Last week, the PTDA held its Virtual Industry Summit and, as expected, the focus was on handling the uncertainty of an industry still battling a pandemic, election anxiety, and civil unrest. With only two months left in the calendar year, most have already written 2020 off and are looking to position themselves for a 2021 rebound. For insight into the sales front, the PTDA brought in co-founder and managing partner for Indian River Consulting Group, J. Michael Marks.
Marks’ presentation, What Does Sales Transformation Actually Mean? examined how the coronavirus pandemic has dramatically accelerated the demise of traditional field sales-driven models. He stated that for those who’ve adjusted to this new normal — great! For now, at least. He said rising customer demands, increasing margin pressures, and aging sales forces aren’t going away. As such, business for traditional distributors has become untenable. Marks presented solutions and sharply reasoned strategies for handling ongoing market disruptions that require doing new things and doing them well the first time. No small task. But Marks said with a certain baseline level of optimism, and some focus, there are some opportunities for transformative sales growth soon. Here are just a few of the key takeaways from his presentation.
• Millennial buyers are not interested in recurring visits for sales reps
According to global research and advisory firm Gartner, by 2025, 80% of B2B sales interactions between suppliers and buyers will occur in digital channels. This is because 33% of all buyers desire a seller-free sales experience – a preference that climbs to 44% for millennials.
• We now see internet-driven price transparency and the exposure of distributor cross-subsidies. Amazon Business is creating existential margin pressure as the market unbundles (it’s cheaper to get a product and no service).
• Marks’ said it’s likely attendees will face some or all of the following challenges even after the pandemic is brought under control:
-Manufacturers leveraging the new customer acceptance of technology by going direct
-Nontraditional competitors like Amazon locking up the large buyers by electronically integrating their back offices (their focus is on replenishment MRO material)
– Difficulty recruiting because applicants want to work from home
– Two years of unreliable supply chains with repeated whipsaw shocks
– You will be competing against the early adopters in your industry that may have been investing in sales transformation for years that will have lower SG&A costs than you do where their sales forces have been shifted from market serving to market-making. They will also be locking customers in with digitally integrated back offices.
• Marks’ said getting the “sales” out of transactions is crucial going forward.
“In the beginning, sales reps were all self-directed and told to look at their territories as their own businesses. Most sales reps were paid incentives on gross margin and the idea was they could eat what they killed. It was all about individual performance. As market complexity increases, the role transitions from being self-directed to being management directed as the point of the spear in market-making, not serving. The rep is provided with missions, tools, and rules of engagement. This is driven by scale, but small firms will never need to change.”
Marks said distributors that haven’t started the sales transformation journey are already 50% behind their competitors.
“Sales transformation is proven with many early adopters operating at scale. There are many places to join in the process and get started.”
That this is a good idea for market leaders is no longer in question.