As macroeconomic conditions continue to worry Main Street and Wall Street alike, many people are looking to the lessons of the past as indicators of what to expect in the near future.
Previous economic downturns can be instructive, but the asymmetry of our current economy makes accurately predicting the future that much harder. For B2B sales leaders, these challenges become even more pronounced.
The B2B software market has undergone immense changes in recent years. The products being sold have become more sophisticated. Customers have become more demanding. The competitive landscape has become more intense.
We examined a range of data to see precisely how the B2B software market has developed over the past decade, and found some trends and patterns that should help sales professionals navigate today’s increasingly volatile business environment.
From Face-to-Face to Screen-to-Screen
The single most disruptive global event in living memory — the COVID-19 pandemic — has had a powerful impact on every sector of the worldwide economy.
Before COVID, sales had traditionally been an in-person endeavor. When public health measures stopped in-person selling and nonessential travel in its tracks, salespeople turned quickly to video calls. Many sales professionals assumed this would be temporary, and eagerly awaited the days when business travel could resume.
That was not the case.
Data from McKinsey reveals that less than one-third of all sales-related activity takes place in person. Identifying and evaluating new vendors accounts for much of this activity, at 31% and 29% respectively, with a majority of sales-related activity now being conducted remotely.
However, the most noteworthy shift in selling behavior isn’t the shift from in-person to remote-first sales — it’s the growth in digital self-service experiences.
B2B self-service experiences on the rise
McKinsey’s data indicates that 22% of business decision-makers are already using digital self-service tools to identify and evaluate new vendors. When it comes to actually placing orders, that figure increases to about 35%, suggesting that automation is already having a significant effect on how buyers interact with their vendors.
This change is not a holdover from the anxious days of pandemic uncertainty. Between 70-80% of B2B decision-makers surveyed by McKinsey indicated a strong preference for remote sales interactions and self-service functionality. Ease of scheduling, cost savings on in-person travel, and individual safety were cited as the top three reasons behind preferences for digital selling.
Changing attitudes toward in-person sales become even more stark across generational lines. In a recent survey of 1,000 B2B decision-makers, researchers at Gartner determined that 29% of B2B buyers who identified as Baby Boomers (born between 1946 and 1964) preferred a digital sales process, compared to 54% of Millennials (born between 1981 and 1994).
Some sales professionals may be skeptical of the revenue potential offered by self-service buying experiences. However, data from Salesforce suggests that many buyers are comfortable making considerable investments via self-service platforms. Approximately 70% of B2B decision-makers surveyed by Salesforce indicated they would be open to spending up to $50,000 in fully remote or self-serve environments, with 27% indicating they would be comfortable spending upward of $500,000.
The increasing popularity of self-serve B2B buying experiences has also had a significant impact on the prevalence of B2B cloud software marketplaces.
Cloud commerce platform Tackle predicts that B2B software marketplaces will see revenues of more than $10 billion by the end of 2023 and more than $50 billion by 2025. In addition, Tackle reports that 83% of buyers are either likely or extremely likely to invest in B2B software via cloud-based marketplaces in the future, suggesting significant growth potential for vendors that embrace self-service selling.
Growing appetites for self-serve selling have salespeople worried. Gartner’s data suggests that just 20% of sales professionals feel confident in their ability to sell as effectively in a digital-first environment as they did in person. And while self-service may seem appealing to busy decision-makers, those who opted for self-service sales interactions scored 23% higher in terms of buyer’s remorse than those who engaged in a rep-driven interaction.
Consumerization of the Enterprise Continues
For the past decade, the line between B2B and B2C software has become increasingly blurred.
Today’s enterprise software users expect powerful features and advanced functionality, but they also expect intuitive interfaces and a streamlined experience online, from their first visit to a company’s website, to the moment they complete their onboarding.
Data from Salesforce states that 72% of B2B decision-makers expect a similar experience from a B2B website as they would from a B2C website — expectations that persist across the entirety of the purchasing journey. Many companies are adopting bottom-up, product-led strategies used by software developers that have successfully bridged the gap between business and consumer.
Many companies adopting product-led strategies
Product-led sales strategies, by which companies use the strength of a product and referrals as their primary growth vectors, are nothing new.
Dropbox is among the best examples of this principle in action. Shortly before Dropbox went public in 2018, the company said that approximately 90% of its $1.1 billion in revenue had been generated through self-service channels. (It’s also worth noting that Dropbox’s primary competitor in the B2B space, Box, reported sales of $398 million during the same period.)
Dropbox’s S-1 filing also revealed that its primary growth strategy for its consumer-focused product also had a significant impact on its B2B product. In 2017, more than 40% of new Dropbox Business plans included a member who had been a subscriber to an individual paid plan, suggesting that a sizable number of individual users had advocated for adoption of Dropbox at work.
Several other major software companies have embraced similar bottom-up strategies, including Slack and Zoom, both of which saw dramatic increases in use during the pandemic. However, while the necessity of the rapid shift from in-person to remote work drove much of this adoption, the companies’ primary growth strategies are to create product experiences so compelling that people want to use them in their personal lives as well as their professional lives.
While product-led growth strategies emphasize nurturing existing users over forging relationships with new customers, that doesn’t mean product-led growth can’t benefit from traditional sales expertise. In a survey of business leaders, B2B software provider Pocus found that 97% of respondents already had a dedicated outbound sales team or planned to add outbound sales to their product-led strategy in the near future.
Relationships Between Buyers and Sellers Have Changed
Today’s sales professionals not only have to navigate an increasingly competitive business landscape, but they also have to reckon with the changing nature of the relationship between buyer and seller.
Many sales professionals believe that a consultative, team-based approach is more vital than ever, especially in today’s uncertain economic environment. However, data from consultancy Korn Ferry suggests that just 22% of buyers see a company’s salespeople as a valuable source of information when prospecting new vendors — less valuable than even basic web searches.
“These days, buyers engage sellers much later in the sales process,” says Jake Bashuk, a new business sales executive at ZoomInfo. “They typically do their research, talk to peers on dark social, and then engage vendors at the end of an evaluation.”
One of the biggest perception shifts in sales is simply how reps connect with prospects in a virtual environment. Korn Ferry’s data states that buyers see just 33% of salespeople as effective in virtual sales environments. Communicating empathy and handling the pressures unique to virtual sales were cited as particularly evident problems during their interactions with sales representatives, suggesting that many reps have still yet to fully master the challenges of remote selling.
In addition, many companies are choosing to involve salespeople later and later in the buying cycle. Korn Ferry found that almost 80% of buyers fully defined their needs before contacting a sales representative, and 57% identified a shortlist of potential solutions first. This limits the influence a salesperson can have throughout the process, and can make it more difficult to preempt misconceptions about the product or service.
Despite clear reluctance among buyers to engage salespeople earlier in the purchasing process, sales cycles remain long — a trend that was already well in motion before COVID-19.
Even before the economic uncertainty caused by the pandemic, many companies had begun to evaluate large purchases with much greater rigor. Data from Forrester indicates that, while the average number of touchpoints in the buying journey had been increasing gradually between 2017 and 2019, it increased sharply thereafter, going from an average of 17 interactions in 2019 to 27 in 2021. This heightened level of pre-purchase scrutiny will likely persist in the near future, especially as companies of all sizes attempt to predict how an asymmetrical economic downturn will affect their growth plans.
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B2B selling may have undergone significant changes during the past decade, but ZoomInfo can help salespeople in every industry and sector close more deals and drive more revenue.
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