to manage accounts, distributors, and individual outlets.

We find that successful initiatives use a coherent combination of changes and tools, and typically have three phases. First, a segmentation and mapping of retail outlets and their needs; then, an analysis of current versus needed sales behaviors and outcomes; andfinally, the identification and use of relevant digital tools. Note the sequence: in successful transformations, executives recognize that digital tools can support, but not set, the required sales and customer-management capabilities.

Targeting, Planning, and Sales Management

The most important thing about selling is the target buyer: who buys, why, and when. Sales planning and performance criteria should be driven by that core choice.

“Coffee Inc.,” a division of a CPG company that prefers to remain anonymous, has a product consistently rated as superior by consumers, but faced low retail sales-conversion rates in a European market with more than 300,000 out-of-home outlets. Analysis indicated that its sales force spent one-third of its time identifying prospects (not selling) and much of its remaining time solving service issues related to equipment or missing items. To identify prospects, the sales force used an outlet database and calls on outlets referred by current customers. Referred outlets had a conversion rate of 90% but were a small part of market potential, while conversion from the outlet database was only 1%.

Management improved growth and productivity via better targeting criteria and digital systems driven by those criteria. First, the company developed a data-powered targeting system using segmentation factors such as the type of channel linked to when consumers typically use the product. For instance, breakfast is important in the coffee industry and outlets serving breakfast became a key target. Second, to reduce sales force time on tasks like order-taking and stocking, the deployment of customer service responsibilities changed. Research showed that low channel engagement with service was due to a preference to interact with dedicated people. Organizing customer service into groups serving specific customers, supported by a new CRM system providing account information, improved customer satisfaction and increased selling time by almost 50%, while reducing total sales force costs.

A lesson here is how a relevant combination of data, deployment and sales management produces results. Most salespeople spend most of their time on non-selling activities. Consider the impact of deploying reps where they have the most impact and increasing selling time by even an incremental 10-20%. That’s a big productivity gain and it increases the addressable market: segments that were not feasible to target become worth it with better utilization of sales resources. Digital tools can help. Companies spend a lot of time and money on customer surveys. But there’s evidence that AI tools can replicate survey results and improve targeting criteria as well as and faster than surveys. However, that data requires performance evaluations, account reviews, and other management practices to become information and marketplace results. Sales managers must manage.

Customer and Third-Party Collaboration 

In most markets, it’s not only about targeting the right customers and providing value. In an omni-channel buying world, sales effectiveness requires success at the intersection of your products, target customers, and channel partners. For many firms, that means rethinking the role of sales and distributors so both groups align with buying realities and growth goals.

In a Western European market, “World Beverages Inc.” (WBI) sells to more than 200,000 outlets served by distributors who take orders, stock products, and deliver to outlets, while the producer’s sales force manages business development at accounts. But as is often the case in a multi-tier marketing structure, WBI lacked the customer information required for growth. As a result, client relations and account potential were not documented or structured, and its sales force chose customer development activities in an ad hoc manner.

The company used analytics tools to build customer insights from its fragmented sources as the basis for a structured sales information system that increased customer visibility, more efficient routing, and the use of key performance indicators to prioritize activities by customer visit and audit channel performance. Additionally, the company increased customer contact and reach through an omnichannel communication strategy, including email, WhatsApp, loyalty programs, and marketing through the eB2B platforms of distributors. Almost half of orders are now placed digitally, increasing channel efficiencies and the producer’s insights with end customers.

In another example, the owners of “Canned Foods Inc.” (CFI) started from humble beginnings and grew into a leader in South American markets through reliance on distributors. But in one of its biggest markets with more than 100,000 outlets, its traditional sales model was no longer driving growth. CFI repeatedly offered promotions to distributors, who then bought at lower prices, stocked the product, and sold it later to their customers. Stocks piled up in the channel, increasing inventory-carrying costs and disrupting production schedules, and the lower price did not result in gains in sales or market share.

To change the situation, the company connected distributors in selected regions with its enterprise resource planning system and account managers to enable real-time information by SKU, store, and distributor order as a basis for coordinated initiatives on products, promotions, visits, and customer development. To align company and channel interests, a new compensation plan was introduced because real-time data allowed for tracking activity performance by account managers and distributors. Equally important, the system increased both parties’ trust in the data. Changing the focus from selling-in to distributors to selling-out to customers, and coordinating direct and third-party efforts based on performance data, grew sales by double digits in the areas selected.

The lessons from the WBI and CBI examples concern the role of digital initiatives when selling involves channel collaborators. Multichannel selling is complicated but increasingly necessary, and channel marketing software is a growing sector for good reasons. For example, estimates indicate that for every dollar a company spends with a SaaS or AI platform, it spends more than 4X that amount with channel partners. Working with partners without the smart use of these tools makes multichannel selling unnecessarily burdensome. But a distribution channel is not just a collection of activities like stocking and order fulfillment. It’s also a go-to-market system with implicit assumptions about the product, brand, the nature of customer value, and selling and service needs. In this context, “digital transformation” is not only about providing tools; as these examples indicate, it’s about using those tools to realign joint efforts in the service of brand value at the point-of-sale.

Digital tools powered by relevant data can help to generate customer insights, better allocate sales resources, facilitate channel interactions, and improve brand value. But like any tool, digital systems are only as good as their users. It’s not just data, but information relevant to sales and channel partners; and it’s not just information, but management and process initiatives that translate that information into marketplace results.

sales managment that works

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