How to digitalize your sales organization: Use technology, data and analytics

A version of this article was first published in the September/October 2022 issue of the Harvard Business Review.

Companies can reap great benefits from digitalizing their sales organizations—that is, using technology, data and analytics to improve the sales process. Done well, digitalization increases customer engagement, boosts the skills and performance of salespeople and...more

Customers today don’t simply want knowledgeable answers to their questions about products and services; they want speedy solutions for their particular technical requirements and business issues. At Microsoft, where sales account executives interact with millions of software buyers each year, customers’ expectations of the sales team have skyrocketed. Yet until recently, it was cumbersome and sometimes impossible for account executives to get a true picture of each customer’s needs. They had to manually assemble and synthesize data that was scattered across Microsoft’s business units. Time and effort were wasted and interactions with clients suffered.

Microsoft’s leaders knew there had to be a better way. They found it in digitalization—the use of technology, data and analytics to design business processes and inform decision-making. (The concept should not be confused with digitization, which is the conversion of analog information to digital formats.) In 2021 Microsoft CEO Satya Nadella spoke of the impact of digitalization on companies everywhere: “By 2025, it’s projected that sales and marketing processes will involve more proactive engagements than reactive ones, all the way from customer marketing to supply chain,” he said. “Going forward, every business process will be collaborative, powered by data and AI, and will bridge the digital and physical worlds.”

At Microsoft (a client of our consulting firm, ZS), the transformation was already well underway. By 2016 the company’s leaders had embraced the idea of using data and artificial intelligence to facilitate collaboration across sales roles and digital channels. In March 2018 Microsoft launched new tools to equip its sales force and partner sellers with insights about customers and suggestions about actions that would benefit them. Sales teams could spend less time gathering data and more time engaging in personalized conversations with buyers. Productivity, measured by time in front of customers and leads converted to opportunities, rose by as much as 40%.

Digitalization can create similar benefits for a wide range of sellers. Done well, digitalizing the sales function increases customer engagement, enables more-flexible and customer-centric selling organizations, helps salespeople perform better and more. But the transition is often difficult—both for the sales team and for the company as a whole. A 2021 survey conducted by ZS revealed that although 90% of biopharma sales executives believe that digital transformation is critical to their success, the majority (55%) view their initiatives as unsuccessful. Fewer than 10% said they had achieved the full potential from their investments. Survey results across other industries largely parallel these. Academic researchers studying digital progress during the pandemic examined 11 independent cross-industry studies that empirically measured digital transformation failure. The aggregate failure rate across all disciplines, including sales, was 87.5%.

In our work with sales organizations, we find that digitalization initiatives are often plagued by slow progress, poor adoption or low sustained impact. In this article, we examine why digitalization is so important to sellers and why their efforts often fail. Then we offer five recommendations to help achieve better outcomes.

Digitalization affects practically every process that a selling organization engages in, including interacting with customers, deploying resources and managing talent (for example, hiring, training, motivating and supervising salespeople). At its core, though, digitalization is about building and supporting a more customer-focused selling model.

Most sales digitalization efforts fail in one of three ways. First, some sales organizations expend a great deal of energy on digitalization but never really get going, or they progress so slowly that leaders lose confidence in the effort. Second, some initiatives lead to a viable solution, but broad adoption throughout the sales organization is poor or is achieved only through coercion. Sales leaders and salespeople may struggle to master the new skills or fail to embrace the mindset necessary for the initiative to succeed. Support programs may not meet the needs of diverse sales force members—from technology avoiders to reluctant adopters to enthusiastic, feature-hungry users. Sometimes people’s hesitancy is not about the technology at all but about new ways of working. For example, salespeople who excel in personal interactions with customers may have trouble assimilating into a culture that revolves around digital channels and data-driven decisions.

A third type of failure occurs when solutions that are successful at first fail to evolve into sustainable systems that remain in use and continue to offer value. This happens because digitalizing the sales function is complex and prone to constant change in how work gets done, from both an organizational and a technological standpoint.

Digitalization enabled the transformation of Microsoft’s underlying business model from selling software as a one-time purchase to offering software as a service. As a result, the role of its sales force and partners has changed: Today salespeople do more than acquire new customers. They also focus on helping existing ones realize ongoing value and increase their usage of Microsoft products, thereby boosting customer retention and fueling sales growth. Each sales account executive must understand the needs of 100 or more customers and find appropriate solutions from among a rich suite of technically complex offerings. Before the latest digitalization effort, this meant that account executives spent hours tracking down customer information collected with disparate tools by various individuals in Microsoft’s sales, customer success, service and support organizations. Then more work was required to glean insights from the data and decide what action to take with each customer.

Digitalization has streamlined that process. Customer and market data are now in one place. A core of sales intelligence capabilities, including several AI models, produce customer insights and suggestions for salespeople. An internally developed tool called Daily Recommender delivers the insights and suggestions to salespeople. For example, algorithms detected that one customer company had spent a significant sum on software licenses and that 27 of its employees had recently interacted 34 different times with Microsoft marketing materials. Daily Recommender advised the responsible account executive to contact the customer about purchasing more Microsoft 365 subscriptions—and to reach out quickly, because third-party data indicated that the customer had engaged with a competitor. By following up on the suggestion, the salesperson was able to deliver a solution well-matched to the customer’s needs, while simultaneously bringing in additional revenue for Microsoft.

Customers are reporting more value and a better experience because Daily Recommender’s insights help account executives focus on the issues that are top of mind for those who use and support Microsoft’s products. One of every three recommendations qualifies as a sales opportunity. That’s almost four times higher than the industry average of 6% to 10%. By design, the list of recommendations is not static and therefore never gets stale. Sales team productivity is up, customer conversion rates are higher and potential purchases are finalized more rapidly.

Digitalization can also transform the recruitment and training of salespeople. When hiring, companies are improving the quality of the applicant pool by mining data from sources such as LinkedIn to identify candidates who are likely to join if made an offer and likely to succeed if they join. And in the area of training, companies are complementing human coaching with AI-enabled coaching that analyzes salespeople’s conversations with customers and provides feedback. Microlearning approaches deliver small, focused chunks of digital training content to sales team members and selling partners at a point in their workflow when the information is most relevant and can be applied right away.

Digitalization is not just affecting digitally native companies like Microsoft. Take the case of John Deere, a 185-year-old firm at the center of a digital transformation in the agriculture industry. Deere’s digitalization starts with its products: Embedded sensors in its machinery capture data that growers can use to optimize their farm output. This technological innovation has far-reaching implications for Deere’s sales and marketing organization and its dealer network. In addition to selling farm equipment, the company now has an opportunity to sell services that turn the sensor-collected data into insights that help growers boost profitability and environmental sustainability.

To encourage adoption of the high-tech equipment and familiarize customers with how to operate it for maximum benefit, Deere has given its independent dealers additional tools for training and assisting them. In addition to interacting with a grower in person, dealers can provide support by using a remote connection tool to tap into a digital display on the customer’s equipment.

Of course, these innovations create a need for new sales skills and roles. Historically, Deere’s dealers have been adept at selling, repairing and maintaining machinery. Now they also need digital capabilities for bringing sophisticated technology and data-based insights to growers and for demonstrating the value of the company’s specialized solutions and services. John Deere’s U.S. sales and marketing organization is supporting dealers in developing those capabilities.

As sales processes and structures evolve, the skills and mindsets of salespeople, sales managers and leaders must evolve as well. In the past, sales success was about understanding customers, using intuition and building relationships. Today sellers must have a willingness to incorporate technology, data and AI-driven insights into their sales activity. They must also adapt to another profound change: Instead of working alone with customers, now they are part of a system of digital channels and sales roles, orchestrating resources while collaborating with customers to shape solutions.

The transition to new ways of working can be difficult. The capabilities of current sales team members may not match the new demands of the job. In the short term, the change may distract and demotivate salespeople, leading to the loss of top performers, the disruption of customer relationships and a decline in business. In the long term, if the wrong people end up in the wrong roles, the impact can be felt for years.

Digitalization decisions must be implemented with an eye toward innovation and adaptation as business needs evolve. Salespeople are agile by nature, but the fluidity of the sales role during a digital transformation requires them to adopt an even nimbler mindset and to continually improve their skills and knowledge. Those most likely to succeed embrace constant learning as part of the culture.

Sales digitalization initiatives benefit by focusing on five key actions. When executed well, these practices dramatically improve the odds of success.

Put the right leadership in place. The sales digitalization team should have a “boundary spanner” at the helm—someone who is comfortable with and respected by both sales and marketing people and technology experts. Collaboration between the two communities ensures that solutions are not only usable and useful but also able to be sustained and enhanced over time.

Boundary spanners balance the dreams of the sales organization with the pragmatic concerns of IT. Priorities for the sales team include identifying new sales opportunities, driving beneficial product innovations and winning over customers. The information technology group has priorities that are equally important but potentially conflicting. These include controlling costs and risks, developing enterprise capabilities and ensuring longer-term sustainability. Boundary spanners are attuned to both sides of the equation. They readily spot overambitious plans, avoid constant shifts in priorities and keep the focus on value and fit for users. A boundary spanner will:

• Support IT by helping the sales team see the timeline, quality and budget risks of adding new features too late in the process.
  
• Support sales and marketing by helping IT see the benefits of using an innovative technology that better satisfies business needs than a tried-and-true solution does.
• Align both IT and the sales and marketing group around insights that might not come naturally to either.
• Push back whenever “design by committee” is making the system unwieldy and threatening the timely development and release of new products.
• Ensure that the initiative is not so grand in scope that it collapses under its own weight.

The best boundary spanners have empathy for different viewpoints. Generally their career paths include leadership roles in technology and sales or marketing. For a boundary spanner to steer a digitalization effort to a successful outcome, support from high-ranking leaders is key. Executive sponsors can help ensure that sales initiatives fit into the overall corporate strategy and do not duplicate or create incompatibilities with efforts in other domains.

Executive sponsors also create a safe space for boundary spanners to take action even if a few feathers get ruffled. For example, sponsors can ensure the restructuring of the sales organization if needed; they can step in to resolve conflicts and facilitate collaboration across organizational silos; and they can help secure the long-term commitment of resources.

Incorporate accountability measures. Sales digitalization efforts are much more likely to succeed when they are guided by the right vision, strategy and metrics. This requires developing a business case, a strategic plan with key performance indicators (KPIs) and an overarching governance framework for the initiative. A business case quantifies the value for the business and its customers, while laying out the context and approach. KPIs monitor progress toward goals. And a governance structure directs the initiative to its desired outcome by identifying overlaps across initiatives and finding opportunities for sharing resources and learning.

Today sellers must have a willingness to incorporate technology, data and AI-driven insights into their sales activity.

Consider another ZS client, the global biopharmaceutical company UCB. It had traditionally relied on salespeople to share information about prescription drugs with doctors and other medical practitioners, typically during face-to-face visits. As practitioners began getting information from digital sources, such as email, websites, mobile apps and podcasts, UCB set out on a multiyear journey to rethink its go-to-market strategy with a digital-first mindset. At the start of its digitalization effort, it focused on supporting product launches with insights obtained by integrating data and applying advanced analytics. For example, the company had believed that poor patient adoption of one new product was due to ineffective communication between the sales force and health care providers. However, analytics showed this assumption to be wrong. Health care providers were, in fact, prescribing the product, but many patients were not filling the prescriptions and starting the treatment because of affordability concerns. UCB shifted its energy to improving the patient assistance program instead of debating what had gone wrong in the sales force. Sales performance improved significantly.

As UCB’s confidence in the power of analytics grew, so did its efforts to leverage data and algorithms to inform decisions. By 2018 the company was ready to take analytics to where the rubber meets the road—the interaction between sales reps and doctors. Sales reps began using analytics to target the right doctors with the right message at the right time. Armed with data-based insights about patient disease progression, local health environment dynamics, a provider’s likelihood of switching therapies and other factors, reps were able to connect with receptive providers and tailor communications to provider and patient needs.

Sales organizations can enhance the success of digitalization initiatives by tracking KPIs related to product adoption and value for customers and users. KPIs can include both leading and lagging indicators. (Leading indicators are those that help predict future success, such as the number of new customers contacted. Lagging indicators are those that gauge performance to date, such as the number of new accounts won.) By paying attention to KPIs, sales teams can diagnose problems and course-correct during the rollout of an initiative and beyond. Further, leaders can use KPI data to give employees positive feedback, energizing the organization.

Meanwhile, a framework for central governance helps ensure ongoing investment in the initiative and steady progress toward business objectives.

Deploy cross-functional teams. Successful initiatives have a cross-functional program management team led by a boundary spanner. This core group is responsible for overseeing and coordinating the work throughout the digitalization journey. Its members typically include user representatives (from the sales and marketing staff), engineers (data scientists, scrum masters, user experience experts, software architects and the like) and orchestrators (such as project managers, change management experts, sales support people and finance specialists).

Additional cross-functional teams participate for focused periods of time as their skills are needed. The number and composition of these supplementary teams depends on the scope and scale of the effort.

Diverse teams, when leveraged well, ensure technical viability, usability and value. By contrast, teams that lack functional diversity invariably result in strength on one dimension but fatal flaws on others, leading to adoption or sustainability challenges.

UCB created several cross-functional teams to carry out its digitalization efforts. One subteam tasked with building the user-facing solution included representatives from sales, technology, analytics and operations. Another subteam with similar membership focused on the data infrastructure. Yet another subteam was charged with planning the deployment and change management efforts. That group included leaders from sales, marketing and sales operations. Most critically, what we call an EET (an early-experience team) was composed of salespeople typical of the larger sales force, not just the most technology-savvy reps. EET members became frontier adopters who were instrumental in shaping the solution.

Implement an agile approach. The software development industry has significantly shifted from a “waterfall” approach for completing projects to an “agile” approach. With waterfall—the traditional, sequential way of working—teams typically spend a year or more going through the process of fully designing a system, then building it and then operating it, always completing one phase before starting on the next. Agile is more fluid and incremental, involving weeks-long sprints of designing, building, deploying, learning and then iterating. An agile approach is key to managing digitalization initiatives in sales.

The Microsoft sales organization’s experience is a great example. The development team adhered to a 10/10/10 rule for each sprint: 10 hours to define a business problem, 10 days to design a model to address the problem and 10 weeks to pilot the solution. The team focused on user experience and created a simple and straightforward interface for Daily Recommender. As a result, salespeople were able to master the tool simply by using it. And it continues to evolve, because as users accept or reject the action suggestions it generates, their choices train and improve the algorithms.

The digitalization initiative at UCB embraced the agile approach too. The project began with proof of concept: UCB developed a predictive algorithm and ran simulations using historical data to show that the approach could work. Then the company built a minimum viable product—a simple tool with critical features to guide sales reps in using the algorithm’s recommendations with customers. Sales reps on an EET piloted the tool and shared feedback. As the initiative progressed, the development team used two-week sprints to launch new releases. The scope of the work for each sprint stayed fixed, but the developers modified the plan for the next sprint to reflect feedback from the EET.

Enable organizational change. In sales, change management is not just about getting the organization to behave differently. It’s also about engaging people in designing the change to ensure that it provides value to those affected. EETs test out early versions of solutions to see if they are useful and implementable. User experience experts on cross-functional teams shape system design so that interactions between people and technology are intuitive and contribute to productivity.

Four aspects of the sales job have unique implications for change management. First, salespeople often work alone from disparate locations. That means that propagating change throughout the sales team can be difficult. Besides customers, the one person sales reps are in frequent touch with is their manager. Thus, first-line sales managers can be great allies in enabling change. While senior leaders can explain the rationale for the change and motivate buy-in, first-line managers (or peer influencers) are in the best position to discuss details and sensitive topics (such as new measures that may be put in place to assess salespeople’s performance).

It’s important to realize that as managers support their staff in embracing digitalization, they too will need to take on new responsibilities. In addition to coaching and directing individuals to achieve sales goals, they now must help them apply data and technology and shift tactics accordingly. Managers who are themselves digitally hesitant, or who grew up in an environment of top-down transfer of accountability, may find this to be a big role change.

Second, salespeople are used to having autonomy when working with customers. Digitalization can threaten this autonomy, making it especially difficult to implement change. Sales reps and managers may be accustomed to relying on their own judgment about when and how to interact with each customer. With digitalization, they have to adapt to a more data-driven approach. Sales organizations can make the transition easier by providing explanations for AI-driven recommendations—for example, accompanying a product recommendation with a message that “this account is likely to buy this item because other accounts with similar purchase patterns eventually bought it.” Adoption improves when salespeople provide feedback about whether each machine-generated suggestion is useful—and if not, why. Not only does feedback help the algorithm incorporate on-the-ground insights; it also gives reps a sense of ownership that motivates continued use of and trust in the application.

Third, many salespeople are reluctant to change the way they interact with customers for fear of putting existing relationships at risk. They prefer to stick with what works until they see proof that a new approach is better. That’s why EETs that vet and shape changes are so important. Salespeople also vary in their technology skills and digital savvy, so postlaunch user training and support are critical for driving adoption of digital sales solutions. Success is most likely when the solutions are embedded into a salesperson’s day-to-day workflow. Thus the best training programs address changes in the business process and people’s skill sets instead of focusing solely on the tool itself.

At UCB, members of the EET provided ongoing support to their peers while acting as evangelists for the solution as it was being introduced. The sales reps were likely to trust their peers on issues of value and impact, whereas they tended to be skeptical of proselytizing by headquarters personnel, who sometimes missed nuances of how the solution fit into the way the sales force worked.

Fourth, salespeople in most industries have a substantial amount of variable pay tied to the achievement of sales or other goals. Success with digitalization can require realigning the variable pay structure to reinforce changes in job responsibilities. If salespeople perceive that the change hurts their earning potential, they are more likely to leave the organization—and employee turnover may cost the company key customers too. A transition plan can help avoid that.

Digitalization of sales is proceeding at a breakneck pace. To maximize the chances of a great outcome, your selling organization should focus on the five actions we’ve outlined above. We also encourage you to use a checklist similar to ours, adapting it as your business model evolves and as you learn from your successes and setbacks. By following these recommendations, you can bring speed and impact to your efforts—and help your sales soar.