Is It Time To Overhaul Your B2B Sales Models?

by CXOtoday News Desk    Jan 28, 2014

B2B models

B2B companies have traditionally followed a very marketing-focused approach for business growth. More investment in sales and marketing generally meant more growth and revenues for the company. But this is not happening any more. Bain & Company studied the financials of about 200 large US-based companies in healthcare, technology and financial services. It found that more than half of these companies failed to demonstrate the scale benefits that one would expect from their growing size.

The other key observation is that sales models for many large companies have become more complex and less efficient, putting pressure on profit margins. It states, “Most current sales models are not keeping pace with the shifts in demand, as many companies struggle with factors that contribute to higher costs.”

A major problem they often realize is lack of experts and their inability to handle changing customer demands. More often than not this results in last-minute mad hunt for specialists and bad hiring decisions, which creates additional pressure. According to the study, each situation results in overused, misapplied sales resources or missed business opportunities. Companies also are finding they have loaded up on variants of solutions, sales teams and sales coverage—a creeping complexity that raises costs and ironically can stifle the growth that an expanded offering set is intended to provide.

Achieving growth targets profitably requires a repeatable, high-return model for selling solutions. And that means knowing where and how to invest in sales resources. Bain recently surveyed senior sales and marketing executives in 24 B2B companies, and found that 15% more high-performing companies than low-performing companies had built a differentiated capability to deploy their selling resources to the highest-value market opportunities. (Performance was measured by customer loyalty scores relative to competitors and five-year relative market share trends.)

The growing need to overhaul B2B sales models is driven in a big way by changing customer demands:

- B2B customers are now demanding more sophisticated, customized solutions that needs domain expertise.

- Buying decisions are not just based on costs, but on providers’ ability to solve business problems.

- The generalist approach doesn’t work anymore as there are multiple stakeholders participating in the purchase decision.

- Customer loyalty is dwindling as they don’t want to be locked into a vendor’s products.

These changes have led many B2B companies to rethink their strategies and devise new sales models. Some of the recent changes include shift from single-product to multi-product portfolios, replacing product-based sales with integrated solutions or move from plain transactional selling to a more consultative mode of selling that is suited to the customer’s industry or business situation.