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Megatrends:
Shaping the Future of Sales
#SalesSummit #DF15
Lareina Yee
Partner, McKinsey & Company
Lareina_Yee@mckinsey.com
@Lareina Yee https://www.salesforce.com/sales-summit/
#SalesSummit #DF15
Today
Megatrends  Customer behaviors  Imperatives for sales executives
Our perspective is based on research with sales leaders across
industries
#SalesSummit #DF15
Companies averaging
High-tech
Industrial
Telecom
Healthcare/
pharma
Financial
services
Other leaders
Consumer
products
Basic
materials
$31B
Revenues
$47B
Market cap.
86,000
Employees
#SalesSummit #DF15
Megatrends
TECHNOLOGY
The new ABC of IT
Hyperconnectivity
Interaction Automation
USER-CENTRIC
Me + free + easy
p2p + online DESIGN THINKING
Using customer input
from sales & marketing
into engineering
DEMOGRAPHICS
New pockets of growth
Shifting of the guard
SOFTWARE CHANGING
EVERYTHING
Software eating the world
ECONOMICS
Share
eCommerce
Falling cost of experimentation
The new ABC of IT…
#SalesSummit #DF15
Analytics
Number of connected devices
per employee in 2014
Percentage of all server
workloads currently virtualized
Amount of data
enterprise has today
…Changes who is the buyer, Allows customers
to signal intent, and Buyers to collaborate
1 2
Byod Cloud
Used to access business
applications are consumer-owned
Amount Cloud Services industry
will reach by the end of 2015
Companies will spend on big
data investments in next 5 years
$232 billion
750 – 1,000TB 3.3 devices
40% of devices
60%
$180 billion
3
Hyperconnectivity
#SalesSummit #DF15
“The Internet of Things . . .
will change everything –
including ourselves”
– Dave Evans,
Cisco’s chief futurist
“Software is eating much of the
value chain of industries that are
widely viewed as primarily existing
in the physical world”
– Marc Andreessen
Number of connected devices
2000 2011 2020
50B
10B
200M
…Providing customers/sellers
more contextual information
3rd Era – Automating interaction
#SalesSummit #DF15
INDUSTRIALIZATION IT ENABLEMENT
COLLABORATION
ENABLEMENT
…To unleash new sales productivity
• Production • Transaction • InteractionWORKERS
• Capital-intensive
• Repeatable /
predictable
• Unstructured work /
collaborationTASKS
• Physical • Structured information
• Unstructured information
and “exhaust” dataFLOW
KEY
DRIVERS
• EOS
• Specialization
• BPR
• Automation
• Agility / self-organizing
• Transparency (PM, KM)
Me, Free and Easy
#SalesSummit #DF15
. . . Raises new expectations for how customers
want to be served, and in what cycle time
Auto dealers have been exposed to an unprecedented amount of change
Online information sources
Average time spent per
purchase, in hours
Show room traffic
Average # of dealers visited
per purchase
Digital media spend
Share of dealer marketing
spend for online media, in
percent
14
5
~3x
10 years
ago
Today
2
4 0.5x
10 years
ago
Today
33
7
10 years
ago
Today
~5x
B2B is P2P and online
65% of organizations are engaged in online communities
#SalesSummit #DF15
. . . Turning traditional ways we buy on its head
Products designed
with selling
experience in mind
Value oriented and
consultative mindset
Focus on outcomes,
not just technology/
product
Analyze usage
patterns
Design thinking approach…
#SalesSummit #DF15
…can make selling process a delightful experience
The proliferation of software into every industry…
#SalesSummit #DF15
…requires technical savviness in the sales process
Enabling product delivery
as a service
Streaming music
and video services
Digital marketing
solutions
Changing non-SW
industries
Home: SW powered
lightbulbs
Healthcare:
Telemedicine,
Personalized drugs
Auto: Remote repairs
…many more
Software
changing
everything
Falling experimentation costs…
#SalesSummit #DF15
“Experimentation is the
new planning”
– FastCompany
EA was able to increase
online sales of SimCity 5
by over 40% using
promotion testing
A/B TESTING
…Allows continuous refinements to the selling model
EVERYTHING AS A SERVICE
Over 150,000 servers
4 million registered freelancers
Over 34,000 cities
Almost 1 million users
Over 2,400 skills listed
192 countries
Over 500,000
listings worldwide
The growth of the sharing economy…
#SalesSummit #DF15
…Creates a shift towards selling services vs. products
Amazon your eCommerce . . .
129
-94%
2,143
112
100
12-16%
Multichannel
retailers
116
Amazon
Category depth
Avg. number of SKUs /
category (5 categories)
100 items
Price index1 vs. Amazon.com
2013
Experience rating
American Customer
Satisfaction Index 2013
88%
72%
83%
77%
81%
80%
79%
#SalesSummit #DF15
Triple threat . . . why not buy all goods this way?
Assortment PriceExperience
New pockets of growth are emerging…
#SalesSummit #DF15
Small
Large
Mega
Global rising middle class will drive
the next wave of growth . . .
By 2025 . . .
Amount needed in additional
global investments each year
China telecom and transportation
share of wallet will grow
New cities in China with 1M+ people –
Europe has 35 today
Percentage of new urban consumers
emerging cities will have globally
$10T
3x
220
60%
…And companies will need Go-to-Market agility
Exit Boomers, enter Millennials…
Shifting of the guard
#SalesSummit #DF15
11% visit a social networking
site several times a day
26% visit a social networking
site once a day
30%OF BOOMERS USE A SOCIAL
NETWORKING SITE
50%
19% visit a social networking
site several times a day
29% visit a social networking
site once a day
OF GEN XERS USE A SOCIAL
NETWORKING SITE
75%
29% visit a social networking
site several times a day
26% visit a social networking
site once a day
OF MILLENNIALS USE A
SOCIAL NETWORKING SITE
New generation of
workers, born with the
Internet, came to age
with social networks
…Sales force demographics is changing – and the
new generation has different skills and expectations
SOCIALMEDIA
How are enterprise buyer behaviors changing?
#SalesSummit #DF15
Empowered and Digital
• Let me search
• Know me before I meet you
• Meet me where it matters
• All channels, all the time
Let me search . . .
Q. How important is online research
to your buying decision?
% of respondents
44
Not so important
100%
Important - online research is
one of many aspects
Extremely important –
I make my decision solely
based on online research
27
5
Highly important –
online research is key to
my decision making process
23 Top three most valuable
features during online
research
 Product comparisons
 Pricing information
 Product reviews/customer
testimonials/case studies
#SalesSummit #DF15
> 90% of customers find online research
important in making buying decisions
Know me before I meet you…
#SalesSummit #DF15
Top of
mind
concerns
Service
satisfaction
rating Recent
Technology
trends
Last
interaction
Most
recent ticket
opened
B2B decision makers using social
networks for business purposes
Use
Use
Use
34% Use
74%
42%
39%
IDENTIFY BUY
Digital / social
enables more efficient
and effective aftersales
services
Low channel
costs revolutionize
GTM approaches
New digital sales tools
offering new opportunities
35% of B2B pre-
purchase activities are
digital / social
Online is second
most important source
of information for B2B
customers
TRIGGER
Meet me where it matters . . .
#SalesSummit #DF15
…Embrace the Customer Decision Journey (CDJ)
All channels, all the time . . .
#SalesSummit #DF15
Customers use on average
6 different channels
for prospecting
65% get frustrated
when they’re presented with
inconsistent experiences
through different channels
Online self-serve is 2nd most preferred way to buy IT
Q. How do you prefer to buy new IT?
% of respondents
Adobe moved its marquee product online
with Creative Cloud, with over >1.4m
Creative Cloud subscribers in 2014
“Customers don't have to come through us,
there is no reason why they should buy through
a reseller”
– Adobe reseller
Don’t forget the online channel
On-the-ground sales rep
from VAR, SI or Distributor
100%
Over the phone
Brick and mortar store
17
On-the-ground sales rep
from vendor
11
Online self-serve
15
25
31
#SalesSummit #DF15
Digitize your sales and channel partner models
No more swim lanes
Use data as a basis of competitive advantage
Imperatives for sales executives
Digitize the experience
#SalesSummit #DF15
• Word of mouth
• Online research
• Recommendations/
criticisms
• Traditional advertising
• Direct marketing
• Sponsorship
• Store
experience Follow your Customers
through their journey
Digital innovation at
every step
Company
Marketing
Customer
Marketing
Previous
experience
F2F contact
Buy
22
5
42
Evaluate
26
11
26
Consider
39
28
12
31
37
27
New accounts /
initial sales
Early-life /
onboarding
Billing
and care
Collections
Loyalty /
retention
Life events
Up-sales /
cross-sales
… yet channel management is ranked in bottom
Wake up the channel
Indirect is a crucial sales driver
% of sales going through indirect
% of respondents who agree that they apply
best practices in this domain
40
43
39
44
49
52
53
53
54
62
51
55
58
56
65
67
66
66
64
72
Talent mgt
Tools and information systems
Channel partner management
Innovation and product mgt
Strategic marketing
Tactical marketing
Performance mgt
Price and contract mgt
Org design and effectiveness
GTM model design
Entire industry
Top quartile performers
95%
Long
Steel
74%
IT 52%
Auto
parts
90%
Agric.
equipment
45%
Telecom
(B2C)
Capability Average
#SalesSummit #DF15
n
No more swim lanes
#SalesSummit #DF15
CIO
CMO
• Whitespace
opportunity hunting
• Micro segmentation
• Sales process
instrumentation
• Coverage optimization
Analytic
sales
CSO
Channel
Routes
to market
Direct
Online
Inside
Basic
customer
support
Customer support
evolves to customer
success to
maximize CLV
Customer
success evolves
to partnership
OPEX
AS-A-SERVICE
MODELS
FLEXIBLE
CONSUMPTION
PAY-AS-
YOU GO
CAPEX
ONE-TIME
TRANSACTION
PRODUCTS
COMMUNITY
INFRASTRUCTURE
PLATFORMS
INFORMATION
EXCHANGES
ENABLEMENT
API
DATAANALYTICS
ECOSYSTEM
Broaden your value proposition
#SalesSummit #DF15
Use Data For Your Competitive Advantage
#SalesSummit #DF15
Better tools
Next product to buy
CRM recommendation
based on customers’
needs and company’s
strongest value proposition
Call planning
CRM system pre-books
50% of reps’ time
Trigger points
customer profiles predict trigger points
Better resource allocation
Growth potential
LOW HIGH
LOW HIGH
Market share
HIGH
LOW
LOW HIGH
Market share
Growthpotential
Micromarket
potential
Summary and final thoughts…
#SalesSummit #DF15
• The trends are clear
• Your customers’
expectations are shifting
• Be ready to adapt
Staying connected
#SalesSummit #DF15
McKinseyonMarketingandSales.com
Lareina_Yee@mckinsey.com
@LareinaYee
Thank you
Salesforce Sales Leadership Community
www.salesforce.com/salesleadership
#SalesSummit #DF15

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Megatrends for sales organizations

  • 1. Megatrends: Shaping the Future of Sales #SalesSummit #DF15 Lareina Yee Partner, McKinsey & Company Lareina_Yee@mckinsey.com @Lareina Yee https://www.salesforce.com/sales-summit/
  • 2. #SalesSummit #DF15 Today Megatrends  Customer behaviors  Imperatives for sales executives
  • 3. Our perspective is based on research with sales leaders across industries #SalesSummit #DF15 Companies averaging High-tech Industrial Telecom Healthcare/ pharma Financial services Other leaders Consumer products Basic materials $31B Revenues $47B Market cap. 86,000 Employees
  • 4. #SalesSummit #DF15 Megatrends TECHNOLOGY The new ABC of IT Hyperconnectivity Interaction Automation USER-CENTRIC Me + free + easy p2p + online DESIGN THINKING Using customer input from sales & marketing into engineering DEMOGRAPHICS New pockets of growth Shifting of the guard SOFTWARE CHANGING EVERYTHING Software eating the world ECONOMICS Share eCommerce Falling cost of experimentation
  • 5. The new ABC of IT… #SalesSummit #DF15 Analytics Number of connected devices per employee in 2014 Percentage of all server workloads currently virtualized Amount of data enterprise has today …Changes who is the buyer, Allows customers to signal intent, and Buyers to collaborate 1 2 Byod Cloud Used to access business applications are consumer-owned Amount Cloud Services industry will reach by the end of 2015 Companies will spend on big data investments in next 5 years $232 billion 750 – 1,000TB 3.3 devices 40% of devices 60% $180 billion 3
  • 6. Hyperconnectivity #SalesSummit #DF15 “The Internet of Things . . . will change everything – including ourselves” – Dave Evans, Cisco’s chief futurist “Software is eating much of the value chain of industries that are widely viewed as primarily existing in the physical world” – Marc Andreessen Number of connected devices 2000 2011 2020 50B 10B 200M …Providing customers/sellers more contextual information
  • 7. 3rd Era – Automating interaction #SalesSummit #DF15 INDUSTRIALIZATION IT ENABLEMENT COLLABORATION ENABLEMENT …To unleash new sales productivity • Production • Transaction • InteractionWORKERS • Capital-intensive • Repeatable / predictable • Unstructured work / collaborationTASKS • Physical • Structured information • Unstructured information and “exhaust” dataFLOW KEY DRIVERS • EOS • Specialization • BPR • Automation • Agility / self-organizing • Transparency (PM, KM)
  • 8. Me, Free and Easy #SalesSummit #DF15 . . . Raises new expectations for how customers want to be served, and in what cycle time
  • 9. Auto dealers have been exposed to an unprecedented amount of change Online information sources Average time spent per purchase, in hours Show room traffic Average # of dealers visited per purchase Digital media spend Share of dealer marketing spend for online media, in percent 14 5 ~3x 10 years ago Today 2 4 0.5x 10 years ago Today 33 7 10 years ago Today ~5x B2B is P2P and online 65% of organizations are engaged in online communities #SalesSummit #DF15 . . . Turning traditional ways we buy on its head
  • 10. Products designed with selling experience in mind Value oriented and consultative mindset Focus on outcomes, not just technology/ product Analyze usage patterns Design thinking approach… #SalesSummit #DF15 …can make selling process a delightful experience
  • 11. The proliferation of software into every industry… #SalesSummit #DF15 …requires technical savviness in the sales process Enabling product delivery as a service Streaming music and video services Digital marketing solutions Changing non-SW industries Home: SW powered lightbulbs Healthcare: Telemedicine, Personalized drugs Auto: Remote repairs …many more Software changing everything
  • 12. Falling experimentation costs… #SalesSummit #DF15 “Experimentation is the new planning” – FastCompany EA was able to increase online sales of SimCity 5 by over 40% using promotion testing A/B TESTING …Allows continuous refinements to the selling model
  • 13. EVERYTHING AS A SERVICE Over 150,000 servers 4 million registered freelancers Over 34,000 cities Almost 1 million users Over 2,400 skills listed 192 countries Over 500,000 listings worldwide The growth of the sharing economy… #SalesSummit #DF15 …Creates a shift towards selling services vs. products
  • 14. Amazon your eCommerce . . . 129 -94% 2,143 112 100 12-16% Multichannel retailers 116 Amazon Category depth Avg. number of SKUs / category (5 categories) 100 items Price index1 vs. Amazon.com 2013 Experience rating American Customer Satisfaction Index 2013 88% 72% 83% 77% 81% 80% 79% #SalesSummit #DF15 Triple threat . . . why not buy all goods this way? Assortment PriceExperience
  • 15. New pockets of growth are emerging… #SalesSummit #DF15 Small Large Mega Global rising middle class will drive the next wave of growth . . . By 2025 . . . Amount needed in additional global investments each year China telecom and transportation share of wallet will grow New cities in China with 1M+ people – Europe has 35 today Percentage of new urban consumers emerging cities will have globally $10T 3x 220 60% …And companies will need Go-to-Market agility
  • 16. Exit Boomers, enter Millennials… Shifting of the guard #SalesSummit #DF15 11% visit a social networking site several times a day 26% visit a social networking site once a day 30%OF BOOMERS USE A SOCIAL NETWORKING SITE 50% 19% visit a social networking site several times a day 29% visit a social networking site once a day OF GEN XERS USE A SOCIAL NETWORKING SITE 75% 29% visit a social networking site several times a day 26% visit a social networking site once a day OF MILLENNIALS USE A SOCIAL NETWORKING SITE New generation of workers, born with the Internet, came to age with social networks …Sales force demographics is changing – and the new generation has different skills and expectations SOCIALMEDIA
  • 17. How are enterprise buyer behaviors changing? #SalesSummit #DF15 Empowered and Digital • Let me search • Know me before I meet you • Meet me where it matters • All channels, all the time
  • 18. Let me search . . . Q. How important is online research to your buying decision? % of respondents 44 Not so important 100% Important - online research is one of many aspects Extremely important – I make my decision solely based on online research 27 5 Highly important – online research is key to my decision making process 23 Top three most valuable features during online research  Product comparisons  Pricing information  Product reviews/customer testimonials/case studies #SalesSummit #DF15 > 90% of customers find online research important in making buying decisions
  • 19. Know me before I meet you… #SalesSummit #DF15 Top of mind concerns Service satisfaction rating Recent Technology trends Last interaction Most recent ticket opened B2B decision makers using social networks for business purposes Use Use Use 34% Use 74% 42% 39%
  • 20. IDENTIFY BUY Digital / social enables more efficient and effective aftersales services Low channel costs revolutionize GTM approaches New digital sales tools offering new opportunities 35% of B2B pre- purchase activities are digital / social Online is second most important source of information for B2B customers TRIGGER Meet me where it matters . . . #SalesSummit #DF15 …Embrace the Customer Decision Journey (CDJ)
  • 21. All channels, all the time . . . #SalesSummit #DF15 Customers use on average 6 different channels for prospecting 65% get frustrated when they’re presented with inconsistent experiences through different channels
  • 22. Online self-serve is 2nd most preferred way to buy IT Q. How do you prefer to buy new IT? % of respondents Adobe moved its marquee product online with Creative Cloud, with over >1.4m Creative Cloud subscribers in 2014 “Customers don't have to come through us, there is no reason why they should buy through a reseller” – Adobe reseller Don’t forget the online channel On-the-ground sales rep from VAR, SI or Distributor 100% Over the phone Brick and mortar store 17 On-the-ground sales rep from vendor 11 Online self-serve 15 25 31
  • 23. #SalesSummit #DF15 Digitize your sales and channel partner models No more swim lanes Use data as a basis of competitive advantage Imperatives for sales executives
  • 24. Digitize the experience #SalesSummit #DF15 • Word of mouth • Online research • Recommendations/ criticisms • Traditional advertising • Direct marketing • Sponsorship • Store experience Follow your Customers through their journey Digital innovation at every step Company Marketing Customer Marketing Previous experience F2F contact Buy 22 5 42 Evaluate 26 11 26 Consider 39 28 12 31 37 27 New accounts / initial sales Early-life / onboarding Billing and care Collections Loyalty / retention Life events Up-sales / cross-sales
  • 25. … yet channel management is ranked in bottom Wake up the channel Indirect is a crucial sales driver % of sales going through indirect % of respondents who agree that they apply best practices in this domain 40 43 39 44 49 52 53 53 54 62 51 55 58 56 65 67 66 66 64 72 Talent mgt Tools and information systems Channel partner management Innovation and product mgt Strategic marketing Tactical marketing Performance mgt Price and contract mgt Org design and effectiveness GTM model design Entire industry Top quartile performers 95% Long Steel 74% IT 52% Auto parts 90% Agric. equipment 45% Telecom (B2C) Capability Average #SalesSummit #DF15
  • 26. n No more swim lanes #SalesSummit #DF15 CIO CMO • Whitespace opportunity hunting • Micro segmentation • Sales process instrumentation • Coverage optimization Analytic sales CSO Channel Routes to market Direct Online Inside
  • 27. Basic customer support Customer support evolves to customer success to maximize CLV Customer success evolves to partnership OPEX AS-A-SERVICE MODELS FLEXIBLE CONSUMPTION PAY-AS- YOU GO CAPEX ONE-TIME TRANSACTION PRODUCTS COMMUNITY INFRASTRUCTURE PLATFORMS INFORMATION EXCHANGES ENABLEMENT API DATAANALYTICS ECOSYSTEM Broaden your value proposition #SalesSummit #DF15
  • 28. Use Data For Your Competitive Advantage #SalesSummit #DF15 Better tools Next product to buy CRM recommendation based on customers’ needs and company’s strongest value proposition Call planning CRM system pre-books 50% of reps’ time Trigger points customer profiles predict trigger points Better resource allocation Growth potential LOW HIGH LOW HIGH Market share HIGH LOW LOW HIGH Market share Growthpotential Micromarket potential
  • 29. Summary and final thoughts… #SalesSummit #DF15 • The trends are clear • Your customers’ expectations are shifting • Be ready to adapt
  • 32. Salesforce Sales Leadership Community www.salesforce.com/salesleadership #SalesSummit #DF15