Why the industrial future is forcing sales organizations to change

Table of Contents

Companies are being acquired, merged, and going bankrupt at an ever-increasing rate (McKinsey). At the same time, we see accelerating climate change that forces industrial industry to make major changes. Several changes have already taken place, but many seem to miss the sales organization’s key position in enabling the industrial future.

In this article, we will explore what changes have taken place and how they force sales organizations to change the way they work. In a separate blog post, you will be able to delve deeper into what changes need to be made.

Background to the industrial future

Industrial Future in Sweden

During the financial crisis in 2009, the Swedish industrial sector was considered obsolete and service companies should instead be prioritized. Since then, a new focus has been placed on lifting the Swedish industrial companies as it is significant for jobs, exports, and climate change. The Government has decided on a strategy for the green and digital transition and the initiative has come to be called “The Industrial Future“.

Sweden is leading the way

Sweden is Europe’s most innovative country according to the “European Innovation Scoreboard 2022”. We are at the forefront of the industrial transition and the number of companies choosing to produce in Sweden has increased in recent years. Some of the reasons have been a well-educated workforce, proximity to subcontractors, our research and innovation system, access to fossil-free electricity, high quality, and flexibility in production. The ability to work with sustainability as a driving force in business and product development is increasing sharply in importance. Sweden gains a high level of competitiveness through the efficient use of resources in combination with the development of leading and sustainable production.

We need to move from selling products to really selling solutions. With that, we must also dare to try new things. The Swedish industrial sector can become an even stronger player when it comes to creating business value and enabling a successful green and digital transition.

Changes in the industrial buyer

For the industrial seller, customer dialogues are changing drastically and the questions from customers have changed significantly. Four major changes have taken place:

  1. Moving from cost savings to increased value creation

Previously, buyers had a strong focus on minimizing operating costs, which led to many companies having maintenance debts. Now companies are starting to realize that they cannot save themselves to death and thus many have begun to look ahead instead of just cutting costs. Today, the seller in industrial companies needs to understand the customer’s goals and explain the value that the solution creates for the business. It is not enough to communicate the price tag and try to give discounts.

  1. More educated customers and greater complexity in decision making

The buyer today has access to more information and has often completed a large part of the purchasing process before contacting the seller. According to a study from HBR (Harvard Business Review), an average of 7 people participate in a purchase compared to about 2 people 20 years ago. This has contributed to increased purchasing complexity. Today, sellers need to find effective ways to stay “top of mind” with their potential customers and decision-makers.

  1. Extended turnkey commitments

In recent years, there seems to be a trend where companies are cutting back on the number of suppliers to increase understanding and strengthen the relationship with a single supplier. Expertise and flexibility are two words that have become more important to customers.

  1. Changing objectives

Previously, it was common for buyers to be measured at the lowest price and the evaluation of suppliers was based on that objective. Based on the changes in the operating environment, buyers have increased their demands for circularity and reducing emissions. In addition, other criteria have been added, for example, diversity work has been given higher priority on the agenda.

Trends affecting the sales and marketing organization

In the industrial sector, sales and marketing departments will need to work in other ways. Largely because of the major trends that are currently forcing the market to act differently.

The green transition: Reduced CO2 emissions

A strong trend among industrial companies is the external pressure to reduce carbon dioxide emissions. This is primarily a consequence of the global journey of change humanity is undergoing. The reason why this is a strong trend in the Swedish industrial sector has to do with the fact that Sweden is a country that is considered to be at the forefront. According to a report from PWC, almost half of about 400 Swedish companies stated that their interest in sustainability work has increased sharply. One example is SSAB, which is accelerating the development of its completely fossil-free steel by 15 years.

Salespeople today increasingly need to understand a customer’s long-term goals and create a partnership along the way. This leads to other issues in the needs analysis and increased collaboration to develop tomorrow’s solutions together.

Increased e-commerce & digitalization

E-commerce is an important part of companies’ work with customer segmentation. Both to be able to improve the shopping experience by constantly being able to see stock balance and improve availability. But also to be able to let salespeople work with high-priority large customers without risking losing sales with smaller customers.

Digitalization is about the amount of sales support that the sales organization has access to today. A major benefit of digitalization is being able to make more data-driven decisions instead of taking chances through gut feeling. For the individual seller, this provides the conditions for working smarter and more efficiently. The development continues and with this, systems such as CRM, Marketing Automation, and ERP become even better. There are also new sales support tools such as prospecting tools, digital sales rooms, call support, and various AI tools to increase the effective sales time for the seller.

Salespeople need to understand which customers they should prioritize investing their time in and which customers they need to switch to a higher degree of self-service. They also need to be able to quickly identify the potential of new customers coming in via e-commerce.

Equality, diversity, and inclusion

The industrial sector has a history of being a male-dominated profession with a lack of diversity. Within the sales departments, the situation often looks even worse. The industry has managed to attract more women but they are still underrepresented with a 25:75 distribution (according to IF Metall). In B2B sales, the distribution is approximately 27:73 and we can make a guess based on the figures that women are also greatly underrepresented in industrial sales organizations.

Gender equality, diversity, and inclusion are areas that are constantly high on Sweden’s and companies’ agendas. Especially since it has been shown that groups with scattered experiences can achieve better results than groups with similar experiences.

Industrial companies need to become better at attracting women at all levels. A critical area is sales, which is already a male-dominated profession.

Competence development & recruitment

The green transition, digitalization, smarketing, and gender equality workplace demands not only on the organizations but also on the individuals. When new ways of doing work are introduced, it requires that employees either learn to work in a new way or are moved to another part of the business. Lifelong learning becomes a central part of every employee’s everyday life. Companies need to decide whether to recruit new employees, train existing ones or buy the skills externally.

The sales organization needs to realize that the skills the salesperson needs have changed and will continue to change. There needs to be a clear plan for developing existing employees and for what new type of skills need to be recruited into the company.

Smarketing in traditional companies

Cooperation between sales and marketing is becoming increasingly important. A survey done by Hubspot discovered that companies with a well-integrated sales and marketing function get 38% more business, make 27% faster 3-year growth, and achieve 208% higher revenue than organizations where sales and marketing do not collaborate.

LinkedIn is the world’s largest professional network with 900 million members in 200 countries. The platform is one of the most important channels for B2B companies and is not used nearly as much as it should. A survey from HubSpot has shown that companies that consistently work with social selling are 40% more likely to reach their revenue goals. The industrial sector has a lot to gain from starting to work even more with LinkedIn as a platform and above all through social selling.

The entire industry has major commercial gains to be made from the cooperation of the departments. For example, ABM (Account Based Marketing) work enables larger and more profitable business with companies that they previously failed to do business with.

Sales and marketing today need to start collaborating for real. Salespeople need to understand how to reach out and stay “top of mind” with their customers in the modern world. Digital networking and the importance of building a personal brand will be crucial going forward.

Challenges with today’s organization in sales

The traditional organization of sales organization in industrial companies has usually been divided into four different parts:

Key Account Manager (KAM) organization:

The traditional KAM organization usually focuses only on the largest customers and identifies potential based on these. No time is spent identifying other existing customers who have the potential to quickly develop into key accounts through the right focus.

The outdoor sales organization:

The sales reps usually process a high quantity of customers. This means that salespeople tend to spend more time on customers with established relationships, instead of identifying which customers have growth potential. Outdoor sellers often fail to build the new relationships required to reach growth potential. There are more “coffee and bun meetings” than value-creating meetings that generate business.

Inside sales organization:

Inside sales often becomes a reactive support organization that provides service to customers who “scream” the loudest. Often they have low knowledge of which customers should really be prioritized by the company.

Presale organization (product specialists/solution architects/project managers):

Product specialists often come in too late in the customer’s buying journey and sometimes rather act as “devil’s advocate” by telling them what is possible, and not (of what the seller has sold). They often have a high level of trust from customers and that trust is not used as much as it should.

What changes need to take place in the sales organization?

The most important thing is to create a more customer-oriented business. To a greater extent, the seller needs to sit at a “ready-made” table that is also set by several people. Therefore, the seller needs to understand all people’s needs, and priorities and create a common overall picture from the customer’s different points of view. At the same time, the seller needs to build trust in a convincing way and act as an advisor.

The need for customer follow-ups is increasing in order to identify achieved results in cooperation with the customer. Today, the job only begins when the contract is signed and the customer wants the supplier to contribute to the change. Without a good implementation, no results are created. Therefore, the seller and the customer need to evaluate the achieved results together by asking questions such as:

  • What are the concrete results and what is their significance from the point of view of business operations?
  • In what way has it contributed to streamlining operations?
  • What are the possible challenges and how do we solve them?

Producing value requires close collaboration between both parties where they complement each other’s expertise and go from being suppliers to partners for real.

From supplier to partner & from the seller to trusted advisor

To succeed in producing value and creating close cooperation, companies in the industrial sector need to take the step from being suppliers to becoming partners. Every single salesperson needs to go from being a salesperson to becoming a Trusted Advisor for real (see tables below).

The first table describes the difference between a company that is considered a supplier and a company that is considered a partner. The second table describes the difference at the individual level between a classic salesperson and a trusted advisor. The goal of both a company and an individual is to make the move from left to right in the two tables below.

Table 1

Table 2

Make sure you are ready for the future with Salesonomics:

The outside world places high demands on the industrial companies and the sales organization becomes an important enabler in the transition to the industrial future. Do you need help setting the sales strategy for the way forward?  Contact us at Salesonomics and we will guide you to the smartest solution. If you have come further in thought and need to recruit salespeople or train your existing salespeople, we can of course help you with that too.

 

Simon Blanche

Simon Blanche