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  • 1. The Future of Sales Technology Five critical projections for the Next Decade By: Howard Stevens and Geoffrey James Based on 20 Years of World Class Sales Research Across 80,000 B2B Customers and 7,300 Sales Forces
  • 2. Introduction Over the past two decades, we’ve seen the Internet move from dial-up medium of email and brochure-ware into a broadband medium capable. There’s been a massive migration of all sorts of information onto the Web, along with the introduction of entirely new business models for selling. Sales organizations and experts are only beginning to understand how to effectively use this new technology and that it will take another decade (at least) before the full potential of even today’s level of technology will be entirely realized. Eventually, there will come a time when the world of business (in general) and the world of selling (in particular) will view the Internet, with all its technological marvels and capabilities as being as “invisible” as the telephone is today. In this “post-Internet era,” knowledge workers and executives will no longer compare the Internet to the other forms of communication and technology that they’ve used in the past. It will become something entirely different, with its own rules and compre- hensible usage. The purpose of this chapter is to identify the most important trends that will play themselves out over the next decade (i.e., from 2013 to 2023). Understanding how sales technology is likely to develop is crucial to planning how and where to invest resources to position a firm for long-term growth. In general, the pace of change in sales technology is accelerating, especially with the explosion of growth in tablet devices and social media. Sales managers who take heed of these changes and quickly adapt to new environments and adopt new tech- nologies will be far more likely to succeed than those who wait until the trends play themselves out.
  • 3. 4 Why Technology Projections are so Critical Sales groups tend to be early adopters of new technology. In some cases, like email and the smartphone, it’s been the salespeople themselves who have em- braced the new technology. In other cases, like Sales Force Automation (SFA) and Customer Relationship Management (CRM), the impetus for new technol- ogy has come from sales management. Not surprisingly, sales groups often pioneer technologies that later become more widely applied across the corporate landscape. A prime example of this is “cloud computing.” Computer scientists had been suggesting that computer power could be provided using a public or private utility since 1950s1 . However, it wasn’t until the early 2000s that Salesforce.com proved that the concept was practical and economical. In the previous chapter “Selling in the Internet Age,” we discussed the relation- ship of current sales technology to current sales techniques. However, that chapter deals with present reality and the short-term future as lagging compa- nies and sales groups adapt to that reality. While that information is obviously useful, for long-term planning purposes it’s important for executives with sales responsibility to understand the likely paths that sales technology will take in the longer-term future. Ten years ago, one of the co-authors of this book published an article in Selling Power magazine entitled “Salesforce of the Future.” That article made the following projections: 1. The Internet will NOT replace B2B sales professionals. In 2001, most pundits believed that online ordering and industry exchanges would allow companies to sell directly to one another, without a pesky salesrep or margin- gobbling reseller. The article predicted the rise of a hybrid sales model, where the Internet would only become an important component of an overall sales strategy and that companies would gravitate “towards hybrid B2B business models that combine offline and online sales methods.” 2. CRM will extend into the entire marketing and sales cycle. In 2001, most CRM applications addressed individual aspects of selling, like contact management. The article predicted that future CRM systems will provide salespeople with B2B- type data such as customer visits to the website, call-center requests, service escala- tions, product availability, and the status of customer-specific manufacturing runs. 1 Ryan; Falvey; Merchant, “Regulation of the Cloud in India”, Journal of Internet Law (October 2011)
  • 4. 5 3. Outside sales would be wireless connected. In 2001, most salespeople carried a cell phone and a laptop, usually synchronizing the data at the begin- ning and end of each day. Wireless was simply too unreliable for a more real- time system. The article predicted that within 10 years, everyone - customer and salesperson alike - will be able to connect and retrieve a wealth of informa- tion, regardless of where they’re located and that much of that access would come from smartphones and tablets (called “Personal Digital Assistants” in the article.) 4. There will be a wealth of add-on sales tools. In 2001, the latest in sales technology was pretty much CRM, email, and PowerPoint. The article predicted that “the wired and wireless Internet will enable companies to offer sales tools that the sales reps of the past could only dream about.” Today, products like Salesforce.com have become both repositories of and channels for various kinds of add-on technology. 5. B2B sales will become more collaborative. In 2001, the archetype of the sales rep was still that of a maverick who closes the big deal and collects the big commission. The article predicted that would change and that sales reps would increasingly be expected to become experts in their field who can act as consultants, helping customers to understand their needs and then coming up with a plan to fulfill those needs. Obviously, since the predictions proved largely true, sales executives who read that article were more likely to devise effective strategies over the past ten years than those who assumed that sales techniques and sales technology would either remain static or go in an entirely different direction. For example, sales executives who believed the prediction that a hybrid sales model would emerge naturally prepared for that model by investing in both website and sales training. The sales executives who lost out were those who continued to believe that “B2B selling means pressing the flesh” (i.e., selling techniques would remain static) or that “B2B selling will be largely replaced by an online marketplace.”
  • 5. 6 Projection 1 Sales Management will be even more data-driven Sales management has always been data-driven, at least to a certain extent. Few corporate metrics, after all, are more visible than sales figures! However, as we explained in the previous chapter, “The Sales Quality Revolution,” sales managers can now use new sources of data to hone the hiring and deployment of sales resources. This trend will accelerate until it dominates sales management, especially inside large companies that have extensive sales forces. This will be a massive change because historically sales executives have lacked the science to support their strategies and instead have relied primarily on their intuition for many of the most critical decisions. Over several decades, Chally has complied a database of several hundred thousand salespeople whom they have assessed along with matching perfor- mance data. Using this treasure trove of information, Chally has done hundreds of validation studies (much like insurance companies do actuarial studies) and thus identified what competencies actually predict sales success for different sales positions. This scientific process has shown that much of the conventional wisdom about sales management is simply inaccurate and that intuition (as it expresses itself as conventional wisdom) often leads to ineffective sales management. For example, intuitively it makes sense for sales executives to focus on the strengths of their organization in order to “clone” the winning behaviors of their top salespeople. Indeed, the vast majority of sales training programs are based upon the premise that average salespeople can be trained to become top performers. However, when the data is actually examined, it’s clear that this strategy is ineffective. Another intuitive truth is that an “above average” sales performer will be suc- cessful when moved into a sales management role. In fact, such promotions are statistically much more likely to result in failure than success, except in one specific case: when the promoted salesperson was originally a strategic ac- count manager. Similarly, conventional wisdom says that “outside sales” and “inside sales” require very different skill sets, making it difficult for people to move from one role to the other. It turns out that, statistically, the best candidates to move into any field sales position are those who are currently employed in telesales. Such people actually perform better than field salespeople moved into a different type of field sales!
  • 6. 7 We believe that such insights will become more obvious and more commonly understood as sales executives are exposed to the scientific analysis of their own sales personnel and performance data. To this end, Chally has developed a software tool which measures and tracks sales personnel and performance data for an individual or an entire sales force in order to answer essential sales management questions, such as: • What’s needed for this sales position? The tool provides precise measures of critical competencies required to be successful at any potential sales assignment. • Who fits this sales position? The tool accurately measures and matches the likely performance of different combinations of managers and sales teams. • What could go wrong? Sales failures usually result from mismatches between a position and the competencies of the person asked to do it. • Who will perform well in this job? Motivation is often a crucial element of sales success. The tool can determine who is “hungry” and motivated to succeed for each specific role. • How is my team performing? The tool uncovers whether or not the tasks actually performed matching the capability or potential of the people assigned to them. • What interventions are needed? The tool identifies cases where additional coaching or training is required, or where a “work-around” might be appropriate. We believe that tools like the Talent Audit will become as common among sales managers as email is today because the application of science to increasingly large data sets will ensure better personnel decisions. This, in turn, will reduce turnover by increasing sales job satisfaction, make it easier to open new sales territories, and prevent the loss of customers through sales personnel mismatches.
  • 7. 8 The extensive use of data in sales management will ripple throughout the sales organization, changing the way that everyone uses data. We expect this “data- driven” revolution to have the most impact in the following areas: Lead Generation Sales organizations will continue to plumb new sources of data to better hone their lists of sales leads, to better understand prospective customers, and to nurture those prospects into real sales opportunities. In the past, generating high-quality leads using traditional methods was expen- sive and chancy. For example, mass-market advertising, even with a strong call to action, was lucky if it generated even a trickle of prospect inquiries. Similarly, direct mail campaigns, even when targeted to the optimal demo- graphics, were lucky if they got a response rate in the 3 to 4 percent range, while road shows and seminars involved pricey travel and meeting space rental even if nobody actually showed up. In the future, lead generation will be driven entirely by the data available about a customer and even about that customer’s customer. Cold calls will become completely obsolete in the sense that the salesperson will always possess detailed information about the customer and the customer’s business before contacting that business. More importantly, sales teams will be able to cross-compare the data available about a prospective customer with the historical data about conversion rates with similar salespeople selling to customers with a similar profile. Using data to drive the lead generation process will inevitably result in a lower cost of sales because data-driven sales leads will be pre-qualified as potential customers, long before any human effort is put into developing the lead. Since salespeople will possess complete information on prospective customers, they’ll target advertising, direct marketing, and event marketing toward cus- tomers who are likely to buy. Opportunity Development We project that salespeople will use new sources of data to better understand their customers’ business models and buying processes. This, in turn, will make it easier to develop opportunities in a cost-effective manner. Salespeople are already using a variety of communication tools to keep in touch with their customers. These tools include some that are in common use today (e.g., email, social networking, web conferencing) as well as others that are just beginning to become part of the sales environment (e.g., messaging, online demonstrations).
  • 8. 9 These communication tools already allow salespeople to remain in contact with more influencers and decision-makers, both more closely and more frequently. The increasing availability of data will allow those communications to be better timed and more to the point. To understand why, it’s first necessary to understand how the buying environment is changing. In the past, companies tended to stovepipe the buying process. Generic purchases (like office furniture) went through a centralized purchasing department, while the decision for specialized products (like computer hardware and software) lay with the experts, like the corporate Informa- tion Technology (IT) group. In the past, then, B2B selling consisted of finding the person who needed the product, convincing him/her that he/she needed it now, and then hand-carrying the purchase order to the person who had signature authority to release the funds. Today, however, most B2B buying decisions involve multiple stakeholders, influencers, and decid- ers, all of whom must be convinced that a purchase makes sense. At the same time, increased focus on corporate governance has encouraged the creation of highly complicated purchasing approval processes. The continued “complexification” of buying processes will make it necessary for salespeople to keep track of multiple individuals and organizations with multiple agendas. This will only be possible through the accumulation and utilization of detailed information about each customer engagement. Customer Service We project that the gathering and reuse of customer data will turn customer service and sup- port from a business function that responds to customer questions into one that anticipates and prevents customer problems. Customer support is a big problem for many companies, often because they don’t understand its importance to the customer, thereby creating situations that fester and cause customers to find other vendors. According to a classic cross-industry study by the research firm CRMGuru, sales managers believe that customers move to another vendor either because they found a lower price elsewhere or their product needs changed. In fact, “bad customer service” was cited as the reason for chang- ing vendors by nearly 3 out of 4 of the customers surveyed.2 In addition to losing current customers, bad customer service can also prevent the acquisition of new customers through the proliferation of negative “word-of-mouth” on social networking sites. However, the Internet and cell phone networks also allow vendors to constantly gather data about how and when customers use products. By monitoring and analyzing this data, vendors can identify potential customer service problems and take corrective action before they occur. This is already happening inside some markets. For example, companies that provide computer power over the Internet (e.g., “cloud computing”) regularly monitor and analyze the peak usage patterns of their customers in order to assign resources to those customers before they encounter a slowdown that might result in a customer service complaint. 2 Roman, Ernan. Poor Service: Key Factor in Customer Churn. Huffington Post. July 25, 2012
  • 9. 10 As more products become “intelligent” and “connected” (i.e., have computers with communications capability built into them), the vendors of those products will continue to have more ways to gather data and use that data to keep customers happier. Conclusion We project that the ability to communicate more frequently and more effectively with customers will make it easier to build strong relation- ships. However, customers will continue to differentiate between “real” relationships and “social networking” colleagues. Building a long-term customer relationship is intensive in terms of time and resources. The salesperson must maintain a connection with current customer contacts, even while expanding outwards into new opportunities within the customer site. While the potential payoff is enormous, it can be challenging for a salesperson to maintain a deep understanding of a customer’s internal structure, business model, and operational politics as the customer’s firm changes and grows. The communications capabilities inherent in today’s selling environ- ments reduce the amount of time and effort expended in ongoing customer communication and therefore in the building of long-term relationships. Armed with detailed data about decision-makers and stakeholders, salespeople can more easily keep customers informed and move sales opportunities forward. However, regardless of what technology they’re using, humans will remain human. Because of this, we predict that customers will con- tinue to value personal contact and face-to-face meetings, especially in cases where the business relationship requires a great deal of trust between the participants. In other words, the majority of salespeople will work in data-rich environments, interacting with customers primarily through the tele- phone and Internet, with access to an enormous amount of informa- tion about customers, industries, and the competitive marketplace. Customers will look to these “plugged in” salespeople to make sense of the massive amounts of information clutter existing on the Web and become “trusted experts” rather than just advisors. However, there will remain some environments, such as high-ticket B2B purchases of complex solutions, where there will be a need for face-to-face meetings involving salespeople and experts from the sell- er’s firm. These individuals will also work in a data-rich environment much of the time, but they’ll also require the traditional in-person skills that have been mainstay of the sales profession for nearly a century. However, in the future, even face-to-face will become more digitally based, with real-time interactive video conferencing. Summary: • Sales management will use new sources of data to make management more scientific. • Extensive pre-qualification of leads will become commonplace. • Salespeople will use multiple data sources to move opportunities forward. • Customer service will become better integrated into the customer experience. • The majority of salespeople will be online, with an elite few that meet customers face-to-face.
  • 10. 11 Projection 2: CRM will become ubiquitous but invisible Historically, CRM has had a higher failure rate than most other types of corporate software. In 2001, for example, Gartner announced a study that found CRM implementations experienced a 50% failure rate, a finding echoed (and then some) in 2002 by the Butler Group (70%) and the Selling Power CSO Forum (69%). CRM failures do not result from failures in the hardware or software. Compared to many other applications, CRM does not create a heavy computing load nor is it particularly complex to implement. CRM systems fail when a majority of users decide that the systems in question are more bother than they’re worth. The technical term for this is a “low adoption rate.” This is not a trivial problem. A centralized CRM system for a large sales organization, when implemented as part of an overall Enterprise Resource Planning (ERP) system, can easily cost millions of dollars. Even when the system itself is less expensive, sales groups still incur the cost of training people to use the system, costs that are lost if the system doesn’t take hold. Furthermore, many CRM failures have been accompanied by the creation and/or maintenance of a “shadow” system where the “real” sales tracking takes place. Such systems range from spreadsheets on a sales manager’s laptop to contact management programs squirreled away inside some sales manager’s PC. Since such ad-hoc systems are prone to error, they often end up causing problems of their own (like lost data), making the failure of the “official” CRM system even more of a disaster.
  • 11. 12 Sales managers have tried various methods to increase CRM adoption rates in order to reduce the likelihood of a failed implementation. One approach (popularized by CRM guru Barton Goldenberg) has been to offer salespeople rewards for CRM usage. More commonly, sales managers have tried to refuse paying commissions until the salesperson in question has entered all the required data. However, despite such drastic measures, CRM failure rates haven’t improved much. In 2009, for instance, Forrester Research estimated the CRM failure rate to still be at 47%.3 Computerization vs. Automation The continued failure of major CRM implementations leads us to the conclusion that the concept is fundamentally flawed. There are two basic and mutually inconsistent approaches to using computers in business environments: automation and computerization. While these terms are often used interchangeably, they actually describe very different philosophies about how computers are most effectively deployed. With automation, computers are seen as a means to monitor various processes within a company, centralize control of those processes, replacing humans with computers (or robots), and thereby create greater efficiency. Automation is always driven from the top downwards, with the Information Technology (IT) group playing a leadership role in pushing adoption of the new technology through the rest of the company. With computerization, computers are seen as a way to make individuals more more powerful and capable. Computerization involves the elimination of rote tasks, but generally by replacing those activities with higher-value activities. Computerization is always driven from the bottom up, with the IT group reacting to decisions made elsewhere inside the company. Put another way, automation empowers management-computerization empowers employees. Because these concepts are, in a certain sense, mutually at odds, it’s not surprising that there have multiple battles inside the corporate world for “control” of computing resources. It was in the midst of this push-pull conflict that IT groups began introducing what soon became known as Sales Force Automation (SFA) and later renamed as Customer Relationship Management (CRM). Such systems were designed as repositories of customer contact information and a way to track sales activity through various stages of a pre-defined process. By 1995, the software category was well-established enough to justify the founding of companies focused primarily on CRM, such as Seibel Systems. 3 http://www.zdnet.com/blog/projectfailures/crm-failure-rates-2001-2009/4967
  • 12. 13 Why CRM Systems Fail Early CRM systems, however, had many problems, most of which were the direct result of the “automation” focus of the software. Among salespeople, these systems were seen (justifiably) as an attempt to enforce more management control over sales activity and to establish corporate ownership of the customer data (like contact information) that salespeople gathered during their sales activities. While salespeople have generally fought automation, they’ve consistently been early adopters of computerization. For example, prior to around 1990, sales groups were early adopters of (initially) standalone word-processors and (later) personal computers. Like other corporate organizations that purchased these forms of computerization, sales groups were often forced to do “end runs” around IT groups, which tended to be hostile to “uncontrolled” computer power, preferring instead to promote centralized automation. In more recent years, this preference for computerization over automation has manifested itself in the rapid adoption, within sales groups of smartphones and tablets, both of which have changed the way that salespeople (and other types of users) interact with technology. Even more than the PC, such devices tend to push the complexities of data processing into the background in favor of presenting an easy-to-use interface. Sales managers have also been early adopters of new technology. For example, while CRM was originally offered as an in-house application, with all the inflexibility and top-down control that such an implementation implies, the trend in CRM has been toward “on-demand” applications like Salesforce.com. Such systems are not only less expensive than their more traditional forebears, but they are more modular, making them much easier to customize to match the individual requirements of any particular sales team. Extensions to the Concept At the same time, CRM systems have become “smarter” in the way that they use existing information on the Internet, which can greatly reduce the amount of clerical work required of the sales team to build up a useful amount of information. In the future, tablets and smartphones will make interacting with CRM even less burdensome as CRM continues to become more customizable and therefore better able to match individual and team requirements. For example, Chally has begun building what it calls “sales transformation dashboards,” which provide detailed information about personnel, their success rates, their deployments, their activities, etc., with measurement algorithms customized for each selling environment. Using this technology, a sales executive can not only track overall performance of the sales organization, but also predict where salespeople are likely to fail or succeed in the future, depending on where they’re assigned. A sales manager
  • 13. 14 starting up a team in a new territory can establish the characteristics of that territory. The system can then recommend, based upon past performance and competency profile, the combination of sales manager and sales reps who would be most likely to be successful developing that territory. Using data in this way is far beyond the original scope of CRM, even though it uses CRM data as an element of the analysis and decision- making process. Conclusion What emerges is a sales technology environment where the accumulation of data (including CRM data, but extending to many other types of data) becomes highly automatic and where that data is used in highly creative ways throughout the sales, marketing, and support organization. CRM thus becomes more of an enabling form of rather than an application purchased to provide a specific function. In other words, as computerization proceeds apace and automation moves into the background, we believe that the entire concept of CRM will become largely meaningless because the data that was its raison d’etre will simply be assumed to exist, in the same way that Ethernet and email are simply assumed to be a part of the overall environment. For CRM providers, the downside of this trend is that they’ll either need to expand their offerings or change them substantially in order to support the new environment that’s emerging. This will cost money to develop and open up opportunities for “disruptive” technology from other vendors. On the other hand, the move toward a computerization model (and opposed to an automation model) will greatly increase adoption rates and success rates. Summary: • CRM has experienced low adoption rates and high implementation failure rates. • CRM inappropriately attempted to automate sales activity rather than computerize rote tasks. • Sales teams immediately adopt technology that helps them to sell more effectively. • Tablets and smart phones will incorporate functions currently performed by CRM clients. • CRM data will be vastly augmented by new public and private data sources. • CRM will become a part of the overall selling infrastructure rather than a discrete application.
  • 14. 15 Projection 3 Tablets will eclipse laptops and desktops Over the past decade, “on-demand” applications (most notably Salesforce.com) have absorbed most of the market growth in the CRM sector, largely replacing and displanting “on-premise” CRM applications (like the original implementation of Seibel.) CRM implementations that use “cloud computing” (another word “on-demand”) only utilize a Windows-based desktop or mobile computer as a platform to host a browser. As such, there’s little reason to have a Windows-based machine purely to run a CRM ap- plication. This follows a trend in business computer usage, which is gradually migrating from the traditional Windows environment for many day-to-day business tasks toward browser-based applications and mobile clients (i.e., programs developed for specific devices) according to the market research firm Gartner.4 Despite several attempts, Microsoft has been largely unsuccessful in penetrating the CRM market with a Windows-centric product, while CRM vendors have quickly moved to service clients on other platforms, notably tablets, which already support browsers, making tablets functional supersets of Windows devices, at least as far as CRM is concerned. 4 Gartner Reveals Top Predictions for IT Organizations and Users for 2012 and Beyond. December 1, 2011
  • 15. 16 Tablets as “Laptop Killers” When the iPad was originally released, Walt Mossberg of the Wall Street Journal called it a “pretty close” laptop killer.5 There are now growing signs that that “pretty close” was a gross understatement. At the point of this writing, Windows devices are still the preferred way to cre- ate documents and presentations, and Microsoft’s Outlook mail client is still the “lingua franca” of email. However, there are growing signs that this is changing. According to a recent survey of iPad users conducted by the sales technology firm Brainshark6 , the most common business uses for the iPad are smack in the center of Microsoft’s Office market checking work emails (82%), doing Web research (72%), and viewing or delivering presentations (74%). Ominously (for Microsoft) almost half (46%) are also using tablets for “business apps,” which presumably includes document creation. While Microsoft has, of this writing, avoided porting Microsoft Office to the iPad, we believe that it is only a matter of time before fully compatible applications are available. Indeed, there are already acceptable alternatives that support 90% of the functions required by salespeople. The Brainshark study also revealed that 89% of iPad owners take their iPad when travelling on business and more than one out of three of these travelers only bring an iPad and leave their laptop at home. While 92% of iPad owners say the device currently supplements their laptop, more than half (51%) believe that their iPad will be their primary computing device within the next two years. Significantly, almost two-thirds of iPad owners would rather lose their laptop than their iPad. This kind of loyalty to a product category bodes ill for Microsoft, which has never been able to capture that kind of loyalty with its Windows product. Tablet Sales Accelerating While there were previous tablets in the market, today’s market for tablets was created in early 2010 with the launch of the iPad. Since then, sales of the device have been phenomenal. Within 90 days of its introduction in early 2010, the iPad managed to penetrate 50 percent of Fortune 100 companies.7 By 2011, iPad sales were already eating into PC sales,8 and within two years after its release, the quarterly sales of the device reached 17 million iPads, double the population of New York City. By the autumn of 2012, it had penetrated into 90% of the Fortune 500. 5 Mossberg, Walter S. “Apple iPad Review: Laptop Killer? Pretty Close”. Wall Street Journal. March 10, 2010. 6 Brainshark. Mad for the iPad. September 18, 2012 7 Clevenger, Nathan. “How the iPad Conquered the Enterprise”. Datamation. July 29, 2011. 8 Metz, Rachel. iPad Takes A Chunk Out Of PC Sales, Say Analysts Huffington Post. April 13, 2011
  • 16. 17 When viewed in terms of cumulative sales, the number of iPads are growing exponentially, as shown in the following table: Can Microsoft Succeed in the Tablet Market? Microsoft’s announcement of the Surface (a Microsoft-branded, Windows-based tablet) and Microsoft’s continued reluctance to offer a version of Office that runs on the iPad makes it clear that Microsoft sees the iPad as a major competitive threat to its dominant position in personal computing. However, Microsoft has a long history of failure in the handheld and tablet market, go- ing all the way back to 1996, when the company launched “Windows CE.” Since 2001, Microsoft has tried to market the concept of Window-based tablet computers, but these devices, despite being manufactured by established PC companies like Dell and Hewlett-Packard, have gone nowhere. Microsoft was also responsible for the Zune, an iPod competitor that barely got on the market share radar and the Kin, an iPhone competitor that was pulled from the market only forty-eight days after reportedly selling only 500 units, despite a massive spend- ing on advertising and promotion. This pattern of repeated failures strongly suggests that the handheld/tablet/phone market simply isn’t part of Microsoft’s DNA. As a result, it’s a possibility that the Sur- face will, like every other product Microsoft has launched in this space, end up as an orphan or a device that hangs onto a very small market share. Time will tell. 9 Costello, Sam. What Are iPad Sales All Time? About.com Guide. Table 1: Cumulative iPad Sales (millions of units) Source: About.com Guide 9 90 80 70 60 50 40 30 20 10 0 May 2010 Jul 2010 Sep 2010 Jan 2011 Mar 2011 Jun 2011 Oct 2011 Jan 2012 Apr 2012 May 2012
  • 17. 18 Conclusion Today, desktops and laptops based on Microsoft’s Windows operating system remain the “platform of choice” for most sales organizations. How- ever, we project that tablets, specifically devices based on Apple’s operat- ing system iOS and Google’s operating system Android, will largely replace Windows-based desktops and laptops. While it is currently too soon to tell for certain, we remain skeptical of the abil- ity of Microsoft’s Surface tablet to establish itself as a third alternative in the tablet market. While there’s no question that Windows machines will remain a fixture in the business world for many years to come, there is no longer as much reason today as in the past to adhere to Windows as a de-facto standard. Sales teams, like much of the business world, are ready to adopt an alterna- tive and now that such alternatives are available, we feel the days of the dominance of the desktop and laptop inside sales teams will draw to a close, over the next decade. Summary: • Browser-based applications do not require a laptop or desktop to function. • Tablets are replacing laptops for business travelers. • Tablet sales are rapidly accelerating, eating into laptop and desktop sales. • Microsoft’s Surface inherits the legacy of Windows, both good and bad. • Microsoft Windows is architecturally too complicated and has become brittle. • Tablets based on iOS or Android will become the business device of choice.
  • 18. 19 Projection 4 Interactive video will become commonplace Video conferencing has been around for over two decades, but has not yet played much of a role in sales environments. However, this will change over the next decade, and video interaction will permeate the sales environment. The Effectiveness of Online Meetings Online meeting are, of course, more cost effective than face-to-face meetings. To illustrate this, imagine a two-hour face-to-face meeting that requires the conver- gence of five people at a single location. The table below shows a simple cost comparison. Face-to-Face Meeting Online Meeting Number of Attendees 5 5 Number traveling to attend 4 0 Total time required including preparation & travel 54 hours 15 hours Manpower cost (at $50 per hour) $2,700 $750 Estimated airfare, hotel $3,000 $0 Technology cost (devices, bandwidth) $0 $500 Total Cost $5,700 $1,250 The table may understate the case because it doesn’t take into account the lost opportunity cost of tying up four people during the time it will take for them to travel to the meeting. While it’s true that people can conduct more work while traveling than in the past, travel always involves a significant reduction in produc- tivity. This is particularly significant when the meeting attendees are high-level executives. Contrary to popular belief, video conferencing is nearly as effective as traditional face-to-face meetings when it comes to making good business decisions, according to a study conducted at the Beckman Institute of Advanced Science and Technology at the University of Illinois.10 That study showed that video conferencing was as good as face-to-face meetings for decision-making, achieving accuracy, avoiding overconfidence, commitment to the group decision, and the number of beliefs discussed or learned during the meeting. 10 Snlezek, Janet
  • 19. 20 The study also revealed that compared to face-to-face groups, video conferenc- ing groups showed lower levels of confidence in their decisions, especially if they were instructed to discuss their beliefs and assumptions underlying their estimates. However, considering the cost benefits, these aspects of decision- making are probably a reasonable sacrifice. Video conferencing also has an advantage over teleconferencing in that it allows the communication of visual information that would otherwise be lost. Psycho- logical studies show that only 7 percent of communication involves the actual words, while 55 percent is visual, carried by body language and eye contact, with the remaining 38 percent being vocal--pitch, speed, volume, tone of voice, etc. Why Video Conferencing Hasn’t “Caught On” Since video conferencing is nearly as effective as face-to-face meetings and represents a huge cost-savings over face-to-face meetings, it’s a bit surpris- ing that it remains relatively uncommon both in sales situations and general business interaction. In fact, it hasn’t been until recently that sales groups have embraced any form of video conferencing even though adequate technology to conduct such meetings has existed for well over a decade. A possible explanation of the slow adoption of interactive video may lie in the expectations that people have when dealing with video data. Since most business people have been exposed to thousands of hour of television, virtu- ally from the day they were first able to discern individual images, they have acquired a specific visual “vocabulary” that’s different from the face-to-face environment. For example, during a face-to-face meeting, a sidelong glance at a person standing to one side carries no significance, because the other people in the room know that the glance is directed at that person. On video, however, the exact same sidelong glance creates an impression that the person on camera is “shifty-eyed” and therefore untrustworthy. The same is true of glancing down at notes, which is one reason why profes- sional broadcasters and politicians use teleprompters. If they read from notes, they look as if they were ashamed and staring at the floor. It is extraordinarily difficult for average people to look reliable and trustworthy even when videos are recorded in a professional studio. For example, execu- tives who trained to represent their companies on television are advised to avoid sunglasses, flashy jewelry, rocking from side to side, scratching, and the clasping and unclasping of hands, all of which look dreadful on video. In addition, video conferencing has probably suffered from the inherent con- servativeness of corporate culture, which has tended to view online meetings (with some truth) as representing less of a commitment to the customer than a face-to-face meeting.
  • 20. 21 New Perceptions of Video Conferencing The cultural bias against video conference appears to be in the process of change, with younger workers likely to perceive it more positively and use it more effectively than their older peers. A 2005 study of video conferencing conducted at Department of Instructional Systems Technology at Indiana University revealed the effectiveness of web conferencing also varies according to the type of material being communicat- ed.11 For that study, students were exposed to a course that used both face-to- face classroom instruction and online classroom meetings and then asked to communicate their preferences for each methodology. Researchers discovered that approximately three out of four students preferred face-to-face meetings when the task being learned was ambiguous because it was easier and faster to clarify issues through immediate questions and an- swers. They also felt that direct interaction and instant feedback “helped make them think better.” In addition, approximately four out of five students preferred face-to-face dis- cussion when the information being conveyed was very complex and difficult to understand. In this case, they felt that it was easier to get complete answers because two-way non-verbal cues helped them to understand content and reduce misunderstanding. Students held similar views about brainstorming and decision-making, both activities in which the dynamics of the face-to-face environment was seen to be more effective. However, when it came to clearly defined, unambiguous tasks typical of the majority of large-sized college classes, about twice as many students felt that computer-mediated discussions were faster, easier, and more convenient, primarily because it allowed students to work with flexible schedules and take more time to think and reflect. Students embraced online discussions in greater numbers when the content was relatively simple. Cheaper, Faster, Better The Indiana study shows that yesterday’s students (and today’s younger work- ers) clearly see video conferencing as often superior to face-to-face interaction. However, that study was conducted in 2005, which is before technological changes that have made video conferencing radically less expensive. Originally fueled by online applications like Skype and WebEx, the video con- ferencing marketing was already growing rapidly, jumping to $1.1 billion in the first half of 2010, an increase of 32% over the same period in the previous year, according to the market research firm Synergy.12 However, that market growth was about to be swamped by the proverbial “disruptive” technology. 11 Liu, Shijuan 12 Video Conferencing
  • 21. 22 In June 7, 2010, erstwhile Apple CEO Steve Jobs announced FaceTime at the 2010 Worldwide Developers Conference in conjunction with the iPhone 4. The integra- tion of FaceTime into every new iPhone and iPad has turned video conferencing from a specialized application to one that’s become integral to the way that many people (especially younger ones) communicate with one another. We project that the popularity of FaceTime and similar applications on other plat- forms will wear away the reluctance of the business world to use video in a wide variety of situations. Specifically, in sales, we see five primary uses: 1. Online events Sales teams often schedule special events at hotels in order to prospect for new customers. However, even when they’re successful, such events can be quite expensive, and when they’re sparsely attended, they can be a colos- sal waste of money. Online events allow sales teams to attract and communicate with decision-makers who have little time to travel to special events. It should be noted that this is already taking place in many firms with “webinars,” however many of these events do not yet use interactive video, although they may include video clips. 2. Sales proposal development With the traditional sales process, proposal writing often requires the involvement of multiple people inside the sales rep’s organization, many of whom are likely to be located at a different facility and may be too busy to participate fully. While a sales rep can try to coordinate the proposal writing using e-mail and voice mail, numerous problems are inevitable. Video conferencing provides a way to keep various members of the team in- volved in the writing process without requiring travel. 3. Sales training Interactive video is already widely implemented as a training vehicle for software applications. In the future, however, the primary reason to use interactive video in sales training will be (especially as more sales activity moves online) the ability to be “fluent” using interactive video. Such fluency is only possible if training is conducted in the same environment in which it will be utilized. 4. Presentations and demonstrations While many presentations will still involve “slides,” salespeople will increasingly use interactive video tools to add to the experience. In some cases, this might involve FaceTime-like interaction and in others the use of interactive video to demonstrate product features. 5. Customer service Representatives will be able use live video feeds to help customers having specific problems with specific products. The customer service rep will demonstrate in a “here... do this...” manner rather than the “locate the red knob beside the third blue light on the left of the red switch and turn it side- ways...” circumlocutions that are common in customer service today.
  • 22. 23 Conclusion By 2023, the majority of B2B selling activity will take place online. That’s already the case with commodity products, of course. Most businesses order everything from office equipment to airplane tickets online. What will be different is that the sales of non-commodity B2B products and ser- vices – the kind of offering that requires a sales professional to develop and close an opportunity – will be conducted online as well. A similar situation existed in the early years of email, before it supplanted business letters and internal memoranda as the primarily vehicle for writ- ten business communications. As late as the early 1990s, it was consid- ered gauche in some circles to use email for important business commu- nications. Anything that was really important, or intended for somebody really important, was presented in hard-copy, on letterhead. Today, of course, email no longer carries a stigma; if anything, the re- verse is true and hard-copy communications are considered second rate because they can be lost, they can be misrouted, and they create an additional burden for the reader who would like to respond. (There’s no “REPLY” key on a physical piece of paper.) And in fact, that’s what appears to be taking place in the selling arena. Innovative companies are beginning to use the technology to create a selling and buying environment that, far from being poor imitation of face-to-face meetings, actually has major advantages, similar to the ad- vantages that email has over hard-copy business letters. In other words, interactive video (aka video conferencing) is poised to become a tool that’s second nature in most sales environment, as well as throughout the rest of the business world. Summary: • Online meetings have major cost advantages over face-to- face meetings. • Video conferencing is as good as face-to-face meeting for some business purposes. • Until recently, video conferencing has faced barriers to its adoption. • Younger workers find video conferencing more effective than face-to-face meeting for some purposes. • FaceTime has become very common among consumers and businesspeople. • Common uses will be online events, sales proposals, training, demonstrations, and customer service. • A majority of selling activity will take place online with interactive video as one of many tools.
  • 23. 24 Projection 5 Social Networking will supplant cold calling While cold calling remains a mainstay of sales training programs and many selling business models, we believe that it is already becoming less effective as a lead qualification mechanism. We believe that, despite improvements in the technology that automates various aspects of the cold-calling process, cold calling will continue to be less effective. Cold Calling Is Increasingly Ineffective Classic cold calling consists approaching prospective customers or clients via telephone when those clients are not expecting such an interaction. According to the current Wikipedia entry on “cold calling,” the word “cold” is used “be- cause the person receiving the call is not expecting a call or has not specifically asked to be contacted by a salesperson.” Prior to the ubiquitous use of voice mail, making a successful cold call to a decision-maker entailed talking to various underlings and gatekeepers who would then “put the call through” or, alternatively, placing the call when the decision-maker would answer his or her own phone. Today, almost all companies use some form of voice mail, which provides an automatic and relentless gatekeeper for most decision-makers, especially when combined with caller ID. Sales technology firms have come up with several technologies to overcome the barrier of voice mail. For example, there are many services available today that will dial many numbers simultaneously and hand off the call to a sales rep when a human voice is detected. However, there has also been a growth in the number of decision-makers, espe- cially among younger executives, who no longer use voice mail and only take calls from numbers that their mobile phone recognize.13 13 Colvin, Jill.
  • 24. 25 Government Regulation Growing There has also been persistent pressure from consumers and business- people alike to reduce the number of cold calls. For example, within the European Union, member states are now required to issue laws that prohibit general cold calling, while in the UK, it is now unlawful to transmit an automated recorded message for direct marketing purposes via a telephone, without prior consent of the subscriber. Similarly, the Republic of Ireland has an index of numbers that cannot be called for the purposes of cold calls and/or sales and advertising, and an unsolicited marketing call to a such a number is a criminal offense. Cold calling remains legal in the United States. However, the Fed- eral Trade Commission (FTC) manages a “Do Not Call List” which has curbed unsolicited telemarketing to land lines but increased the amount of cold calling to mobile phones. It is only a matter of time before consumer pressure curbs cold calling to mobile phones, par- ticularly since the recipient is, in many cases, paying for the connect minutes. Overall, we see customers being less likely to accept unsolicited calls and more likely to press governments to restrict and eliminate them. Conclusion As of this writing, over a billion people have Facebook accounts.14 While not all of these accounts are active, a billion is well over 10% of the people alive today and comprises nearly everyone in the busi- ness world, at least in the United States. The business-oriented social network LinkedIn has well over 100 million members, also comprising most of the business world.15 At the same time, social networking is rapidly becoming an integral part of the business world in general, and the sales world in particu- lar. The CRM analyst and consultant Barton Goldenberg, for example, notes that B2C companies are already heavily involved in developing customer relationships using social media and believes that B2B com- panies should and will be investing as well in order to have “ up-to- the-minute customer knowledge” and the ability to provide “ support from anywhere, anytime.”16 We project that social networking will provide the main vehicle for lead generation, largely replacing cold-calling. Because contacts through social media are less anonymous, we believe that “hunters” will need to develop new skills in order to fully exploit the new technology. Summary: • Voice mail is making cold calling increasingly difficult. • Governments are increasingly putting restrictions on cold calling. • Social media is rapidly growing in popularity. • The use of social media will replace cold calling for lead generation. 14 Grandoni, Dino. Facebook Has 1 Billion Users. The Huffington Post. (October 4, 2012) 15 LinkedIn’s astonishing growth: By the numbers. The Week. (March 24, 2011) 16 Goldenberg, Barton. Press Release Announcing New Book. ISMguide.com (April 14, 2008)
  • 25. 26 Howard P. Stevens Howard Stevens is Chairman of Chally Group Worldwide. Mr. Stevens specializes in leadership development, succession planning, customer and market analysis, and sales benchmarking. He is the creator of the original sales product lifecycle classifications and designed the major 5-year longitudinal study of leadership develop- ment for the U.S. Department of Defense and NASA. A licensed clinical psychologist, he is also known for his research and programs to develop a professional sales curriculum at the university level. With diversified interests, he is the author of several books on sales and management (pub- lished in multiple languages) including Achieve Sales Excellence, The Quadrant Solution and Selling the Wheel. He has written many articles and is a frequent speaker and radio and television guest. His World Class sales benchmarks program has been presented over 500 times across 30 coun- tries for corporations, trade associations, govern- ment agencies, and universities. He has been a guest on CNN, Bloomberg USA, National Public Radio, Radio Free America, and other business- based programs. Mr. Stevens also taught “World Class Sales” benchmarks at the Columbia Univer- sity Graduate School of Business and other uni- versities, and serves on the Sales Advisory Board for Ohio University and the Foundation Board of Wright State University. Geoffrey James Geoffrey James writes the world’s most popular sales-oriented blog, “Sales Source on Inc.com.” Previously named “Sales Machine” and hosted on CBS, Geoffrey’s blog won awards from both the Society of American Business Editors and Writers and the American Society of Business Publication Editors. Unlike other sales blogs, Sales Source on Inc.com is 100% independent. Geoffrey doesn’t do sales training and he doesn’t do sales consulting. That frees him to present his readers with the very best ideas from the very best sales experts and executives. To get updates, sign up for his news- letter or the @Sales_Source Twitter feed. In addition, Geoffrey has published hundreds of articles in dozens of national magazines, includ- ing Men’s Health, Wired, Brandweek, Technology Marketing, and Selling Power magazine. About Chally A global leadership and sales potential and performance measurement firm, Chally Group Worldwide utilizes our industry leading research, predictive analytics and advisory services to ensure our clients have the vital information to minimize risk associated with making critical talent management decisions relating to selection, alignment, development and succession planning. With over 38 years of experience, Chally provides tools in more than 24 languages across 49 countries.
  • 26. © Copyright Chally Group Worldwide 3123 Research Blvd Dayton, OH 45420 937.259.1200 800.254.5995 www.chally.com Please Recycle