Digital Transformation Delivered
Across the board, survey respondents identified digital transformation as the most critical initiative for 2021. In this section we explore what digital transformation looks like.
This initiative has been on the IT team priority list for years and was a top 2021 initiative among our survey respondents. In 2020, McKinsey Research across industries found that, “Responses to COVID-19 have speeded the adoption of digital technologies by several years. […]Among the biggest differences between the successful companies and all others is talent, the use of cutting-edge technologies, and a range of other capabilities. A related imperative for success is having a culture that encourages experimentation and acting early. Nearly half of respondents at successful companies say they were first to market with innovations during the crisis and that they were the first companies in their industries to experiment with new digital technologies.”
Speed Vs Demand
The findings in Penny’s 2021 Direct Sales Industry Benchmark Report were consistent with McKinsey’s observations across a wide range of industries. As direct sales executives identified, the development and delivery of AI, digitization and customer-focused technologies are the biggest opportunities for companies to explore so they remain competitive in the years ahead.
However, one of the recurring concerns is that implementing technology is often slower than the field’s demand and the resulting digital experience is below consumer expectations. McKinsey’s results had shown that, “At the organizations that experimented with new digital technologies during the crisis, and among those that invested more capital expenditures in digital technology than their peers did, executives are twice as likely to report outsize revenue growth than executives at other companies.” These results prove the urgency of digital transformation delivery and solution experimentation. For direct sales companies, the first step is understanding where the company is on the digital transformation evolution. We’ve looked at different stages of such transformation and identified the tech stack markers unique to each stage.
The Road of Digital Transformation
LEGACY STATE
Static data repository
- Disjointed information with poor user experience
- A dispersed back office across regions
- Hundreds of tools – none of which integrated
TRANSITIONAL STATE
Information combined with limited actions
- Information is categorized and sorted with
limited user functionality - Consolidated single back office across regions
- Starting to streamline tools
MODERN STATE
Insights-driven integrated platforms
- User-centric, focusing on field and customers
- Data and tools actively improving retention and attracting new consultants
- Operational costs reduced and revenue increased
ADVANCED STATE
Agile social enterprise
- Fully streamlined back office and app ecosystem
- Actively appealing to digital natives but easy for all to use
- Agile setup and strategy to capitalize on influencer economy and new social trends
“The entire world has shifted. Our perspective of what we expect and want is unrecognizable to what it was a decade ago. Technology has to be capable of doing everything easily and quickly from calculating and automatically paying out commission, to creating and disseminating content, to quick, global shipping of all package sizes, to giving corporate the data needed to improve the bottom line of the business. The world is more impatient and more tech-savvy than ever. Customers know what they want and will go somewhere else to get it.”
Matt Trotter, Head of Enterprise Solutions
Modernize to simplify
It’s a big initial step anywhere along the digital transformation continuum. The undertaking is significant but the end result will be simpler to navigate and manage, it will cost less from an operational perspective and it will increase revenue. One way of framing this is thinking about digital transformation as a key business development strategy. It’s constantly evolving, looking for new opportunities to improve productivity, increase profit etc.
It’s exciting to see that some companies are approaching the ‘Advanced State’, in particular cosmetic and skincare brands that appeal to younger demographics. Their digital-first approach meant they were well equipped to deal with the twists and turns of the pandemic. They understood the need to be agile and that digital transformation is continuous.
What can we learn from these successes? Let’s apply McKinsey’s “Six capabilities to sustain digital transformation” framework to direct sales and the Penny benchmark report findings.
Six Capabilities to Sustain Digital Transformation
1. Diverse Tech Talent
Establishing the culture of innovation and reiteration on the corporate side is critical to deliver the digitization promise.
- Digital solutions rolled out within the first weeks of the pandemic were enough to transition the field to digital-first interactions without losing field momentum.
- With increased remote work, talent from all over the world is now accessible. Leverage workers from regions that have implemented advanced digital solutions around integrations, change management, data analysis and digital field enablement.
2. Customer-centric design thinking
The underlying theme of many successful transformation projects.
- As illustrated in the tech stack evolution, moving from a static data repository to insights-driven and an agile social enterprise is all about prioritizing the end-user functionality. Ensuring that from the field, to the customer, everyone’s digital experience is seamless.
- Brand engagement goes beyond a smooth check out process, or timely product cross-sell. Consumers want to be heard, understood and cared for as well as being aligned with the brand’s views and social impact.
3. Agile ways of working
Described by McKinsey as, “An agile approach is a mindset shift for leaders – it’s all about what minimal viable product you can achieve within specific constraints – this allows organizations to learn, iterate and improve quickly before that MVP is industrialized”. This is the approach that first digital movers in direct sales were forced to adopt as COVID-19 changes unfolded.
- Starting out with the smallest and fastest scope of digital-first selling, to field engagement and field enablement solutions rolled out within weeks, not months.
- Followed by constant reiteration and behind the scenes platform work to centralize and consolidate various solutions, while prioritizing field experience.
4. Data literacy
A clear area of focus from survey respondents was to address the disconnect between corporate strategies and what the field needs and wants to feel supported.
- The direct sales structure makes it incredibly hard to get a clear sentiment from thousands of geographically dispersed distributors using disconnected solutions.
- Organizations that successfully improved field engagement and expanded their field demographics into younger and more diverse sellers achieved a greater level of transparency into the field data – including prospecting volumes, performance levels, content effectiveness, prevalent networks and social reach.
5. Next-gen technology
For many direct sales organizations the next expansion frontier is Gen Z (the digitally native, raised on technology generation) as both customers and consultants.
- Fully attached to their devices, with apps personalizing their experience from ordering food, to getting rides, to seamlessly blending real life and virtual interactions, with their stars on TikTok and YouTube making amounts comparable to movie stars – Traditional email marketing and first generation social media no longer has the influence or reach for this new target market.
- First movers into next-gen technologies around immersive experiences and personalized experiences will have a clear competitive advantage in the post-covid commerce space. Interact across several channels, address the need for constant education and evolution, help define social influencers and create a highly engaging blend of virtual shopping and connection experiences.
6. Analytical reasoning
“It’s vital for leaders and their teams to be able to break down problems, analyze patterns in data, leverage new kinds of data, and continuously find different solutions,” notes Maria Ocampo, McKinsey digital expert.
- For years companies have talked about the need for data to guide strategy and decisions. Recently we’ve been bombarded with data from various platforms and now teams need a system in place to sift through the data to analyze patterns, leverage new information and continuously apply the findings to drive better business decisions.
- A benefit of centralizing systems and digitizing platforms is that data will be at a company’s fingertips and offer greater data analytics specialization. Eventually, having a data scientist might be as common as having a communications specialist on corporate teams looking for a competitive edge.
