Industry executives and experts share their predictions for 2021. Read them in this 13th annual VMblog.com series exclusive.
2021 Predictions on the Future of B2B Pricing & Sales
By Greg Peters, Chairman, President and CEO, Zilliant
2020 has been quite a year. Never have we, in our
lifetimes, seen so much disruption to our personal and professional lives. The
pandemic, and all the offshoots from it, is both accelerating many trends
already set in motion as well as creating a whole new set of business
challenges.
Today, just one thing is certain. For business leaders,
those tasked with meeting the P&L goals of an organization, there is no
place to run and no place to hide. Entering 2020, it's not like winning in the
marketplace was easy. Massive shifts in customer expectations and competitive
requirements were already taking place a year ago. These included things like:
- Increasing competition in the form of new
online entrants, including Amazon
- Customer expectations for a B2C-like,
frictionless online buying experience
- Increasing cost volatility and the impact
of tariffs
The Covid-19 virus has only complicated these trends even
more. It has significantly impacted global supply chains, impacting inventory
availability worldwide. It has caused significant shifts in product mix for
some companies with some sectors seeing rapid growth and the opposite in
others. Similarly, sales channels were shifted literally overnight with the
rapid acceleration of ecommerce and minimal in-person interaction.
As we look forward, I think there are a few things we know.
First, we know the level of interconnectedness and interdependency of people
and organizations will continue this unpredictable B2B buying environment.
Second, we know customer interactions will continue to be increasingly digital
- forcing people, processes, and technology to continue to adapt. Finally, we
are seeing that people alone cannot scale in this world and organizations must
learn and embrace AI technologies.
Looking toward 2021 with these factors in mind and looking
at how quickly software and technology has evolved in the business world to
nearly reach parity with the consumer world, here are my predictions for the
future of pricing and sales in 2021.
Prediction No. 1: 50% of In-Person Sales
is Gone Forever
The impacts of the COVID-19
pandemic have heavily disrupted the classic sales channel balance between
inside and outside sales teams. eCommerce is now an essential channel with
companies racing to make it easier for customers to buy from them online,
inside sales teams quickly adjusted to performing their jobs from home, and
shops stayed open if deemed essential. The field sales reps did their best to
quickly adjust their normal jobs on the fly to be available to their customers
without being able to call on them in person.
According to McKinsey, "almost 90 percent of sales have moved to a
videoconferencing/phone/web sales model, and while some skepticism remains,
more than half believe this is equally or more effective than sales models used
before COVID-19."
Certainly, the sales landscape
has shifted quickly under the burden of COVID-19 disruption. Savvy company
leaders are adjusting in-step, utilizing predictive sales analytics to blend
inside and outside sales and better serve each customer.
However, once the pandemic
subsides, we will not be returning to the previous traditional sales mix. Bill
Gates recently predicted that 50% of business travel is gone forever. Not only
will sales travel follow the overall business travel prediction from Gates, but
also, companies are finding avenues to give their customers the frictionless
online buying experience they crave.
That's a tall order in the
highly tailored and often customer-specific nature of B2B sales. Thankfully, AI
is advancing rapidly to give customers a personalized experience that is
contextually relevant to their unique relationships with suppliers. As a
result, a large percentage of business will be transacting digitally, and with
increased efficiencies on both sides, shifting that business back to in-person
sales is not likely to happen.
Prediction: 50% of
in-person sales is gone forever. Companies will utilize predictive sales
analytics to enable outside sales reps to give accounts the white-glove
customer experience remotely while giving customers the personalized experience
they enjoy as consumers.
Prediction No. 2: Leading Companies Make
Significant Strides in Closing the Strategy-Execution Gap
For B2B companies to compete
and win, executives must have a means to tie their strategies to how sales
teams engage with customers through each interaction. Yet companies lack a
systematic, scalable way to do so.
If the company strategy is to
increase profitability and revenue, how should that impact prices and sales
decisions across various customer types, multiple channels, agreements,
regions, products, and much more? How should those actions change to meet
P&L goals as costs change, demand spikes or plummets, volume growth
stagnates, or new competitors sneak in?
Ideally, guidance reflecting
corporate strategy would be immediately disseminated across channels, and
tailored to all the various, and sometimes competing, market realities that can
be present at once across a business.
The example above is a notion
that business executives know well - closing the gap between corporate strategies and sales
actions. It is an oft-cited catchphrase, yet companies have yet to achieve a
means to translate strategy into action. Why? Because despite significant
investments in mobile, eCommerce and sales intelligence technology - a market
estimated to reach $5 billion1 by 2027 - companies still
lack a centralized, connected solution.
However, software, data science
and AI have made significant, pragmatic advances to address challenges in the complex and
dynamic B2B business landscape. The result being that it is possible to translate growth and profit
strategies into sales action. It just requires an inquisitive mind to discover the solution and
reimagine what's possible.
Prediction: Heading into 2021, given the urgency for business leaders
to deliver stellar business performance despite significant challenges, I
predict that leading companies will make significant strides in closing the
strategy-execution gap. We'll see companies increasingly adopt predictive sales
analytics and campaign management applications to generate sales growth
intelligence faster and bridge discrete strategies and systems to drive
specific actions across the entire customer lifecycle.
Prediction No. 3: Price Optimization &
Management Crosses the Chasm
One of the most oft-quoted facts about pricing - that a 1
percent improvement in price, assuming no loss of volume, increases operating
profit by 11.1 percent - is nearly 30 years old (Harvard Business Review,
October 1992). Yet, the software category of B2B price optimization and
management which emerged about one decade later, has not been widely adopted
despite its measurable financial benefits.
It's interesting to consider why. Over the
course of 20 years in the pricing space, I've made some broad observations. The
first reason is that everyone (and no one) owns the pricing function within a
company. The second reason is simple: Pricing is complicated. The third
reason is a perceived data barrier. A common misconception among company
leaders is that they do not have enough usable data. Despite these challenges,
most company leaders intuitively know that there's room for improvement with
respect to pricing. We agree, of course, that pricing is extremely important to
drive profitability, which the data supports.
However, both pricing
optimization and price management solutions have made significant advances in recent years.
Now, companies can empower pricing teams to simplify onerous price management
and administration tasks while delivering market-aligned dynamic pricing to
maximize margin or revenue.
Interestingly, the category is growing among
analysts in the space as well. In the 2018 IDC
MarketScape for Price Optimization & Management, the authors predict that "the use of price optimization
applications will grow." They cite a few reasons, some of the most interesting
being because, "value is demonstrable and payback is short, competitors are
going to use them (price optimization and management solutions), the amount of
rich customer data is increasing, integration with upstream/downstream systems
is more standardized, and the use of machine learning will create better models
faster." Certainly, the category itself is poised to take off, and we've seen a
significant spike in demand. There's also another market headwind contributing
to my prediction: CPQ.
Configure, Price, Quote (CPQ) software helps
sales reps streamline the tasks related to creating quotes for their customers.
According to Gartner2, "In 2019, the CPQ application market grew by 15.5%, to an
estimated $1.42 billion." As the CPQ market continues
its rapid ascent, more companies are recognizing the critical nature of the "P"
in CPQ.
To get the full value of CPQ, it's critical to
provide high-quality prices within the CPQ solution, which is no small task
given the complexity of the price setting and management process. When pricing
guidance is market-aligned and delivered within CPQ, companies can improve the
speed and effectiveness of pricing decisions within the quoting process. CPQ
solutions do not typically include advanced pricing science or even management
solutions, and as such, an increasing number of customers are seeking a more
sophisticated pricing solution that truly meets their needs.
Prediction: In 2021, I
predict that the software category of price optimization and management will
gain mainstream awareness and widespread adoption in the B2B landscape. By
doing so, this high-value solution will become widely adopted by pragmatists in
addition to visionaries.
Prediction No. 4: B2B Matches B2C
eCommerce Customer Experience
For those following B2B and the complete and utter havoc
that Amazon and other born-in-the-cloud competitors wreaked on the market,
pointing out the urgency of eCommerce is like telling a stock trader to "buy
low and sell high."
B2B company leaders understand they are behind the curve
when it comes to a world-class online experience for their customers. The
difficult part is reconciling consumer strategies like real-time product and
pricing promotions to the B2B market, which is highly customized, negotiated
and tailored by its very nature.
The pandemic has accelerated
trends and challenges that were already in motion, while creating an entirely
new set of challenges to contend with. Massive shifts in customer expectations
and competitive requirements were already taking place a year ago. 2020 forced
an abrupt increase in the amount digital business being transacted, forcing
companies to act quickly.
The good news is that, despite these challenges, B2B
software has caught up with commercial capabilities and can mimic the B2C
experience. Advances in pragmatic AI have made a host of commercial solutions
possible, including:
- Deliver highly relevant, complementary
product recommendations based on the items in the customer's cart.
- Ensure the prices customers see online
strike the right balance between meeting their expectations and the
seller's business objectives.
- Differentiate pricing for existing
customers and new visitors by product category or SKU.
- Set eCommerce-specific discounts that can
be personalized (or targeted) to customer segments and product
groups.
- Analyze pageviews, conversions, cart
abandonment data and inventory availability to set multiple discounting
strategies online.
- Identify cross-sell and customer retention
insights across your entire customer base to guide customers to the
products they aren't currently buying but should be buying as well as the
items to re-order.
- Automate pricing negotiations between
customers and online or self-service portals, reducing quote turnaround
time and reserving sales intervention only when pricing requests are
outside of pre-established margin bounds.
Truly, capabilities for
companies to deliver the frictionless, intuitive customer experience online
have reached parity with their B2C counterparts from a commercial perspective.
As the use cases and ease of implementation grow, the standard B2B eCommerce
experience will also reach a maturation.
Prediction: In 2021, I
predict that the B2B eCommerce experience will mirror that of B2C. Meaning,
companies will be able to deliver the real-time pricing, product and sales
experience their customers expect, with all the nuance of the dynamic,
highly-negotiated B2B market taken into consideration.
##
About the Author
Greg oversees all of Zilliant’s operations, including its strategic direction, product planning and development, as well as its financial management. Under Greg’s leadership, Zilliant has grown into one of the leading providers in predictive B2B sales guidance and has pioneered new approaches for companies to harness the power of Big Data. Prior to Zilliant, Greg served as president and CEO of Vignette, the leading content management company and one of the most successful initial public offerings in 1999.
He also served as president and chief executive officer of Logic Works, Inc. and controller and chief financial officer for Micrografx, Inc. Greg sits on the board of directors at LiquidFrameworks and Rhodes College, and is an accomplished industry speaker who has appeared at numerous leading industry events.
---
1Grandview
Research, "Sales Intelligence Market Size," August 2020
2Gartner, "2020 Magic
Quadrant for Configure, Price and Quote Application Suites," September 2020