Sales and digital: a strategic transformation

What are the most salient aspects Digital Commercial Transformation (DCT) for managers? What are the objectives of DCT? What are the most common processes, methods, tools and results? These are the questions which we attempted to answer in this study, our primary aim being to identify clusters of companies based on the different models they use for DCT.

The research was conducted bythe Commercial Excellence Lab (CEL) at SDA BocconiWe carried out our work in two stages, the first qualitative and the second quantitative.

In the first stage, here’s what we learned:

• iDCT means very different things for every company in our sample, for instance from implementing customer relationship management systems to adopting social selling tools to digitalizing product samples and catalogues…and the list goes on.
• The ‘T’ in DCT can impact myriad processes: internal, back office, and/or interaction with customers, all with an eye to boosting process efficiency and/or effectiveness.
• Objectives often vary in substance and number, which frequently proliferates processes and actions that clash. What’s more, almost nowhere did we find a structured, organic plan for managing DCT.
• Perceptions of DCT are highly polarized among sales networks. Some see it as a virtuous phenomenon with a high potential for positive impact on their sales results; in contrast, others have a very negative view of DCT.
• lBarriers to success tie into underestimating these four basic organizational processes: preliminary analysis to assess the impact of DCT on the sales team’s work (in fact, implementing DCT often generates new, unexpected activities or inadvertently complicates traditional tasks); an adequate investment in internal communication processes that help people understand the whys and wherefores of DCT; promoting training and development initiatives to develop the new competencies that the sales team needs; establishing precise KPIs as guidelines for DCT to facilitate monitoring and measuring the impacts of this transformation.

In the second stage of our research, we conducted an international survey, collecting 540 questionnaires from business managers who work in a variety of sectors in four countries (Italy, Germany, the UK, and the US). What emerged is a wide gap between the importance managers attribute to DCT (which is high nearly everywhere), and the perceived degree of implementation of this transformation, which in Italy is far lower than in the other countries in our study.

Figure - 1 the gap between the importance and the implementation of DCT

What we found is that the vast majority of the companies we interviewed (74%) see DCT as an evolutionary rather than a revolutionary phenomenon. Their motivations for implementing this transformation spring from in-house strategic decisions, not from customer demands or competitive pressures. Companies seem to pursue DCT above all to streamline sales processes; the least common reason they cited was to cut down on the number of sales representatives and to substitute them with technologies.

Figure - 2 Aims of DCT (scale: 1 = not at all, to 9 = very much)

The main digital actions relating to DCT include information capture, analysis and dissemination, for the most part with the intent to grow the ability to create value for the customer, but also to achieve process automation.

Our research revealed that as far as digital transformation, the more forward-thinking companies attain better market performance. Next we explored the aspects affecting success in adopting DCT. As far as relevant organizational factors, the key driver was assigning clear, specific roles tasked with DCT, along with individual responsibilities and targets (47.3%), followed by a well-defined strategy for actioning this transformation (23.6%), and prioritizing customers in doing so (19.3%).

Through cluster analysis, we then identified four types of companies which adopt DCT in different ways and with differing degrees of success: leaders, laggards, enablers and replacers. The identikits of each one are given in Table 1 below.

Tabel - 1 DCT

Summing up, there are a variety of models for managing DCT, characterized by diverse combinations of managerial levers that can be used to implement this process, which achieve varying levels of market performance. Generally speaking, the winning tactics are to assign clear responsibilities and specific KPIs, adopt evolutionary transformations, and use digitalization primarily as a support tool and an enabler for the sales network.

Specifically, in the most successful cluster, which we call Digital Leaders, most companies are brand leaders. More than digitalizing their processes, they’re finding evolutionary ways to digitalize their offerings. What’s more, they’re focusing their transformation primarily on more attractive customers and new customers, rather than the ones they already count in their portfolio. They are also the companies where DCT is linked to better economic performance, with above-average profitability and growth in turnover. These firms also have resources dedicated to DCT, and assign clear organizational responsibility for digitalization. Currently, ICT functions usually take the lead on DCT, but a number of companies mentioned having new inter-functional business units.

To take a deeper dive into all DCT-related topics with our partner companies, SDA Bocconi’s Commercial Excellence Lab is conducting a new study on how digital transformation and the adoption of technologies impact the role of the Sales Department.