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Digital Sales: Evolution or Revolution

Digital Transformation! That's the buzzword you hear everywhere and constantly. But ask 10 people and you get 20 answers about what it actually is. To give an overview of how digital aspects are changing the market when especially thinking about marketing and sales, I prepared a framework with lots of examples that is grounded on Michael Porter's five forces model and the PEST analysis of markets (Political, Economical, Social, Technological aspects of the market environment). The goal was to give an overview of the current market situation and an outlook on what kind of strategic (sales) decisions need to be taken that sometimes can decide about life and death of a company mid-term/long-term. Will you survive with just evolutionizing your organization or is revolution the only way to go?

This presentation was held as a 2,5 hour lecture to master students of the Sales & Marketing Department of Ruhr-University Bochum (Germany) on April 23rd, 2018. The feedback of students and professor was super positive.

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Digital Sales: Evolution or Revolution

  1. 1. & 1 Digital Sales: Evolution or Revolution? Strategic Decisions in the Sales Organization
  2. 2. Sr Consultant Digital Strategy Thorsten Sachtje metapeople • Strong background in Marketing Strategy and Customer Management • Diplom-Kaufmann • @tsachtje We are metapeople. Marketing Engineers. 2
  3. 3. Company Presentation Unsere Dienstleistungen 3
  4. 4. Netherlands 30 Employees Switzerland 10 Employees Dubai 30 Employees South Africa 15 Employees APAC 10 Employees France 250 Employees UK 160 Employees Italy 15 Employees Spain 30 Employees Germany 190 Employees Nordics 55 Employees China 70 Employees Company Presentation Our Network 4
  5. 5. Company Presentation Our References
  6. 6. 6 Let‘s start
  7. 7. „ My goal with this presentation: build a framework of understanding. “ Thorsten Sachtje Senior Consultant Digital Strategy @ metapeople 7 • @tsachtje
  8. 8. „ It is not about ‚digital marketing‘, it is about marketing effectively in a digital world. “ Ivan Mezenes CEO @ Diageo 8 • @tsachtje
  9. 9. „ Digital Transformation is another term for what I call Business Transformation. “ 9 Thom Groot Digital Director @ The Automobile Association • @tsachtje
  10. 10. „ Digital transformation is the continuous process by which enterprises adapt to or drive disruptive changes in their customers and markets (external ecosystem) by leveraging digital competencies to innovate new business models, products, and services that seamlessly blend digital and physical and business and customer experiences while improving operational efficiencies and organizational performance. “ 10 IDC Worldwide Digital Transformation Spending Guide Taxonomy IDC, 2016 • @tsachtje
  11. 11. Economical Social Political Technological The Market Rivalry Among Existing Competitors Threat of New Entrants Bargaining Power of Buyers Threat of Substitutes Bargaining Power of Suppliers • @tsachtje 11
  12. 12. 12 Micro
  13. 13. Economical Social Political Technological Micro Rivalry Among Existing Competitors Threat of New Entrants Bargaining Power of Buyers Threat of Substitutes Bargaining Power of Suppliers • @tsachtje 13
  14. 14. Political Technological Social Economical Rivalry Among Existing Competitors Bargaining Power of Buyers Threat of Substitutes Bargaining Power of Suppliers Company Rivalry Among Existing Competitors Threat of New Entrants • @tsachtje 14
  15. 15. Marketing vs Sales 15 • @tsachtje 100% Sales forever I tend to Sales Both actually I tend to Marketing 100% Marketing forever What was the question? What do you like more?
  16. 16. 16 Marketing & Sales Source: Sparksight, June 2015. ToFu: Marketing Role MoFu: Shared Role BoFu: Sales Role • @tsachtje
  17. 17. « Legacy application or system: An information system that may be based on outdated technologies, but is critical to day-to-day operations. » Gartner IT Glossary Definition Cloud-based scalable systems. Legacy on-premise systems. Corporate Start-Up 17 Innovation vs Operation. • @tsachtje
  18. 18. Political Technological Social Economical Rivalry Among Existing Competitors Bargaining Power of Buyers Threat of Substitutes Bargaining Power of Suppliers Competitors Rivalry Among Existing Competitors Threat of New Entrants • @tsachtje 18
  19. 19. Big and Slow vs Small and Fast? Not necessarily! 19 Better Technology Better Org Structures & Processes Better Trained People Higher Budget / Funding Faster / more open to new approaches Infrastructure Organization HR Finance Culture • @tsachtje Organizational Playgrounds
  20. 20. Amazon‘s goal: „Earth‘s Biggest Store“. « Bezo‘s ability to paint an extraordinary vision and register steady progress against that vision is rewarded with the cheapest capital in the history of businesses. […] And… Cheap. Capital. Is. Awesome. » Scott Galloway, NYU business professor 20 Profit vs No Profit • @tsachtje
  21. 21. Confrontation Cooperation* 21 * As Vendor/Seller, via Amazon Marketing Services, offering Alexa skills, integrating Alexa in own devices. Cooperation vs Confrontation. • @tsachtje
  22. 22. 22 Cooperation with Amazon Free Optimization: On-Amazon SEO Paid Optimization: Amazon Marketing Services (Sponsored Products, etc.) Amazon Seller (Marketplace) vs Amazon Vendor Winning the Buy Box as Seller: „Fulfillment by Amazon“ preferred 1 2 3 • @tsachtje
  23. 23. David Kahan, CEO of Birkenstock: „Birkenstock does NOT sell Amazon“. 23 Confrontation with Amazon Source: The Marketing Journal, January 2018. Amazon Private Label Brands Amazon Basics (Technical Essentials: Batteries, etc.) Arabella (Lingerie) find (Fashion) Strathwood (Furniture) Goodsport (Sportswear) Rebel Canyon (Sportswear) Peak Velocity (Sportswear) … Race for Consumer Access • @tsachtje
  24. 24. Race for the perfect Customer Experience 24 Inbox Ad Logout Video Native Ad Google Suche Facebook Bing Suche Alexa Abfrage Chatbot Support • @tsachtje
  25. 25. Political Technological Social Economical Rivalry Among Existing Competitors Bargaining Power of Buyers Threat of Substitutes Bargaining Power of Suppliers New Entrants Threat of New Entrants Threat of New Entrants • @tsachtje 25
  26. 26. 26 100 day Test Period, 30 year Warranty, Integrated Powerbank Collected Venture Capital: 15m € Entry barriers as low as never Source: Horizn Studios. „The most notable innovation in the luggage industry over the past 30 years has been the development from 2 to 4 wheels.“ Stefan Holwe, Founder @ Horizn Studios „A Nike or Under Armour is missing in the travel sector - we close this gap.“ Stefan Holwe, Founder @ Horizn Studios • @tsachtje
  27. 27. Political Technological Social Economical Rivalry Among Existing Competitors Bargaining Power of Buyers Threat of Substitutes Bargaining Power of Suppliers Substitutes Threat of New Entrants Threat of Substitutes • @tsachtje 27
  28. 28. Make it fast, easy, convenient, … 28 Transportation Music Travel TV Shopping • @tsachtje The Disruptors
  29. 29. 29 • @tsachtjeSource: Innovationtactics.com. Substitute for other forms of transport Competitor for other ride-hailing companies Substitute for one, Competitor for another
  30. 30. Political Technological Social Economical Rivalry Among Existing Competitors Bargaining Power of Buyers Threat of Substitutes Bargaining Power of Suppliers Suppliers Threat of New Entrants Bargaining Power of Suppliers • @tsachtje 30
  31. 31. 31 Digital Transformation Rising Customer Expectations Need to adapt quicker to disruptive new business models Need to adapt quicker to disruptive new capabilities Examples anyone for Bargaining Power on Pricing, via Switching Cost, Supplier Concentration, …? Source: Boston Consulting Group, March 2017. • @tsachtje Supplier or Partner?
  32. 32. 32 Source: IMD Global Center for Digital Business Transformation, 2017. Supplier or Competitor? • @tsachtje
  33. 33. Political Technological Social Economical Rivalry Among Existing Competitors Bargaining Power of Buyers Threat of Substitutes Bargaining Power of Suppliers Buyers Threat of New Entrants Bargaining Power of Buyers • @tsachtje 33
  34. 34. Consumer is perfectly informed about everything with shitstorm power at hand. Sustainability in Production High Quality Products New Product Categories Etc. Product Must be fast (e.g. Social Media, Same Day Delivery) Must be perfectly informed (360° customer view) Service Online vs Online: Price Comparison Websites Discount Websites Offline vs Online: Realtime price information always available: price differentiation difficult. ROPO Declining loyalty Pricing 34 Power at a fingertip. • @tsachtje
  35. 35. 35 Macro
  36. 36. Economical Social Political Technological Macro Rivalry Among Existing Competitors Threat of New Entrants Bargaining Power of Buyers Threat of Substitutes Bargaining Power of Suppliers • @tsachtje 36
  37. 37. Economical Social Political Technological Political Rivalry Among Existing Competitors Threat of New Entrants Bargaining Power of Buyers Threat of Substitutes Bargaining Power of Suppliers • @tsachtje 37
  38. 38. Go Live in EU on 25.05.2018! New EU law on data protection and privacy for all individuals including strict documentation requirements and high fines: Up to 20 m €, for big corporates even higher. GDPRWhat is right and what is wrong? And what about my data? Currently in discussion as successor of Cookie Guideline. Strict consent requirement for setting a cookie. Could have serious effects on tracking, targeting, personalized advertising. ePrivacy Latest press fuels discussions: Data Leaks Cambridge Analytica Facebook Etc. Data But what about the tracking? 38 • @tsachtje
  39. 39. Economical Social Political Technological Rivalry Among Existing Competitors Threat of New Entrants Bargaining Power of Buyers Threat of Substitutes Bargaining Power of Suppliers Economical • @tsachtje 39
  40. 40. Economic 40 • @tsachtje Interest Rates Exchange Rates Recession Inflation Taxes Demand/Supply Economic Factors Cheap Capital anyone?
  41. 41. Economical Social Political Technological Social Rivalry Among Existing Competitors Threat of New Entrants Bargaining Power of Buyers Threat of Substitutes Bargaining Power of Suppliers • @tsachtje 41
  42. 42. Established in 2016 (US). Budgets shift. 42 Digital first. • @tsachtje
  43. 43. Established in 2016 (globally). … but not everywhere yet 43 Mobile first. • @tsachtje
  44. 44. Established in 2015 (globally). Messenger: 3 out of Top 5. Facebook: 4 out of Top 5. 44 Messenger first. Facebook, Twitter, LinkedIn, Instagram WhatsApp, Facebook Messenger, WeChat, Viber • @tsachtje
  45. 45. Google? Bing? Amazon? Youtube? LinkedIn? Others? Where do you search today? 45 Search Engine of Choice • @tsachtjeSource: Survata, 2017.
  46. 46. 46 What‘s the fastest way to get „your“ product? Source: Google, May 2014. ? Local Search: Consumers search for a variety of local information: Research Online, Purchase Offline (ROPO): Consumers would buy in-store instead of online knowing they: • @tsachtje
  47. 47. 47 Infinite Options vs 8 Seconds Source: Google, May 2016. Micro Moments and Moments of Truth: Be there when it matters! • @tsachtje
  48. 48. German Army 48 Decline in number of troops from 198.000 (2013) to 179.000 (2017). Missing recruits in IT, engineering, medical care. Increasing budget for employer branding: 35.3 m €. Snapchat … and Facebook … and Social TV via Youtube … and Chatbot on Facebook Messenger Reach & Engagement Audience / Target Group: age 17 – 25. On Snapchat: 2.1 m unique filter users 7.5 m filter impressions 15.1 m ad impressions Go where your audience is + • @tsachtje
  49. 49. Economical Social Political Technological Rivalry Among Existing Competitors Threat of New Entrants Bargaining Power of Buyers Threat of Substitutes Bargaining Power of Suppliers Technological • @tsachtje 49
  50. 50. „ The Future is already here – it‘s just not very evenly distributed. “ William Gibson American-Canadian Author August 1993 50 • @tsachtje
  51. 51. 51 Technology Adoption Source: Digi-Capital, July 2016. • @tsachtje
  52. 52. Source: *Voice Labs 2017 Voice Report, January 2017. Voice is gaining traction. • @tsachtje * 52
  53. 53. „ Google says 20% of mobile queries are voice searches. “ Greg Sterling Search Engine Land 18.05.2016 53 • @tsachtje
  54. 54. 54 Voice Assistant are gaining speed Echo Spot Echo connect Echo Show Home mini Home Max Assistant Siri Alexa HomePod June 2015 Nov 2016 Echo Dot October 2017 Cortana 9 3 2 1 # Products Invoke December 2017 Echo plus July 2017 Echo Look Echo Buttons Echo 2nd gen. March 2016 April 2017 Google Home 4 devices in 2 years 10 devices in 6 months Echo 2011 Siri • @tsachtje
  55. 55. Source: Barclays Connected Home / Ovum Digital Consumer Insights 2017: Smart Living Google Assistant Most common Virtual Assistant Amazon Echo Devices Biggest market share in Voice Devices The Future of Voice Touchpoints. • @tsachtje 55
  56. 56. Potential What do you do when on the road and tired? Samples text Samples text 56 New Tech, New Partnerships • @tsachtje
  57. 57. 57 Hype Cycle for Digital Marketing & Advertising Source: Gartner, July 2017. • @tsachtje
  58. 58. 58 Top 10 Strategic Tech Trends for 2018 Source: Gartner, October 2017. • @tsachtje
  59. 59. 59 It‘s a wrap!
  60. 60. 60 Thank you
  61. 61. 61 Questions?
  62. 62. 62

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