Sunday, June 10, 2012

Is the era of the bag-carrying sales rep over? The future of sales in the technology industry

A couple of weeks ago, I attended the annual TieCon 2012 event - a technology oriented conference in the Bay Area which saw many distinguished speakers and up-and-coming leaders offer thought and opinion on the latest trends and what's ahead in technology. During this two day event, I observed that a panelist made a statement to the effect that the era of the bag carrying sales rep was over. I believe his reference was to the growing trend of the freemium  model whereby a product is given away for free with the potential to upsell follow-on premium services. The assumption is that customer acquisition costs are reduced because of the experiential component and the associated advantages of word of mouth, social and referral networks, viral marketing etc. What role then would sales play in the future if we were to gravitate to this business model? While the success of many companies at the conference and at large e.g. LinkedIn, Yammer, Box and even my children's Angry Birds and other game freemium apps lend credence to the panelist's statement, I thought of the major technology trends and market inflection points underway and how they would impact the Sales function overall.

First, the trends of the Freemium model and online marketing - let me address both together since they are related. The freemium model simply means that the evaluation phase of the sales cycle is accelerated and the salesperson is liberated to focus on the other components of the sales cycle like purchase and post-purchase. If the online marketing channel were to obviate the need for sales, the assumption then is that the sale is solely a transactional sale with no consultative component. In many ways, the sales effort or role is about creating extrinsic value for customers i.e. creating value beyond the product value alone. Even before the advent of online marketing, sales personnel had little role to play in a purely transactional sale, so how does online marketing now obviate the need for the sales component? I would actually expect the sales function to evolve to take advantage of the accelerated sales cycle and the opportunity to focus on the consultative component of the sale. Why? Because of the 'timeless' concept of the 'whole product' in technology, there will always be a need to help customers acquire and complete the remaining components of the 'whole product' that complete the freemium, online offering, base functionality product. Partnerships will need to be developed, knowledge needs to be added, services need to be assembled etc. Sales can continue to play a big role if they focus on the 'whole product' sale.

Second, the trend towards the simplification of IT - the premise that we have gone overboard in a bewildering array of features, tools and functionality at the expense of ease-of-use, usability and simplicity. Regardless of the target market segment, it seems that we offer a Swiss army like spread of tools to address a single specific need. This is manifesting itself in the increasing demand for the elegance of self-service applications and the demand for the simplicity of consumer apps like Facebook in the enterprise. On the trend towards simplicity, the development of base functionality by cloud providers to address a broad user base, the trend towards faster development cycles and iteration based on user experience and feedback etc., what might be the impact to the sales function? I would anticipate that the role of the sales function around customer engagement and customer intimacy would increase significantly given the ongoing need for customization and the feedback that would result from the iterative nature of this model. Again, the thinking I applied above to 'whole product' applies to this trend of the simplification of IT as well. Simplification will enable business agility but the demands of customization, iteration and solution completeness will engage sales deeply.

Third, the consumerization of the enterprise. The most evident impact of consumerization of IT is in the phenomenal popularity of consumer-centric mobile devices like the iPad and how users have brought their personal/consumer devices into the workplace and influenced IT to support and address this need. This is not a trend anymore but a reality! Self-service app stores in the enterprise is another trend. This is a broad topic so I'll address the trend of social media in the Enterprise. To the sales function, this manifests itself in three ways; (a) Building a social media reputation and presence proactively; (b) Seeking out social media forums to build 'social intelligence' on customers and establish newer touchpoints with customers and (c) Using social tools built for the enterprise to collaborate at new levels with colleagues/partners and accelerate knowledge sharing. This area of social media is probably the best impact to the sales function in terms of change and opportunity. I would expect the sales function to evolve and for successful sales personnel to quickly embrace these forums and tools because sales folks have long understood and used the power of leverage. Second, in published analysis of the profile of successful sales person, being 'social' is a key attribute - Why would successful sales people be behind in embracing social media?

Fourth, not the trend but the established momentum of cloud computing which refers to the momentum in the delivery of IT as a service leveraging resource sharing to achieve economies of scale. To the end user, the key promises are business agility and cost structure benefits. If you are in sales working for a service provider, your challenge is only how to maximize your time to take advantage of the massive opportunity. Of course, there is some change and education that needs to be done to win over skeptics but the market momentum is in your favor. If you are in sales selling traditional on-premise IT solutions to customers, then much change is to be expected. You will have a new channel to market - the service provider.

Fifth, Big Data. It looks like data got very big over the past year! I speak with humor because having worked in the storage industry for multiple years, the volume effect of data explosion is not new and was never looking small. However, what is new is the recognition of the other dimensions of big data such as data diversity and the promise of harnessing data to drive new business insights. When I worked in the storage industry, our top sales personnel took it upon themselves to monitor and understand the machine data that was generated by 'call-home' technology because they wanted to understand the impact to their customer's systems especially problem detection, resolution and account intelligence. What a concept! Big Data will be no different. Overall, the implication is Big impact to Sales. Sales personnel will need to accelerate their education on the newer insights into their customers and newer sales analytics tools that will shape salesforce structure, design and strategy.

The more things change, the more they stay the same. Sales has been about people selling to people - in past studies, trust and problem solving are cited among the top three factors of value that customers attribute to sales. There will be newer complimentary forums to build trust such as LinkedIn Groups but the golf course (or in my case, the squash courts) won't go away. Similarly, successful sales personnel have long understood the power of leverage. A top performing sales rep once told me that EVERYONE in the company worked for his account. This was not an arrogant view. Rather, my sales colleague understood the power of leveraging the entire company not just his immediate circle. So, good sales personnel will understand and add social selling tools to their arsenal. Remember, consultative selling? Before we move on to Sales 3.0, there will be newer and more bewildering options available to customers through online channels and newer business models. This means that sales will (continue to) have a big role to play in consultative selling and adding value beyond the base product value available in freemium format, online channels and base functionality.

What will then be transformational changes? For one, the number of touch-points to the customer will increase dramatically. Furthermore, the touch-points to the customers will exist in multiple functions across the  selling company and will include partner touch-points such as cloud service providers. Therefore, the notion of sales having 'full customer ownership' will be flawed. Sales personnel who continue to prescribe to 'account ownership' will be challenged. There will be transformational change, for the better, to the sales-marketing traditional silos and misalignment. Through Big Data advancements, sales will have democratic access to market intelligence and will play a bigger role in strategy. Marketing will have much  more and direct access to the customer and previous inefficiencies in the customer information flow between sales and marketing will be much improved. Finally, much is being written about this but there is compelling evidence of the shift of power to the customer through social media and unprecedent access to information. I prescribe to the more balanced view that the era of sales-customer joint destinies is almost certainly upon us.


  1. Replies
    1. Thanks for reading and thanks for the kind words

  2. Great blog. I agree, the fundamental attribute of a good sales person will not change - if the client doesn't like you as a person, they won't be engaged in buying from you.
    Sales tools can speed up the sales cycle and provide more opportunities to engage with prospects. Less emphasis on sales, and more on education seems to be paying dividends.
    And I certainly agree with this comment "we have gone overboard in a bewildering array of features, tools and functionality at the expense of ease-of-use, usability and simplicity"...and many of those features are valued more by the developer than the customer!
    Gail La Grouw

    1. Thanks pregolfer for reading, the kind words and your specific thoughts. We are in agreement.