Introduction

What is Sales 2.0? Does it belong on the executive agenda?

Own ad hoc research and studies from various other sources reveal that the answers to these questions vary widely depending who is asked. While consultants and representatives of independent software vendors think it is a hot topic meriting high attention, sales executives and managers in the field often do not even know the term or they at least have difficulty to understand what the term stands for. This is not surprising. There are still hot debates among the experts to understand the phenomenon. These debates among consultants and software vendors manifesting the vital interest in the subject are probably fueled with the hope that Sales 2.0 be the next tornado after the CRM/SFA wave to provide them with new growth for their business. Sales practitioners in the field are constantly looking for ways to improve the productivity of their organization. Many of them have however not embraced Sales 2.0 for helping them do so. There are those still struggling to get tangible results from their CRM implementation who might just not be ready yet to discuss the next wave of tools, while those having mastered the CRM challenges have probably become more skeptical on promises how technology can improve the performance of their teams.

This paper was written with the conviction that Sales 2.0, as a phenomenon, poses far reaching strategic challenges and belongs on the agenda of executives wanting to maintain or gain competitive advantage. Looking at the phenomenon despite the current harsh market conditions is not a contradiction. To the contrary, applied correctly, it will actually help to navigate through this turmoil. An attempt is therefore made to describe the phenomenon and a road map is proposed how to respond to the challenges

Strategic Challenges

Porter's 'Five Forces' model for competitive analysis still serves well to illustrate the strategic challenges induced to enterprises by advances in technology, namely the use of the INTERNET and the emergence of the the SaaS (Software as a Service) concept., now also referred to as “cloud computing”.

The way companies started to use the INTERNET already in the Web 1.0 era exacerbated with the dominant role of search engines for finding information and the emergence of Web 2.0 enabling individuals to reach large potential audiences and new forms of collaboration clearly have increased the Buyer's Bargaining Power. Marketing and sales departments are directly touched by this power shift. They must find new ways to maintain their effectiveness to fulfill the mission of being the revenue generator for their company. Maybe the emergence of the term 'digital body language' can be used as an illustration how profound this change is. In the road map further down, proposals will be made how to react to this change. It is though worth while to mention already here, that responding with the use of new technologies alone will not sufficiently address the challenge.

The emergence of Software as a Service (SaaS) solutions gives also smaller firms the possibility to use sophisticated marketing and sales tools for worldwide operations. Size and deep pockets are thus no longer prerequisites for having access to sophisticated software solutions. Barriers for New Entrants are thus significantly lowered. New INTERNET based presentation platforms also lower the need for a physical presence in a targeted geography thus lowering the barrier for new entrants even further.

Substitutes can emerge on an organizational level.. New technologies allow to reach the customer without establishing a physical presence. Depending on how the customer wants to buy, these technologies can substitute classical Reseller and Distributor organizations as elements of a Go to Market Model. On an individual level, these new technologies can cause a cascade to lower cost for routes to market. Provided customer acceptance, Field Salespeople might be replaced by Inside sales or Telesales persons. Inside and Telesales people might be substituted by e-Commerce solutions. Granted, whenever new technologies emerge, such substitution scenarios are popping up. Little evidence can however be found that in the past, these substitutions actually happened. A recent study shows that the portion of the US population working in sales was never higher than today. However there is growing evidence that sales executives today are cutting headcount of field sales forces and administrative jobs, whereas headcount of inside sales people, sales consultants and people working in sales enablement functions is relatively untouched or even increased.

A Phenomenon with many Facets

Sales 2.0 is often defined in the context of what a company has to offer in this space. In this paper it is understood as the paradigm shift for sales organizations in a wider context caused by the buyer's use of the INTERNET and the emergence of the SaaS concept.

Essentially it touches the interaction between the customer facing functions of a company with their customers. It also affects the collaboration of two of the main elements of the customer facing functions - Marketing and Sales - and finally the collaboration within the Sales teams gets new dimensions.

On a more granular and technology oriented view, there is a whole, continuously growing catalog of solutions brought to the market, making it very difficult to understand the phenomenon. The organizers of the first Sales 2.0 conference, which took place in the autumn of 2007, tried the funnel metaphor to classify the solutions. Some of the systems though cross funnel stage boundaries. The distinction whether a system interacts directly with the customer or is more internally focused is considered another important dimension especially for implementation considerations that finally lead to the illustration below.

The Interaction class of system can be used on their own but are also partially a foundation for the other functions. Some of the interaction systems are then also used for internal purposes.

Although we are looking at Sales 2.0, there are actually a lot of tools for which Marketing will claim ownership. Evolving towards Sales 2.0 means thus also to re-think the inter-working between Sales and Marketing.

There are deliberately no brands given as examples of potential solutions. First of all the list of solutions is growing so fast that there will always be some suppliers feeling being left out. Furthermore the author wants to avoid any impression of endorsing one particular system for a category. Most suppliers will though be able to fit their solution into this framework; Maybe the category “Situational Content Generation/Provision” could pose some difficulty. Systems of this category are often referred to as belonging to the “sales enablement” space.

Just to complete the variety of perceptions, there are proponents suggesting to reduce Sales 2.0 to the question on how to use social media as new form to build and nurture relations with prospects and customers.

These technology oriented views make it very difficult to determine a course of action how to draw benefits from these new point solutions which are mostly described from an inside out perspective (what can I do). One also has to remember that many vendors of such solutions are start up companies. The good news is that they most likely use their own ware. However that is also the context in which they present the benefits of their solutions,. These benefits might not always be of the same relevance to more established and mature companies. This is especially true for Lead Generation. Finding customers is crucial for a new company. More mature companies might however face the challenge to understand when the lead generation that served them so well in the beginning of their existence will produce diminished returns as keeping customers becomes an increasingly important component for revenue. The road map below is therefore drawn from an “outside in view” ( customer centric).

A Road Map to Embrace Sales 2.0

The change in buyers bargaining power is probably the most critical discontinuity to be addressed by sales leaders concerned with the competitiveness of their firm. This disruption was caused mainly by how marketing departments used web sites already in the web 1.0 era exacerbated by the growing sophistication of search engines. This lead to a new form of anonymous attraction. There are studies claiming that up to 90% of buying processes today start with an INTERNET search. However one cannot assume that the customer's change in behavior is homogeneous. The buying decision tree is a model helping us understanding how the prospects and customers buy. This then helps understanding the implications on the sales force of this new self directed knowledgeable type of customer.

This understanding how customers wan to buy will also help to identify potential areas for reducing sales and marketing cost.

Typically about 90% of a potential customer base is in status quo, having no intention to buy. For the remaining 10%, the status quo is intolerable (the pain of a problem or the frustration with the inability to grasp a new opportunity is no longer acceptable). There might be situations where the questions following after having crossed the threshold are not even asked and the customer proceeds directly to the buying act. The more complex the problem and the more important the problem is for the customer's business outcome, the questions in the diagram above will become increasingly relevant.

Assessing the implication for the sales force is therefore understanding , to what extent the prospect or customer is willing and able to go self directed through this decision tree and where human driven contact points (call center, inside sales or field sales) with the supplier become appropriate or needed.

The adaptation to this new power balance can however not be achieved with technology.

People, Process, Organization

It is first and foremost a question how people and processes have to be adapted. The question is then whether we have the people with the right skills and attitudes to bring value to the customer wherever s/he decides to leave the self directed path and seeking a more personalized contact with the potential supplier. Process questions arise such as whether it is Marketing or Sales that provides this personalized contact via the addressed attraction and interaction parts. This might have far reaching implications on how Marketing and Sales cooperate in the future.

Sales leaders should be aware though that marketing organizations increasingly being held accountable for their results might already have adopted lead generation and nurturing systems. They have thus more control over the quality of the leads and also claim to provide the personalized contact at a lower cost point than expensive sales resources While this might be true for certain sales situations, there might be others, where the fact that the sales person gets later in contact with the customer can lead to a competitive disadvantage if customers do not want to by in this manner. For situations, where Marketing can provide this first personalized contact, the sales people will have to adapt their skills and behavior. As an example the types of questions asked by the salesperson will have to be tailored to this new, later contact point in the customer's buying cycle.

Also in the internally focused situational content generation and provision area, Marketing might already have ongoing initiatives. Providers of such systems claim impressive operation cost reduction potentials. Waste on collaterals not used by Sales anyway can be reduced and time from salespeople creating their own material most likely not in conformity with the marketing policy can be saved. As these systems have no direct customer interaction the outside in view is less critical for their implementation It is however not so much the mechanics of the systems but the contents that will increase the effectiveness of the customer facing element of an organization. This again requires first a new way of collaboration (process, organization, people) between Sales and Marketing.

Finally, integrating social media into the sales practice is also an organizational and skills issue. Maybe the first point to consider is that it becomes a new rule of etiquette having looked up someone's net presence before calling or meeting with people at the customers organization. Likewise people in the customer organization might expect a possibility to form an independent opinion of the vendor's person they are going to interact with by being finding pertinent information on.

Cost Perspective

There is no doubt, that Sales 2.0 tools can help reduce cost if applied correctly. One has though to be very critical about claims made by suppliers of such systems with respect to increasing the effectiveness. From CRM implementations, we have learned that increase of effectiveness usually implies first that appropriate processes, contents or methodologies are in place which are then supported by a tool.

The knowledge of how customers want to buy is also a good starting point to identify these cost saving potentials and the the right mix of Sales 2.0 tools. Assuming, that for the least sophisticated buying process, the prospect or customer can easier be converted to a channel having in the best case no human intervention or at least less qualified personnel (lowest cost) this least sophisticated buying process should be the primary focus for the introduction of external Sales 2.0 tools.

For more sophisticated buying processes, this basic infrastructure can then also be used for the routine elements. However overlays ( usually human powered channels ranging from call centers to inside sales to field sales) will need to be added to match the increased need from the customer to be able to buy. For maximum cost effectiveness, these overlays should be standardized, modular, and in case of dispersed teams centrally developed. Their use should be mandated for identified specific customer buying patterns.

To use some of the basic infrastructure tools in sophisticated buying situations might require some creativity. As an example it is not readily obvious that a lead generation system can be of much use for a sophisticated strategic account management overlay. Getting access to key people in such customer or prospects organizations however is so difficult that whole campaigns with several well coordinated steps are needed. Using the lead generation tool in a slightly adapted manner together with the situational contents generation and provision tool can however also significantly increase the efficiency of the strategic account management overlay.

The Sales 2.0 training tools have also cost saving potential. However also here it is not only the vehicle to get the sales force trained. The contents has to be modularized so that is relevant for the respective context of the individual salesperson (sales people are situational learners). It has to consider the shifts in skills and processes imposed by the increased bargaining power of buyers. Repacked contents from former face to face workshops might thus not be the ideal solution.

Conclusion

Plans to embrace Sales 2.0 in a broad sense are not incompatible with current tight budget situations. To the contrary, wisely introduced, sales organizations first can be more effective in serving the customers the way they want to buy by adapting skills of people, processes and organizations. They can further lower the cost point of their customer facing function ( Sales and Marketing) by selected tools to support their honed processes and streamlined organizations. Both higher effectiveness and lower costs contribute to a better competitive position and thus a higher chance of survival in these harsh times.