Studies

Whitepaper: How to respond B2B sales transformation with a CPQ?

CPQ whitepaper

B2B sales environment is transforming drastically in 2020s

B2B sales are transforming rapidly now in the 2020s.

This is not just due to Covid19, but more to do with consumerism in B2B sales, continuation of digital evolution and evolving business models. Any of these drivers can not be isolated as completely separate factors, but transformation in B2B sales is a combination of several aspects. 

Covid19 pandemic has only paced up the process, but it is definitely not the main initiator in B2B sales transformation. Overlying trends like digitalization, consumer-like service expectations and changes in the global business environment have started before Covid19 was coming to its global existence.

This is not definitely a first significant transformation in B2B sales, but like before this overlaying transformation needs to be addressed if a company wants to keep up with the competition and even create new business.  

In this paper we scrutinize some of the major changes, from where these changes derive, and how these changes can be managed in the B2B sales operations with CPQ solution which are illustrated with four different use cases. 

Major changes that are affecting on how B2B sales are done

Several consultancy firms and sales service firms (e.g. Gartner, McKinsey, Forrester, Linkedin, Salesforce) are studying and working with B2B sales professionals, and therefore they have the best information on B2B sales at hand. According to Gartner studies change in B2B buyer generation and value of the information has affected majorly on how B2B buying is transforming:

  • 50% of the B2B buyers are people of the internet age. 
  • 17% of purchasing time is used to meet the vendors, all vendors combined.
  • ⅔ of buyers’ time are spent on independent search for information.
  • After the purchase, 25% of B2B buyers think that their purchase matched with the information they received during the purchasing process. 
  • You will get 4,5 times more buys when you are providing quality information to your customer.

The majority of B2B buyers are already of the age of internet generation with new kinds of demands on services they get. This has also changed the demands of buyers for sales and customer services processes. According to Gartner studies, new generation buyers value independent information search and self-service possibilities similarly as in consumer online shopping and banking services.

This change is not only affecting how buyers behave, but also according to studies adds more requirements on salesperson skill level. Salespeople can no more manage their business with traditional sales skills. Salespeople need to be today a modern educational consultant, who can assist buyers in their business and give them new abilities to perform. 

The complexity of customer purchasing processes are increasing for several reasons.

Changes in business models are putting more emphasis on purchasing processes as goods and services are more commonly purchased from a vendor and not produced by the company itself. This is increasing the required skills and capabilities on purchasing operations. Purchasing is also today much more global and the complexity of the purchased goods and services are increasing together with developing new technologies. 

Aspects of technological development in B2B sales transformation 

In this chapter we concentrate on how new technologies affect B2B sales transformation and provide insight on how to enable B2B sales in its transformation with digital sales tools i.e. CPQ.

Technological development especially in digital services are affecting significantly on how B2B purchasing is made. Technological changes are affecting client interfaces, business architectures, business models and most importantly increasing the value of data companies possess.

Changes in buying behavior and sales person role

B2C business continuously sees new digital technologies and solutions. Digital service platforms are common in nearly any consumer service area. This has led to a situation where consumers have started to demand similar solutions also in B2B buying. Buyers want to get information on possible solutions in any time and place, as easy and quickly as possible. They want to investigate possible solutions themselves and seek alternatives. In short, B2B buyers want to operate as in consumer e-stores. 

Technological development affects also on offered solutions and available information. Even though skill levels of any specialist have increased, so has increased the amount of data available. This leads to the situation where professionals need IT applications to help them with data gathering and handling. This situation is the same whether you are in the buying or selling side of business transactions. 

B2B purchasing organizations are much more aligned than before and they have much more skills. Sales organizations need to match up this development and go past the skill level of the buying organization in order to be accepted by the client. 

New digital services are both increasing these demands of buyers but also giving salespeople more tools to manage these rising expectations. Extensive easy-to-use applications such as CPQs are providing crucial tools to bring value for the customer during sales proposal work. 

Same tools can be offered to clients directly and enable clients to be involved with new generation e-stores and service portals. 

New technologies – Data centricity and data platforms 

Industry 4.0 development has increased the value of data in industrial manufacturing. Industrial companies have now much more data which are extensive through different business processes. Business data gathering should start from getting the client requirements, preferably directly from the client.

Currently client requirements data are many times scattered and unorganized. Any technology giving more capabilities to acquire client requirement data directly from the client is a necessity for future success.   

Analyzing and utilizing data is currently creating multiple business opportunities. Using advanced analytics techniques for data analysis and intelligent automation is turning data machining into business opportunities. In order to succeed with these new technologies, companies need integrated systems which enable them to have data leveraged for new business opportunities.

New data integration technologies enable much more robust integrations with less costs. In order to integrate within business ecosystems, companies need business modern tools. When the companies have the ability to share the data efficiently the need for more quality data will accelerate. Quality data flowing between business operations and entities leads to significantly improved business capabilities. 

At best CPQ enables data acquisition directly from the source with quality data. From easy to use interfaces directly for client use to modern integration capabilities for different databases such as real live operational data. Tightly integrated CPQ needs to be modern and developing applications in order to respond to the transformation also in future. 

Business value of data ownership and sharing altogether are bringing interesting new business opportunities. This is not just related to large scale B2C -business operations but increasingly in B2B businesses. E.g. Telecoms are increasingly taking data into their custody related to IoT -services. Complex solutions and systems carry a lot of data related to features and specifications. Mismanaging this data can lead to a situation where the value of the solution starts to deteriorate as per the real business value of the solution is not met due to poor usage of the solution. 

When companies are investing in new data management technologies, it is easier and more scalable to get the data and manage the database, more valuable business opportunities are to be found for the company. 

New technologies are creating vast changes of business environment and new opportunities

Competition due to technical development and globalization is much tougher than before. Bigger companies come into the market with vast financial backing from large and secured markets. Competitors might have extensive amounts of resources to develop, sell and deliver their solutions and services. Over ten years ago technology firms like Apple or Google weren’t players in the car manufacturing business. Amazon sold mainly books and other small value goods online.

In different B2B and B2C businesses, big global companies are expanding their extensive offering and competitive pricing. Be sure that in any attractive business there will be new aggressive competitors with advanced solutions and services which enables something new and different for their clients. 

Being digital can provide possibilities that might give competitive advantage compared to these aforementioned bigger players. Digital services enable a more data-oriented way of doing business operations. These big players are for sure digitalized data-centric businesses, but being concentrated on a company’s own industrial expertise in the digital world can be a winning asset. Data on client requirements and fitting solutions give better possibilities to serve the client and make this client needs met. Optimally this can be done with better sales price and margin when the selling company has defined its offering specifically. 

Digital services need to be built with best technologies that enable fast implementations and ability to agile development and change on services in future. Services need to be very scalable but also tailored for specific customer segments. Modern CPQ solutions can match these criterias when evaluating different IT solutions on sales processes. 

Businesses today have more options in business models than 10 years ago. New digital technologies e.g. platform ecosystems, globalization and new ways of creating revenue and forming business relationships are creating a more challenging business environment for traditionally operating companies. Key question is how to create value for your market segment. New digital tools like CPQs enable better understanding of client needs might be the key. 

Increase of lifecycle services is one of the aspects. Understanding of changing client requirements through the product life cycle requires a database on client requirements and created solutions. Getting client requirements into the database and carrying that information through sales to delivery and life-cycle services are key to success in this comprehensive business model. 

How B2B sales transformation is affecting to company sales operations 

According to McKinsey Survey in August 2020*

  • 35% of companies have taken actions to improve their digital sales & customer service
  • 65% of companies is planning on actions 

Most of the investments have now been done on virtual contacting tools. This is a rather small leap compared to all the requirements businesses are currently having and possibilities what technologies are enabling businesses to do. 

What should be done next?

Overall transformation in B2B sales should not be technology focused, but it should concentrate more on business models and its operations. Technology and digitalization supports this transformation, not the other way around. 

In terms on B2B sales transformation following type of development should be prioritized while transforming company business models and processes: 

  1. New types of sales processes which meet customer requirements
  1. Data that enables to improve meeting the customer expectations

Related to first point, following areas need to be in sales process development focus: 

  • Multi-channel customer service in sales and service processes.
  • Timing of sales activities to better meet customer expectations.
  • Quality of customer contacts and collaboration in order to better understand the customer’s needs and serve the customer continuously with value add.
  • Change of the role of salespeople (customer’s desire for an educational sales service).

In terms of the second point, in aspect of data at least following areas should be part of development: 

  • Knowing the customer (organizations, purchasing processes, purchasing behaviour).
  • Understanding of customer needs and requirements.
  • Lifecycle management of customer solutions with services.
  • Quality of communication (how information in different channels is managed and effectively utilized in communication).

These lists can not be comprehensive, but these are a good starting point when developing B2B sales in the 2020s. There must also be other possibilities, these possibilities vary in terms of the company’s business, its status and different value drivers and investment possibilities. It might be that for example development in company service processes or investment in IoT capabilities can improve company sales operations effectiveness. Many of the companies are also currently taking only the first steps and currently implementing a CRM system that enables them to have one view for basic customer data. 

Four use case examples how to modernize sales with a CPQ 

To elaborate the possibilities of what CPQ can provide for developing B2B sales processes, in this chapter is described four different use cases on how to respond to B2B sales transformation. These use cases are actually real life cases that are solved with the CPQ solution.

Use Case 1: Client requirements in one database

CPQ helps companies to identify the exact client requirements and create technical sizing. This technical requirement database i.e. sizing database enables companies to identify possible customer solutions based on their offering. Company offering is defined as product and related parts data in the solution database. With a CPQ, requirement and solution databases are matched to find optimal solutions including required technical and commercial specifications. 

CPQ is able to handle this complex solution sales process from requirement gathering to deal making. There is a lot of data handled during the sales process which are now in companies very laboursome and errorprone. Errors can be very critical from a business perspective. CPQ can automate this routine work and reduce the risks of errors. 

Example:

Client A operates in process manufacturing. Client A processes waste material where certain particles need to be removed from the waste material. This is done by process machines and equipment which are installed as a system. 

Sizing databases in this business use case includes data on processed material, process environment, system requirements e.g. processing efficiency and other requirements such as economic, quality or environmental requirements.

Based on this sizing data, companies can find from their solution database the right machines and equipment or even a system that meets client requirements from the sizing database. 

Use Case 2: Integrated data flows from sales to delivery and life cycle services

Companies have major challenges on how to transfer information on their sold solutions to production. Data in sales proposals are not structured, it can be mixed, it can be incorrect and it might not be matching with the company’s offering and capabilities to produce the sold solution. This can lead to a situation where the buyer gets a different solution than it acquired or producing the solution is not profitable. 

To mitigate this, companies need to integrate and create a coherent dataflow from sales to delivery and lifecycle services. This requires modern digital applications that can be integrated between different business process applications and databases. 

Integration can be done by utilizing different master data systems or managing data flow between systems efficiently. Either way, it is important that there is no overlap between master data and efficient integration within data flow. Efficient data flow topped with modern easy-to-use user interfaces will create a system that has a vast approval by users and includes data that can be easily used and shared during the business’ processes. 

This use case example elaborates perfectly how CPQ can actually help with a company’s business models and not just being an additional business application in solution architecture. 

Use Case 3: New Interface to your client to support complex solution sales

Traditionally clients have been receiving their data on solutions directly from sales organizations. Today digital product catalogs and e-stores are responding to this need to some degree. This does not mean that the information received online is responding to client needs or it is easy to adopt on the client side. Getting information online might be cumbersome and customer service process flow is working only partly. 

CPQ -platform can provide new tools for B2B client service from requirement gathering to proposal sharing. CPQ can strengthen a company’s e-store, ensuring that the client can find the perfect solution for himself independently. CPQ can create automated well-functioning processes that help clients to find right information for their needs and guide them through their buying process. CPQ enables clients to interact directly with your offering portfolio and this way data gathered from clients will be very rich and customer-friendly in content as you understand more profoundly your client needs and accordingly you are able to propose possible solutions. All this information can be shared between processes and systems with modern technologies. 

Use Case 4: A tool to help sales professionals and teams to increase their skills and efficiency

One of the perspectives of investing in digital sales tools is that internal sales processes are in some businesses very difficult and resource intensive. Sales work takes time, resources and highly-skilled professionals. This is characteristic particularly in B2B solution sales when there is a lot of data related to client requirements and there are many possible solutions for client problems. 

The data related to client requirements is usually very complex, technical and includes a lot of business risks. Mishandling the data and missing parts of this data can cause errors in deliveries which can be then very costly and cumbersome to fix. At the moment this data might be imputed to different systems several times, which commonly leads to errors and vast amounts of duplicate work. 

Part of this work can be supported with a CPQ, which can bring automated processes and tools for information management. A CPQ can create a process which can work as a defined sales guideline for sales people. This kind of sales tool includes a lot of data related to company solutions from a technical and commercial perspective. This way it also helps less experienced and technically skilled salespeople to succeed in their work. 

One aspect of this is that a robust digital sales tool CPQ can also support new business creation and internationalization. New clients, offering or markets can be implemented into business with support of sales tools while introducing new sales people into company operations. Digitalization can help in scaling up business with unified processes and offerings. 

Digital sales process with a CPQ will be giving companies competitive advantage in the modern B2B sales process 

There are a number of initiatives that companies can do in order to digitize their sales processes. Basic catalog type cloud delivered e-stores and standard service portals can be an answer to B2B sales digitalization. They can work well when the client is looking for ready-made products which can be topped up with limited and rather simplistic services (e.g. transportation services, limited maintenance, insurance etc.). 

Digital solutions must be something different when client requirements are not clear particularly in terms of business and operative context or requirements include a lot of complex numerical data, digital catalogs or service portals are too simple solutions and can not illustrate all the data which are needed to have and interpreted in order to find the right solution for the client. 

Advanced CPQ including sizing and configuration tools can automate the process from client requirement gathering to solution proposal. When modern and advanced CPQ tools are integrated to existing business applications, they can be part of a unified and seamless customer experience. Customers can provide its data directly to the seller’s business system. Data quality and coherency will increase. This kind of sales process needs to be supported by automated digital sales tools. 

Conclusion

Digitalization as such can not be the only response for the B2B sales transformation. Main drivers are the people themselves, who must change their way of operating in evolving business models and customer desires. 

Digitalization can help people in their transformation. Automation and supporting people with their information needs are important key actions to respond to new business requirements. Overall, people should always concentrate on more demanding and value-adding operations. Computing is needed for data handling and process automation that help people in their work.

There are multiple aspects in B2B sales transformation. Many of the changes and possible actions are linked with company business models and company business situations. Digital transformation can be the main action item, but it also needs people’s involvement. Easy-to-implement and -use software applications are valuable change drivers in this type of situation. 

The aim and end result should be that with digitally improved sales processes and tools, sales organizations will contribute better sales results with increased client satisfaction and profitability. 

Want to understand more on topic?

Contact us and let’s discuss more.