Digitalization provides an unparalleled opportunity for firms to better understand customers and their buying journey. Yet despite significant efforts and investment, B2B companies have struggled to harness the power of digital tools in their sales and marketing efforts. At Growth Arc, we have identified five cultural norms in B2B firms that act as barriers to results from digital sales and marketing techniques.
In the first two posts of this series, we discussed barriers to deepen customer understanding, working cross-functionally and learning experimentally. Today we look at the effects of channel decisions and mindsets on dealing with complexity.
Traditionally, B2B selling processes are complex with long sales cycles, multiple buying influences, and multiple stages of qualification and evaluation. As a result, firms have developed organizational structures, sales approaches, and industry relationships to effectively manage the sales process.
One guiding principle of strategic sales decisions is Pareto's principle, which states that roughly 80% of consequences come from 20% of the causes. Abiding by this principle, many firms concentrate their sales efforts on the critical minority of customers who generate the bulk of their revenue.
At Growth Arc, we have observed that firms commonly gear their sales efforts toward high-volume customers and segments, while outsourcing the more costly "tail" of lower-volume ones to channel partners.
Implementing this 80/20 approach, however, can create both cultural and structural barriers. First, the choice to avoid complexity can border on a reflexive one; and second, companies may have already lost access to certain customers due to prior choices regarding channel.
Digital sales tactics enable firms to cost-effectively expand their selling efforts to a wider audience. Although Pareto's principle is still applicable, customer size is no longer an appropriate proxy for sales efforts. As digital tactics significantly reduce the cost of customer engagement, firms must now reevaluate the line between the critical few and the remaining "tail."
Effective use of digital sales techniques requires firms to do the following:
Changing the Pareto mindset requires firms to continuously challenge outdated rules of thumb governing complexity in the sales process. In addition to expanding in-house capacity to digitally manage complexity, firms must also reevaluate the role as well as the reach of their channel relationships.